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Case Study – 1: Financial statement analysis
The purpose of this case study is to teach students to analyze financial statements and be able to quickly identify
issues and come up with intelligent questions to explore those issues.
BACKGROUND OF THE COMPANY
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The financial statements are from a real estate company
The company develops residential properties in the U.S.
The company has two lines of business: construction and real estate
The financial statements for the company are given below for the year 2018 and 2019. The financial statement
comprises of the Profit & Loss Statement, the Balance Sheet, and the Cash Flow Statement
THE CASE
The board of the company has hired you to review the financial statements and determine the health of the
company. As an outside consultant you have very little information on the business, other than what has been
provided to you in the background, and the financial statements below.
You goal is to learn more about the company during the kick-off meeting with the management team. Your job is
to review the financials, perform financial statement analysis calculations, develop 3-5 observations, and come up
with 3-5 questions that you will ask the management during the kick-off meeting.
We recommend you:
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Perform a coming size analysis on the most recent year to understand the margins
Perform a trend analysis to see how the figures have changed over the last two years
Calculate important ratio using all three financial statements
Develop 3-5 observations that you will present to the management team based on your analysis
Develop 3-5 questions that you will ask the management team during the kick-off meeting based on your
analysis
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FINANCIAL STATEMENT
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