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Essay on Stategy Key Point

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AYN 505 – Sem. 1/2011
BUSINESS STRATEGY ANALYSIS -
SEMINAR QUESTIONS – WEEK 2 - KEY POINTS

A. Discussion Question

1. In financial analysis, explain why each of the four financial analysis steps (strategy, accounting, financial, and prospective analysis) is critical, and explain how they relate to one another. (PHBWBL p10, Q4 adapted)

2. Your brother, who works in a bank, has recommended to you that you purchase shares in an organisation, on the basis of the following information, which he has heard discussed around the office:

• Total assets have increased by 33% • Revenue has increased by 12% • Net profit has decreased by 4%. • The dividend per share is 23c. • The current share price is $8.50; 12 months …show more content…

2. Accounting analysis enables the analysts to ‘undo’ any accounting distortion by recasting a firm’s accounting numbers. Sound accounting analysis improves the reliability of conclusions from financial analysis.

3. Financial analysis seeks to use financial data to evaluate the performance of a firm. The outcome from financial analysis is incorporated into prospective analysis, the next step in financial statement analysis.

4. Prospective analysis synthesises the insights from business strategy analysis, accounting analysis, and financial analysis in order to make predictions about a firm’s future.

A2 Your brother, who works in a bank, has recommended to you that you purchase shares in an organisation, on the basis of the following information, which he has heard discussed around the office:

• Total assets have increased by 33% • Revenue has increased by 12% • Net profit has decreased by 4%. • The dividend per share is 23c. • The current share price is $8.50; 12 months ago it was $7.50.

1. Would you invest in this organisation?
2. What information encourages you to do so, and what reasons might you have for hesitating?
3. What additional information would you like before making this decision, and where might you find that information? (PHBWBL p10, Q5 adapted)

(a) There

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