Assignment 3: Financial Statement Analysis Due: All financial managers and investors (not to mention, students) must operate in the real world of limited time and resources. You are being given the responsibility to make an informed decision about which m

 All financial managers and investors (not to mention, students) must operate in the real world of limited time and resources. You are being given the responsibility to make an informed decision about which metrics are most important in analyzing the financial health of Salesforce.com and its potential as an investment opportunity. Format This assignment is to be submitted in the form of a letter from an “activist shareholder.” Remember, all investors are actually owners of the company. While it is true that most take little to no action in attending annual meetings or exercising voting rights, some investors secure a large ownership stake in the company and use that leverage to attempt to guide the direction of management. In this assignment, you are taking on the role of an educated investor (which you now are) who owns a “significant” number of shares in Salesforce.com. You are writing an open letter to the Board of Directors with your suggestions for change. The letter may be positive or negative in tone, but the purpose is to highlight key financial data and urge management to take certain actions. Your letter must clearly state your reasons for reaching out to the Board, your rationale for buying the stock, and your recommendations for changes going for JWI 531: Financial Management II Assignment 3 © Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University. This course guide is subject to change based on the needs of the class. JWI 531 – Assignment 3 (1184) Page 2 of 3 • Additional valuation and financial data are available on the Morningstar website, at http://www.morningstar.com/stocks/XNYS/CRM/quote.html • You should also use the Financial Statement Analysis Checklist and the Value Investing and Growth Investing Checklist provided in your online course Use the prompts below to help you write your letter: 1. Begin with a brief recap of your reasons for buying the stock. • Explain why you consider Salesforce.com to be a value stock or a growth stock. Support your position with reference to at least two categories from the Value Investing Checklist and two categories from the Growth Investing Checklist 2. Summarize key product-specific metrics (see Morningstar Appendix), noting: • What the ratios (EPS, EBITDA, ROE, ROIC and RONIC) in the Morningstar and Annual Report show • What ratios need to improve and why • What Salesforce.com most profitable products and services are • Which products or services management should increase or reduce investment in and why (be sure to consider market competition and risk in your comments). 3. Conclude your letter with an explanation of your opinion about the company. based on what you have learned about economic moats and your analysis of values, growth and profitability of Salesforce.com, • Is Salesforce.com a “great moat” company, a “good moat” company, or is it time to divest? Why did you come to this conclusion? Submission Requirements • Assignment is written in the form of an “open letter.” Include the date, your name, etc. and address it to your JWI 531 professor, who will act as the Board Member accepting yourletter • Submitted in MS Word format, and letter is no longer than 5 double-spaced pages (12 pt font) • Written in appropriate business style, well formatted, and grammatically correct • Make use of charts and tables where possible, to make it easy to draw readers’ attention to the most important numbers • Wrap up with a strong closing statement that summarizes your view of the future forSalesforce.com JWI 531: Financial Management II Assignment 3 © Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University. This course guide is subject to change based on the needs of the class. JWI 531 – Assignment 3 (1184) Page 3 of 3 RUBRIC: Assignment 3 CRITERIA Unsatisfactory Low Pass Pass High Pass Honors 1. Writing and Organization Weight: 20% Has significant grammatical errors, does not follow required format and/or omits key components Has minor grammatical errors, is awkwardly written or lacking clear organization Assignment is free from grammatical errors and follows required format; material is presented in logical style with clear transitions Plus, makes use of varied writing elements such as full paragraphs, bullets and charts Plus, is written in a style that demonstrates commitment and passion of the author and delivers a compelling and inspiring message 2. Analysis of Financial Ratios and Key Metrics Weight: 40% Accurate and well- reasoned analysis of 1 or fewer of the five required ratios Accurate and well-reasoned analysis of 2 of the five required ratios Accurate and well-reasoned analysis of 3 of the five required ratios Accurate and well-reasoned analysis of 4 of the five required ratios Accurate and well-reasoned analysis of all of the five required ratios 3. Product Strategy Recommendation Weight: 20% Strategic recommendat ion is missing or not persuasive Portions of the strategic plan are persuasive The strategic plan is reasonable but lacks support for some or all recommendations Recommendations are clear, reasonable and wellsupported The strategic plan is compelling with clear and new insights into ways to strengthen the moat 4. Investment Recommendation Weight: 20% Investment recommendat ion is missing or unclear Investment recommendation is clear, but lacks sufficient summary rationale Investment recommendation is clear and includes supporting rationale Plus, presents a clear position on which sort of investor (value or growth) should be most attracted to the stock Plus, includes additional consideration of market risks or opportunities that could impact performance