Project3AnalyzingFinancialReports

Project 3: Analyzing Financial Reports Start Here You have made good progress on the Choice Hotels project. Frank Marinara says“Because of your good work with our client, Choice Hotels, they would like us to continue working with them on a new project. Since this is more challenging than what you did previously in an individual capacity, I am assigning you to a team that will work on this project. I will send over the project details to your team via email.” INBOX (1 NEW EMAIL)From: Frank Marinara, Director of FinanceTo: You and Your Team MembersChoice Hotels would now like MCS to complete a financial statement comparison with their largest competitor, Marriott International. I need your team to compare Choice Hotels’ 10-K reports that we gathered in the last project with Marriott International’s 10-K reports. The team will need to complete a vertical financial statement analysis using the 10-K reports from Choice Hotels and Marriott.Choice Hotels is exploring ABC cost allocation. They have asked your team to complete the task of allocating overhead to the cost of hotel rooms.We will need to look at Choice Hotels’ latest 10-K report and Press Release in order to complete a budget and revenue forecast.Finally, all team members will attend a meeting with other MCS’s finance and accounting analysts to discuss the pros and cons of the strategies of the two firms.I will need all of the above assignments done within two weeks and suggest you begin right away.Really proud of your efforts here,FrankClick Step 1 to get started!When your team submits the project, the work will be evaluated using the competencies listed below. Your team can use the list below to check the team’s work before submission.1.3: Provide sufficient, correctly cited support that substantiates the writer’s ideas.1.6: Follow conventions of Standard Written English.3.1: Identify numerical or mathematical information that is relevant in a problem or situation.3.2: Employ mathematical or statistical operations and data analysis techniques to arrive at a correct or optimal solution.3.3: Analyze mathematical or statistical information, or the results of quantitative inquiry and manipulation of data.3.4: Employ software applications and analytic tools to analyze, visualize, and present data to inform decision-making.4.1: Lead and/or participate in a diverse group to accomplish projects and assignments.4.2: Demonstrate the ability to plan and execute a project, articulating clear objectives and goals for the team.4.3: Contribute to team projects, assignments, or organizational goals as an engaged member of a team.4.4: Demonstrate diversity and inclusiveness in a team setting.10.2: Analyze financial statements to evaluate and optimize organizational performance.10.3: Determine optimal financial decisions in pursuit of an organization’s goals.10.5: Develop operating forecasts and budgets and apply managerial accounting techniques to support strategic decisions.12.1: Assess market risk and opportunity.13.1: Identify and analyze new opportunities.Step 1: Complete Team Agreement As you adjust to your role, Frank tells you that this project will give you a chance to get to know your new colleagues on the accounting team. The deadlines and requests posed by Choice Hotels necessitate a team-based approach to ensure a timely output without sacrificing quality.Before you get started, your team will need to decide how the project responsibilities will be divided to ensure timely completion of the work. Frank needs your team to complete ateam agreement and work planbefore you begin, which will act as an agreement among team members stating how the work will be completed.As you start Week 5 of this course, submit the team agreement and work plan to the submission folder located in the final step of this project. Then click Step 2 to begin your work.Step 2: Compare Business Performance Using Financial Statements Choice Hotels International (NYSE: CHH) would like to know how their market share compares with Marriott International (NASDAQ: MAR), their most significant competitor in North America. This comparison will help Choice Hotels develop a strategy to gain a competitive advantage over Marriott.Your team will first need to complete a financial statement analysisof both Choice Hotels and Marriott International.Dialogue with Frank Marinara“Use the Choice Hotels 10-K reports we gathered in the last project and compare them with Marriott International’s 10-K reports,” Frank tells your team. The team will need to find Marriott’s 10-K reports the same way you did for Choice Hotels, by accessing the Securities Exchange Commission (SEC) website.Frank continues, “Choice has asked for advice on attracting new investors. Your team needs to complete a vertical analysis by comparing financial reports of the two companies.” Frank recommends using financial ratios for analysis and cost-volume-profit analysis concepts for this task. “I will email the team an Excel Workbook to complete for this project.”INBOX (1 NEW EMAIL)From: Frank Marinara, Director of FinanceTo: You and Your TeamFor this assignment, please complete the Project 3 Excel Workbook with information from the income statement, balance sheet, and statement of cash flow portions of Choice Hotels’ and Marriott International’s 10-K reports. The file contains instructions, an income statement template, balance sheet template, a cash flow template, and a template for the forecast. I have also posed questions for your team to answer so I can provide Choice Hotels with suggestions on improving their financial performance.Thanks,FrankAttachments:Choice Hotels Workbook.xlsxAnswer the associated questions on the Income Statement, Balance Sheet, and Cash Flow worksheets within the Project 3 Excel Workbook to help Choice Hotels make sound investment decisions. When your team has finished, submit the workbook to the submission folder located in the final step of this project. Your team should aim to complete the entire project by Week 6.The team should have at least two team members check every calculation and read the entire report for consistency.Now that you have completed Step 1, proceed to Step 2, where your team will analyze potential investment decisions.Step 3: Analyze Cost and Investment Decisions Choice Hotels is interested in bolstering their assets and improving their costing model to account for these assets. Choice Hotels has been building their own guest rooms and selling them to their franchise owners. The company allocates overhead costs equally to each