Public Budgeting
Paper details:
Case Analysis from Central Michigan University PAD 313 class:
Examine the 2010 Executive Budget Proposal at:
http://www.gpo.gov/fdsys/browse/collectionGPO.action?collectionCode=BUDGET
Examine the 2010 Legislative Budget (part of which is identified as HR 3288) (note that this budget is also attached as a pdf):
Instructions
Compare the Executive Budget Proposal to HR 3228 (also known as Public Law 111-117). Which budget document is easier to understand, ensures accountability and transparency to the public, and has more efficient and effective expenditures?
Make sure to explain your comparisons with references back to the course readings in at least five full pages of analysis.
Case analyses require each student to apply public budgeting concepts learned in this course to real-world public budgeting documents in order to diagnose effective (or ineffective) public budgeting processes.
Each case analysis should be approximately five pages in length. In order to do well on each case analyses, each student will have to apply relevant concepts from public budgeting readings and use those concepts to make the correct diagnosis on why a public budgeting process is effective or ineffective.
Please use the course book as your only source. Read Lee, Johnson, & Joyce’s Public Budgeting Systems
Chapters 7-8.
2.COSTCO’S FINANCIAL ANALYSIS
Paper details:
PROCESS OF PERFORMING FINANCIAL ANALYSIS OF A PUBLIC COMPANY
GENERAL COMPONENT—No more than one paragraph describing the history of the
company.
ACCOUNTING COMPONENT
1. Obtain the most recent ten years of annual total sales (total revenue) data from the
firm’s financial history. In addition, use just the last three years for the firms
financial statement data:
I recommend, you use abbreviated financial statements. They
can be found inNasdaq.com, Yahoo Finance, MSN Money. DO NOT GET BOGGED
DOWN IN THE DETAILED OF THE AGGREGATE FINANCIALS
a. Income Statement
b. Balance Sheet
c. Statement of Cash Flow
2. Derive common size statements for the income statement and the balance sheet NOT
the cash flow
a. Looking at trends in the data
b. Looking at variations in the same data as well as variations in the trends
ECONOMIC COMPONENT
3. How does the above relate to the industry that the company is in, i.e. need to perform
competitive economic analysis about the company:
a. Macroeconomic analysis—-is the company’s sales cyclical or counter cyclical for
example?
b. Industry analysis—market share, is the company’s sales growing, declining, or
staying the same? How is the company performing relative to its competition?
SWOT
4. STRENGTHS and WEAKNESSES should focus exclusively on the INTERNAL
CHARERISTICS OF THE FIRM’S FINANCES.
5. The OPPORTUNITIES and THREATS should focus exclusively on the EXTERNAL
CHARACTERISTICS OF THE FIRM.
FINANCE COMPONENT
The above should provide you the assumptions for deriving proformas for each of the three
financial statements (balance sheet, income statement, and statement of cash flow), and will
allow you to do your critical financial analysis of the firm. The pro forma, must be forecasted
out three years. Make sure you focus on your assumptions and explicitly show them since they
will drive your forecasted data, which will allow you to perform the critical analysis where the
company is going, based on your forecasted data.
THIS SHOULD BE THE FOCUS OF YOUR WRITTEN ANALYSIS; STATED DIFFERENTLY, THE FOCUS NEEDS TO BE ON THE FUTURE OF YOUR COMPANY AND WHERE IT IS GOING AND WHY.
THE EMPHASIS SHOULD NOT BE ON THE HISTORY OF THE COMPANY, OTHER THEN WHAT I HAVE
ASK YOU TO INCLUDE, THAT IS STATED ABOVE.
FINALLY, IN YOUR ANALYSIS YOU NEED TO JUSTIFY YOUR CONCLUSIONS, FOR EXAMPLE IS THE COMPANY IN
A STRONG FINANCIAL POSITION, BASED ON ITS EXPECTED SHARE PRICE AND MARKET CAPITALIZATION, WHY OR WHY NOT?
WHAT DIRECTION DOES THE COMPANY NEED TO GO IN EITHER CASE? These are some of the questions that need answering.
FORMAT FOR FINANCIAL ANALYSIS PAPER WRITEUP
I. Executive Summary
II. Introduction
One paragraph history of the firm
Problem Statement—–Is the firm financially viable?
III. Review of Literature
Newspapers
Periodicals
Etc.
IV. Structural Framework—Estimation of sales (revenue) forecast using your data
Regression Analysis
Alternative Estimation Techniques
Derivation of Proformas—Balance Sheet, Income Statement, Cash Flow
V. Analysis of your findings
Using your historical data from your financial statements and common
size financial statements
Using your forecast data from your pro-forma financial statements and
other information such as economic value added, free cash flow, intrinsic
value, return on invested capital to name a few examples that can help in
your analysis
VI. Summary and conclusions
10
VII. Appendix
Tables
Graphs
Other
1. Use the APA format—Full Documentation, which includes explicitly identifying
others works.
2. NO CUTTING AND PASTING
3. Title page
4. Executive Summary
5. Maximum of five (4) written pages, does not include title page, executive summary
or appendences—tables etc. go into appendix
6. Bibliography
7. Page numbers
