You have been hired as a junior financial analyst by a major, international consulting firm. For your first assignment, you have been asked by a senior financial analyst to demonstrate your skills by assessing the performance of a publicly trading company; preferably one with inventories and receivables. The senior analyst expects you to evaluate at least two years’ worth of financial statements, but you know three years would be better in order to really understand the financial health of your subject company. Each week over the next five weeks, the senior analyst expects you to complete and submit at least one task associated with this assignment and to regularly discuss what you have been learning with you other junior associates, as they will be preforming the same project as you, albeit with a different company, and most likely in a different industry.
Using the Apple’s financial statements, calculate and evaluate the firm’s sustainable growth rate (SGR) for the last 3 years, and summarize your findings in your paper. Be sure to address the following:
What are the sustainable growth rates for your subject company over the period that you studied?
How do they compare with the actual growth rates that the company experienced over the period studied?
What are the consequences faced by firms that grow at a rate that is not consistent with their sustainable rate?
If the firm grew at a rate above or below the SGR, how might it finance its excessive growth or reward its stockholders for the underperformance?