guest room and prices them to achieve a greater profit on the higher-priced rooms. Choice Hotels is concerned that this traditional costing model may not be accurately assigning costs. For example, the selling price of one of its guest rooms, “Presidential Suite”, may not be covering its true cost. You and your team will need to applyactivity-based costing (ABC)to advise Choice Hotels on resolvingthe company’s costing issue with the Presidential Suite guest room.Also, your team will need to understand the concepts of production cost allocation, and breakeven to compare costing models. Two cost allocation methods of production are under consideration by Choice Hotels. Frank needs your team’s help in determining if overhead cost allocation (Choice’s traditional model) or ABC (a new model) is bettwe for their business.Using the same Project 3 Excel Workbook your team used in Step 1, complete the Cost and Investing worksheet. The worksheet contains information that will aid in comparing the cost allocation methods for building guest rooms for Choice Hotels’ franchise owners. When your team has finished, submit the workbook to the submission folder located in the final step of this project.Then proceed to Step 3, where your team will develop a budget and forecase for Choice Hotels.Step 4: Complete a Budget and Forecast Frank recently informed your team that Choice Hotels also needs assistance in creating next year’s budget and developing revenue forecasts. Choice Hotels recently acquired a new hotel brand. This recent acquisition needs to be taken into consideration as your team develops the forecast. Choice Hotels recently held a press conference where the company disclosed their full-year guidance. Your team will need to use this information to develop their budget and forecast.Using the same Project 3 Excel Workbook your team used in Steps 2 and 3, complete the Budget and Forecast worksheet. When your team has finished, submit the workbook to the submission folder located in the final step of this project during Week 5.Now that your team has completed Step 4, proceed to Step 5, where you will discuss strategy with other finance and accounting analysts.Step 5: Discuss Strategy Discussion with ColleaguesEarlier, Frank mentioned you would need to attend a meeting with other finance and accounting analysts at MCS to discussthe differences in strategy between Choice Hotels and Marriott. Both companies have a BBB debt rating from Standard & Poor’s. This is the lowest investment grade rating and indicates that both companies have been aggressive with growth, finance, and Treasury Stock purchases.Discuss the differences in strategy related to business growth, finance, and Treasury Stock purchases.Discuss the similarities in strategy.Discuss any strategy recommendations for Choice Hotels’ management.During Week 6, submit one original posting of at least 250 words in the“Comparing Choice and Marriott”Discussion by Saturday and post two responses of at least 50 words each to other discussion participants by Tuesday.This discussion is an individual activity. Satisfactory and timely participation in the discussion is a requirement for meeting performance in this project. SeeMBA discussion guidelines.When you have finished Step 5, proceed to Step 6, where you will summarize your team’s project findingsin a report to managementStep 6: Prepare a Report to Management At the conclusion of your project, Frank requests a report based on your team’s analysis and recommendations in the previous steps. He is planning on using this report to provide the client, Choice Hotels, with guidance on a potential changes in their strategy. This report, along with citations for any sources your team uses, should be about three to five pages. The report should highlight your team’s analysis and recommendations based on the work you and your team completed in the workbook. Be creative and use charts, graphs, or any other tools your team feels would be useful to convey your team’s analysis and recommendations. Post your team’s report to management in the submission folder located in the final step of this project.Complete your team’s report to management during Week 6 using this template.When you and your team have completed Step 6, proceed to Step 7, where you will submit all work for Project 3.Step 7: Submit Your Work Take note of the recommended delivery dates in the table below. Recommended Project Delivery Step Submission week Deliverable File-naming protocol/Submission instructions Step 1 Week 5 Team agreement and work plan teamname_team_agreement.docx Step 2 Week 5 Income Statement, Balance Sheet, and Cash Flows worksheets Submit the completed workbook Step 3 Week 5 Cost and Investing worksheet Submit the completed workbook Step 4 Week 5 Budget and Forecast worksheet Teamname_project3 workbook Step 5 Week 6 Discussand Compare Choice Hotels and Marriott Strategies Submit discussion post in the Compating Choice and Marriot Discussion section in Step 4. Step 6 Week 6 Report to management teamname_report_to_management.docx ALWAYS DO YOUR BEST @ MCSWhen you submit your project, your work will be evaluated using the competencies listed below. You can use the list below to self-check your work before submission.1.3: Provide sufficient, correctly cited support that substantiates the writer’s ideas.1.6: Follow conventions of Standard Written English.3.1: Identify numerical or mathematical information that is relevant in a problem or situation.3.2: Employ mathematical or statistical operations and data analysis techniques to arrive at a correct or optimal solution.3.3: Analyze mathematical or statistical information, or the results of quantitative inquiry and manipulation of data.3.4: Employ software applications and analytic tools to analyze, visualize, and present data to inform decision-making.4.1: Lead and/or participate in a diverse group to accomplish projects and assignments.4.2: Demonstrate the ability to plan and execute a project, articulating clear objectives and goals for the team.4.3: Contribute to team projects, assignments, or organizational goals as an engaged member of a team.4.4: Demonstrate diversity and inclusiveness in a team setting.10.2: Analyze financial statements to evaluate and optimize organizational performance.10.3: Determine optimal financial decisions in pursuit of an organization’s goals.10.5: Develop operating forecasts and budgets and apply managerial accounting techniques to support strategic decisions.12.1: Assess market risk and opportunity.13.1: Identify and analyze new opportunities.