VI. Statement of Changes in Financial Position
A. From the perspective of an investor, determine whether or not you would invest in your chosen company based on the company's statement of changes in financial position (SCFP). Support your opinion.
The return on assets is very low, under 3% in every year and negative four years ago. The return on equity has been average the last two years but under 5% before that and negative four years ago. They have financed about 80% of their assets with debt, a very high ratio (below 70% is desireable). Their current ratio dipped below 1 in the current year, meaning they do not have enough cash or near cash to pay upcoming short-term debt. As an investor, I would not be impressed just based on the balance sheet review. I would not invest.
B. Review the company's SCFP for any concerns that may need to be addressed. As controller of your company, prepare a memo to your CEO, giving a summary report for possible recommendations.
I have reviewed the liabilties and equity over the past five years and wanted to bring a few things to your attention. First, your debt has really jumped in the recent year. Specifically, your long term debt has more than trippled. It is important that these new funds be invested in projects that will raise your ...
For Amazon, the ratios computed and short memo presented in Excel.