Final Essay, Week 8

Part One (Case Study Component 4)

Apply the final three steps of the nine-step assessment process to develop a 750-word analysis of your chosen company:

  1. Viability of the 3-5 Year Plan
  2. Stress Test Under Scenarios of Adversity
  3. Current Financing Plan

Part Three

Assume that you will be presenting your analysis to a group of senior management at your place of employment that urgently needs to know this information to make a major financial decision for your company. In 250 words, develop an introduction to your analysis that can serve as an overview. Consider factors that might impede their ability to focus on the information you are presenting. For example, some of your audience may be pressed for time, another may have a crisis in their work team that needs to be attended to quickly, and others may simply not be paying attention. You have one chance to impress them; keep your overview focused, succinct, and informative. Present only key and other potentially relevant points this group needs to know.

Hints for Final Essay, Week 8


The Week 8 assignment is the capstone project for this course (at least 2500 words; a comprehensive analysis could be more words).  It is essential that you follow APA guidelines and the 9-step approach for assessing the company’s future financial health (Piper, 2010).  Please read the resource and use elements of each the 9-steps that Piper suggests.  The use of any Tables and Figures should follow APA guidelines.

The Week 8 Essay should contain your Edited Essays, based on my graded version of your essays, from your Week 2, 4, and 6 Essays that should contain the first six (6) steps of Piper’s 9-step approach. Importantly, you need to incorporate your response to my comments into your edited essays. 

To be consistent with the requirements of the assignment, I stronglyrecommend the following format/headings for the final essay:


Introduction (Centered, Boldfaced, Upper and Lowercase Heading)

This section should contain at least a 250-word introduction to the audience as the assignment suggests (briefly describe the company that you are analyzing).  The close of the introduction should contain at least one sentence that briefly describes Piper’s 9-step approach  that will be discussed.


            This sections should discuss each of the 9-steps, including the elements that Piper (2010) addresses.  If Piper’s specific elements were not discussed in your previous essays, I expect you to include such discussions in your final essay.  The titling of the 9-steps should be on the left margin, using APA 2nd level heading (Flush Left, Boldface, Uppercase and Lowercase Heading).  For example:


Analyze Fundamentals (This is Step 1; Your edited essay from Week 2)

Goals.             (APA 3rd level heading:Indented, boldface, lowercase heading with a period; Begin body text after the period).



            Competitive technology.

            Regulatory and operating characteristics.

Analyze Revenue Outlook(This is Step 2; Your edited essay from Week 2)

Revenue outlook.

            Growth rate.



Analyze Investment to Support the Business Units and Strategies(This is Step 3; Your edited essay from Week 4)

Supporting growth.

Asset management.

Assess Future Profitability and Competitive Performance (This is Step 4; note the questions on page 3 that need to be answered in an essay format; Your edited essay from Week 4)


            Cash flow.



Assess Further External Financing Needs(This is Step 5; External financing could be in the form of loans, debt, or equity.  The firm’s need for further external financing is based on the business conditions described in Steps 1-4 such as future sales growth, cash needs, future profitability, and profit retention. Review Pro Forma Balance Sheet, p. 142-144 of Gittman&Zuttter. I recommend that you use Morningstar Website to locate financial data and ratio for your analysis.  For example: edited Essay from Week 6)

Assets.(Project growth in elements of Pro Forma Balance Sheet).

Liabilities.(Refer to projected growth in elements of Pro Forma Balance sheet.)

Ensuring Access to Target Sources of External Financing (This is Step 6; note the questions on page 5 of Piper’s book that need to be answered in an essay format; Your edited Essay from Week 6.)

Soundness of firm’s financial structure.(Firm’s profitability level, cash flow, and risk)

Firm’s debt service.(Firm’s capacity to service debt, debt ratio, liquidity of firm’s assets, salvage value if assets if need to be sold to meet debt obligations, history of paying suppliers,. etc.)

            Firm’s equity positioning.

            Firm’s desired target capital sources and terms.

Assess viability of the 3- to 5- year plan (This is Step 7. New to Week 8 essay)

Assess the consistency of the plan with the firm’s goals, and the achievability of both the operating plan and the financing plan you are proposing.  Use Annual Report, SEC 10K, and your ProForma Statements from your prior Essay for information on your firms’ forecast. Consider the following questions:

  1. Is the operating plan on which the financial forecasts are based achievable?
  2. Will the company achieve its strategic, competitive, and financial goals?
  3. Will the resources required by the plan be available?
  4. Is the firm’s mix of debt and equity compliant with the firm’s debt policy? If it does not meet the firm’s debt policy, action should be considered now.
  5. Are the firm’s investment needs, product strategies, and goals in line with its financing capabilities over the next 3-5 years?
  6. How will the firm’s competitive, organizational, and financial health at the end of the 3 to 5

years compare with its condition at the outset?

Stress Testing Under Scenarios of Adversity (This is Step 8,New to Week 8 Essay)

Perform stress testing under scenarios of likely adversity and value your firm using appropriate valuation techniques on the pro forma financial data analysis you constructed earlier in the course.  A stress test should be conducted to see if the three to five-year plan is sound and if the flow of funds to strategic programs can be maintained in times of adversity. Most three to five year plans, if properly planned and researched, meet the firm’s expectations. However, there have been events that have reduced the reliability of a firm’s plans. Performing a stress test can reduce the probability of a negative occurrence due to adversity.Review Scenario Analysis and etc.– Chapters 4 and 12 of Textbook, Gitman&Zutter)

Current year financing and operating plan (This is Step 9, New to Week 8 Essay)

How should the firm meet its financing needs in the current year? How should it balance the

benefits of future financing flexibility (by selling equity now) with the temptation to delay the sale of equity by financing with debt now, in hopes of realizing a higher price in the future?


Evaluate how the firm plans on meeting the current year’s finance plan. The goal is to balance the benefits of future financing flexibility with realizing a higher stock price. Future financing flexibility can be accomplished by selling equity now. On the other side, management can have the hope of realizing a higher share price by waiting to sell the equity later. Either way, a balance must be maintained depending on market conditions and future forecasting


Provide a brief summary of the key facts and findings.



Piper, T. R. (2010). Assessing a company’s future financial health. Boston, MA: Harvard Business School. Prod. #: 911412-PDF-ENG. (This resource can be found in Syllabus and Resource Tab of Week 1)

I am attaching this Hint to Week 8 Essay as a Word document also; please download and review-

part of the text is color-coded for emphasis.


Please feel free to contact me via the individual forum should you have any questions.  It is my hope that all of you will follow my recommended format or some similar format and the information that needs to be included in the final essay.  Please follow assignment directions and consult the Rubric before writing your essay.


I recommend that you use Morningstar Website to locate financial data and ratio for your analysis.  For example: