Business Finance - Management
In a 4–5 page paper, use the Financial Trend Monitoring System to identify financial factors affecting the financial solvency of a state, a local, or a nonprofit agency. You may choose a new agency to analyze or use one of the agencies you looked at in a previous assignment. (A federal agency or department should not be used for this assignment.) Using the financial factors from Table 7.1, pick 2–3 factors and conduct a trend analysis.
Evaluate selected financial factors by analyzing financial data over at least the last five years. Title this section Trend Analysis.
See Table 7.1 Factors Affecting Financial Condition for a list of financial factors.
Create a table or chart with each factor indicating the direction of the trend. Title this section Data Analysis. (Note: This section should only consist of at least two or three tables or charts.)
Justify your table or chart for each factor by writing a brief evaluation of the trend. Title this section Trend Evaluation.
Develop and explain a policy statement based on your findings to manage areas of concern. Title this section Policy Statement.
Your assignment must follow these formatting requirements:
Include an Introduction and Conclusion in the 4–5 page count. Your cover page containing the title of the assignment, the student's name, the professor's name, the course title, the date, and the reference page are not included in the required assignment page length.
This course requires the use of Strayer Writing Standards (SWS). The library is your home for SWS assistance, including citations and formatting. Please refer to the Library site for all support. Check with your professor for any additional instructions.
The specific course learning outcome associated with this assignment is:
Evaluate financial trends for a selected agency and propose fiscal recommendations.
Sample Solution
Introduction:
This paper analyzes the financial trends of [Agency Name], a [type of agency] located in [location]. Utilizing data from the Financial Trend Monitoring System (FTMS), this report identifies and evaluates key financial factors affecting the agency's solvency over the past five years. Based on these findings, recommendations will be made to address areas of concern and ensure the agency's financial sustainability.
Full Answer Section
Trend Analysis: The following financial factors from Table 7.1 have been chosen for detailed analysis:- Operating margin: This metric measures an agency's ability to generate income from its operations, calculated as operating revenue minus operating expenses divided by operating revenue.
- Debt to equity ratio: This ratio indicates the proportion of the agency's assets financed by debt versus equity, calculated as total liabilities divided by total equity.
- Cash-to-debt ratio: This ratio measures an agency's ability to meet its short-term debt obligations using readily available cash, calculated as cash and cash equivalents divided by total debt.
| Year | Operating Margin (%) | Direction of Trend |
| 2023 | 5% | Stable |
| 2022 | 4% | Slight decrease |
| 2021 | 6% | Slight decrease |
| 2020 | 7% | Decrease |
| 2019 | 8% | Decrease |
| Year | Debt to Equity Ratio | Direction of Trend |
| 2023 | 0.8 | Increasing |
| 2022 | 0.7 | Increasing |
| 2021 | 0.6 | Increasing |
| 2020 | 0.5 | Increasing |
| 2019 | 0.4 | Increasing |
| Year | Cash-to-Debt Ratio | Direction of Trend |
| 2023 | 0.3 | Increasing |
| 2022 | 0.2 | Increasing |
| 2021 | 0.1 | Increasing |
| 2020 | 0.05 | Increasing |
| 2019 | 0.02 | Increasing |
- Increase Operating Efficiency:
- Implement cost-saving measures to reduce operational expenses.
- Explore alternative revenue streams to diversify income sources.
- Conduct regular budget reviews to identify and eliminate unnecessary spending.
- Invest in technology and process improvements to enhance efficiency.
- Manage Debt Levels:
- Develop a comprehensive debt management strategy to control further debt accumulation.
- Prioritize debt repayment with surplus funds.
- Explore alternative financing options with lower interest rates or longer terms.
- Maintain Adequate Liquidity:
- Develop a cash management plan to ensure sufficient cash reserves.
- Invest in readily available assets like money market accounts or short-term bonds.
- Establish a credit line for emergency situations.
- Implement Financial Risk Management:
- Conduct regular risk assessments to identify and mitigate financial risks.
- Develop contingency plans for potential financial shocks.
- Obtain appropriate insurance coverage to protect against unforeseen events.
- Enhance Financial Transparency:
- Publish regular financial reports and statements for public review.
- Hold open forums to discuss financial performance with stakeholders.
- Implement effective internal controls to ensure financial accountability.