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1 CASE REPORT 1 INSTRUCTIONS: Company: BIIB Biogen Inc. Review Figure 1 “Analys

by | Aug 30, 2022 | Finance | 0 comments

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CASE REPORT 1 INSTRUCTIONS: Company: BIIB Biogen Inc.
Review Figure 1 “Analysis Using Financial Statements” and explanations on the
following pages. Case Report 1 will focus on the first step, Business Strategy Analysis for the
company you have chosen this semester. Case Report 1 will consist of answers to the questions
below.
The first step is to download the most recent three years of financial statements for your
chosen company. Access your company’s “10-K” Annual Reports. Students are to submit a
report using SafeAssign before the due date. Late submissions are not accepted. The report
should have a minimum length of 3 pages and a maximum length of 5 pages (excluding tables
and appendices), single-spaced using a 12-sized font and 1 inch margins.
In Case Report 1, be sure to answer the following questions. Number the answer to each
question to clearly identify each answer. Your conclusions should be based on information
found in the Annual Reports, and perhaps additionally on recent 10-Q or 8-K forms. In an
appendix, provide summary financial statements (at a minimum, income statements and
balance sheets).
Answer the following questions in your own words and DO NOT copy verbatim from
company reports. Please write concisely – business and technical writing is always “to-thepoint”
and brief.
1. Describe your company’s primary line(s) of business, their primary products and
customers. Provide an overview of your company’s recent economic performance (over
the last 3 years).
2. Using bullet points, briefly describe the key success factors and risks associated with
your firm’s chosen competitive strategy.
3. Using bullet points, briefly list key strategic decisions taken by the company.
4. Does the firm currently have the resources and capabilities to deal with the key success
factors and risks? Explain the reasons for your answer.
5. Has the firm committed the resources to bridge the gap between its current capabilities
and the requirements to achieve its competitive advantage? Explain the reasons for your
answer.
2
6. Has the firm structured its activities (such as research and development, design,
manufacturing, marketing and distribution, and support activities) in a way that is
consistent with its competitive strategy? Explain the reasons for your answer.
7. Is the company’s competitive advantage sustainable? Are there any barriers that make
imitation of the firm’s strategy difficult? Explain the reasons for your answer.
8. Are there any potential changes in the firm’s industry structure (such as new economic
conditions, new technologies, foreign competition, changes in regulation, change in
customer requirements) that might dissipate the firm’s competitive advantage? Is the
company flexible enough to address these changes? Explain the reasons for your answer.
3
CASE COMPANY ANALYSIS / CASE PRESENTATION
Figure 1
Analysis Using Financial Statements
Financial Statements
Managers’ superior information
on business activities
Noise from estimation errors
Distortions from managers’
accounting choices
Other Public Data
Industry and firm data
Outside financial statements
Business Application Context
Credit analysis
Securities analysis
Mergers and acquisitions analysis
Debt/Dividend analysis
Corporate communication
strategy analysis
General business analysis
ANALYSIS TOOLS
Business Strategy Analysis
General performance
expectations through industry
analysis and competitive strategy
analysis.
Accounting Analysis
Evaluate accounting
quality by assessing
accounting policies and
estimates
Financial Analysis
Evaluate performance
using ratios and cash
flow analysis
Prospective Analysis
Make forecasts and
value business
4
Analysis Step 1: Business Strategy Analysis
The purposes of business strategy analysis is to identify key profit drivers and business
risks, and to assess the company’s profit potential at a qualitative level. Business strategy
analysis involves analyzing a firm’s industry and its strategy to create a sustainable
competitive advantage. This qualitative analysis is an essential first step because it
enables the analyst to frame the subsequent accounting and financial analysis better. For
example, identifying the key success factors and key business risks allows the
identifications of key accounting policies. Assessment of a firm’s competitive strategy
facilitates evaluating whether current profitability is sustainable. Finally, business
analysis enables the analyst to make sound assumptions in forecasting a firm’s future
performance.
Analysis Step 2: Accounting Analysis
The purposes of accounting analysis is to evaluate the degree to which a firm’s
accounting captures the underlying business reality. By identifying places where there is
accounting flexibility, and by evaluating the appropriateness of the firm’s accounting
policies and estimates, analysts can assess the degree of distortion in a firm’s accounting
numbers. Another important step in accounting analysis is to “undo” any accounting
distortions by recasting a firm’s accounting numbers to create unbiased accounting data.
Sound accounting analysis improves the reliability of conclusions from financial analysis,
the next step in financial statement analysis.
Analysis Step 3: Financial Analysis
The goal of financial analysis is to use financial data to evaluate the current and past
performance of a firm and to assess its sustainability. There are two important skills
related to financial analysis. First, the analysis should be systematic and efficient.
Second, the analysis should allow the analyst to use financial data to explore business
issues. Ratio analysis and cash flow analysis are the two commonly used financial tools.
Ratio analysis focuses on evaluating a firm’s product market performance and financial
policies; cash flow analysis focuses on a firm’s liquidity and financial flexibility.
Analysis Step 4: Prospective Analysis
Prospective analysis, which focuses on forecasting a firm’s future, is the final step in
business analysis. Two commonly used techniques in prospective analysis are financial
statement forecasting and valuation. Both these tools allow the synthesis of the insights
from business analysis, accounting analysis, and financial analysis in order to make
predictions about a firm’s future.

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