Financial Analysis

Topics: Balance sheet, Generally Accepted Accounting Principles, Financial statements Pages: 14 (4677 words) Published: September 23, 2012
Final Project – Financial Analysis
Beatrice Valdez, MBA Student
Capella University
MBA 6016 Finance and Value Creation
[ May 16, 2012 ]
Michael Blagg, Professor

Table of Contents
Executive Summary| | 3|
Historical Financial Statement Analysis: Financial Ratios| | 3-4| Balance Sheet| | 4-6|
Income Statement| | 6|
Statement of Cash Flows| | 6|
Pro-Forma Financial Statements| | 7|
Balance Sheet Pro-Forma| | 7-8|
Income Statement Pro-Forma| | 9|
Cash Flow Pro-Forma| | 9-10|
Investing Activities| | 11|
Financial Activities| | 11|
Equations of Statements| | 11-12|
Summary of Valuation| | 12-14|
Current and Quick Ratios| | 14-15|
Transparency| | 15-16|
Corporate Governance| | 16-17|
Conclusion| | 17|
Appendix A – Balance Sheet| | 18|
Appendix B – Balance Sheet Pro Forma| | 19|
Appendix C – Income Statement| | 20|
Appendix D – Income Statement Pro Forma| | 21|
Appendix E – Cash Flow Statement| | 22|
Appendix F – Cash Flow Pro Forma| | 23|
Appendix G – Ratios| | 24|
Appendix H – Discounted Cash Flow| | 25|
Appendix I – Shareholder Capital| | 26|
References| | 27-28|

Executive Summary
“Urban Outfitters targets young adults aged 18 to 28 through its unique merchandise mix and compelling store environment” (Libby, Libby, & Short, 2011). The company is a public company that is traded as NASDAQ: URBN, S&P 500 Component in the retail industry that was founded in 1970 in Philadelphia, Pennsylvania with 170 locations since April 2011. Financial reports are used for internal and external purposes. Internally, managers use the information for strategic planning, forecasting and budgeting. The four basic financial reports consist of a Balance Sheet, Income Statement, Statement of Retained Earnings and Statement of cash flows. “These four financial statements are the basic statements normally prepared by profit-making organizations for use by investors, creditors, and other external decision makers” (ibid, p. 6). This paper will provide information on an analysis made by reviewing historical financial reports to determine how these reports affect Urban Outfitters planning and forecasting. The three major financial reports are used interchangeably to be used to calculate tends and ratios for internal and external decision making. Based on the analysis, pro-forma reports will be have been developed by using the calculated ratios and trends. The information obtained indicate that Urban outfitters will continue to grow and, thus, benefit all shareholders’ and contribute to the economy. Large companies, like Urban Outfitters, are required by law to make the financial data public in the form of annual reports. These financial documents are essential elements that make up these reports. Historical Financial Statement Analysis: Financial Ratios

The financial ratios used on the Financial Statements were mainly those that were useful in forecasting. Average Ratios were used when no other type of ratios would be used to obtain an average of a particular account. Common Use Ratio was used in the Balance Sheet to provide an idea of how much of a particular account was reflected to either total Assets amount or total Liabilities and Shareholders’ Equity. For example (See Appendix A Balance Sheet), The amount shown on the Cash and Equivalents section of the Balance Sheet total in 2009 was $316,035. The total Assets amount on the Balance Sheet was $1,329,009. The Common Use Percentage was calculated by taking the Cash & Equivalent amount $316,035 and divided by the total Assets amount, $1,329,009 to arrive at a common percentage of .237797 or 23.78%. Only the Common Percentage Ratio was used for 2009 that was most helpful in calculating forecasted amounts on the Balance Sheet Pro-Forma (Appendix B). The other ratios used were those calculated in Appendix G and only a handful were...

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Faulhaber, T.A., Editor – The Business Forum, (n.d.). The Emerging Company and the SEC: The Significance of the Sarbanes-Oxley Act. Retrieved on March 30, 2012 from web site: (n.d.). Return on Assets. Retrieved on March 29, 2012 from web site: And, Investopedia Explains Current Ratio. Retrieved on February 26, 2012 from web site:
Jacksonville State University, (n.d.). College of Commerce and Business Administration: Accounting – Statement of Cash Flows. Retrieved on February 26, 2012 from web site:
Libby, R., Libby, P.A., & Short, D.G. (2011). Financial Accounting (7th Ed.). New York, NY: McGrawHill. ISBN: 9780077892661.
Loth, R. (n.d.). Investment Valuation Ratios. Retrieved on March 30, 2012 from web site: (n.d.). Analyzing Income Statements. Retrieved on March 30, 2012 from web site:
Sanders, P.J. and Haley, J. (n.d.). Financial Strength Ratios for Investment Analysis. Retrieved on March 30, 2012 from web site:
Simple Studies, (n.d.). Introduction to Accounting: Closing the Books: Permanent and Temporary Accounts. Retrieved on March 4, 2012 from web site:
The U.S. Security and Exchange Commission (SEC), (n.d.). SEC Initiatives Under New Regulatory Reform Law. Retrieved on March 30, 2012 from web site:
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