Assignment 1A: Financial Analysis Snapshot and Initial Findings

Due: Week 4 (10% of Final Grade)

Overview

A critical financial accounting skill is the ability to read, analyze, and make actionable decisions from published financial statements. Business leaders gain valuable information from the annual reports of direct competitors, companies that operate in similar fields, and companies in which they are considering an investment or partnership.

---

Instructions

You are the CFO of a leading real estate development company, Stanton Properties, Inc.  Stanton Properties plans to add a new strategic partner in the physical fitness business to its master planned community (MPC) division. Tom Presley, General Manager (GM) of the MPC division, has asked for your assistance in performing a financial analysis and recommend the new physical fitness industry partner. The GM has narrowed the list of potential partners down to two firms, Planet Fitness, Inc.  (NYSE: PLNT) and Life Time Group Holdings, Inc. (NYSE: LTH). Both companies use a December fiscal year-end and report their financial statements in thousands of dollars. The analysis period is from 2019 through 2022. Jose Diaz, the CEO, and your boss has specifically asked for a financial analysis of four key areas: Profitability, Short-Term Liquidity, Debt Management, and Cash Flow. You have decided to organize your work into TWO components:

• • Part A: Financial Analysis Snapshot and Initial Findings using data from the companies’ annual reports (Due: Sunday, midnight of Week 4; worth 10% of your final grade)
  • Part B: Executive Memo and brief Video Presentation of your analysis (Due: Sunday, midnight of Week 5; worth 20% of your final grade)

Before starting your work on Assignment 1A, carefully read the instructions for both 1A and 1B. Your deliverables for Assignment 1B are directly connected to the work you will complete for Assignment 1A.

 

Assignment 1A: Financial Analysis Snapshot and Initial Findings

1. All work must be completed and submitted in the Excel Assignment 1 Workbook.
   
   
2. Go to the Investor Relations section of each company's website and download their annual reports. You may need to download more than one report to get all the required historical data.
   
   
3. Use the Annual Reports/10K to populate the Excel workbook template for the two most recent years, 2022 and 2021.
   • • Some entries simply require finding the respective line-item amounts, while others will require calculations that should be entered as formulas (these are indicated in the template).
     • Two years of historical data and ratios for 2019 and 2020 have already been provided in the template from the prior years' annual reports; do not change the data and ratios provided.
     • Note: The template has been set up to provide immediate feedback on your entry. If the cells turn green after you enter the data or formula, you have made a correct entry. If the cell does not change to green, it indicates that the wrong value has been entered into the cell. This may be caused by a mistake in a calculation or by selecting the wrong data from the annual reports/10Ks. If a cell fails to turn green, complete the following steps to troubleshoot:
       1. 1. Ensure that you understand what data is required for that entry.
          2. If you cannot locate the data in the annual report/10K, review the Reference Guides from weeks 2-4 and the other course materials to help find the needed data.
          3. If you have confirmed you have identified the correct data, review your calculations. A simple math error or a misunderstanding of a ratio may be the culprit.
             
             
4. Include a brief summary of your initial findings and thoughts on “the stories behind the numbers” in the “Summary Notes” sheet of the Assignment 1A Workbook based on your analysis of the annual reports. Follow the instructions in the workbook and organize your insights into the four broad categories provided you will address in your Executive Memo and Presentation for Assignment 1B.
   • • Profitability/Net Income Margins
     • Debt Management
     • Cash Is King
     • Short-Term Liquidity

Note: Your summary notes do not require elaborate responses. Bullet points are fine. Focus on outlining key differences between the two companies, anything that surprised you or is noteworthy, and your initial thoughts on where one company might have a financial advantage over the other. These notes will help you think through what you will highlight in your Executive Memo and Presentation in Assignment 1B and will be an opportunity for your professor to provide feedback before you submit that assignment, allowing you to make edits if needed.

 

With the data in hand and some initial analysis of the stories behind the numbers, you should feel confident about moving on to Assignment 1B, where you will discuss your findings in your memo and presentation. However, if you need extra support from your Professor or the Finance Coach assigned to your section, please indicate this by selecting the. If you need help with analyzing and interpreting trends for the four key topics of Assignment 1B, please notify your professor via email as soon as possible.