Task:
Overview
For executives and senior management, financial analysis should be an ongoing pursuit of competitive advantage with the analysis of variances used to gauge whether the corporate strategy is working. There is always one more set of data that can be dissected, one more ratio that can be calculated, one more way to look at the competitive landscape and the opportunities/threats the market presents. Some of the best investments and some of the best strategic moves are made by those who pushed a little further and looked for angles that others had missed.
Our final assignment in the course continues to ask you to use judgment in applying what you have learned about financial statement analysis in this and in previous courses. All financial managers and investors (not to mention, students) must operate in the real world of limited time and resources. You are being given the responsibility to make an informed decision about which metrics are most important in analyzing the financial health and its potential as an investment opportunity
Use the prompts below to help you write your letter:
1. Begin with a brief recap of your reasons for buying the stock.
• Explain why you consider to be a value stock or a growth stock. Support your position with reference to at least two categories from the Value Investing Checklist and two categories from the Growth Investing Checklist
2. Summarize key product-specific metrics (see Morningstar Appendix), noting:
• What the ratios (EPS, EBITDA, ROE, ROIC and RONIC) in the Morningstar and Annual Report show
• What ratios need to improve and why
• What Salesforce.com most profitable products and services are
• Which products or services management should increase or reduce investment in and why (be sure to consider market competition and risk in your comments).
3. Conclude your letter with an explanation of your opinion about the company. based on what you have learned about economic moats and your analysis of values, growth and profitability
• Is Salesforce.com a “great moat” company, a “good moat” company, or is it time to divest? Why did you come to this conclusion?
