Overview, Techniques, Ratios and LimitationsCarlos B. Stei.docx

Overview, Techniques, Ratios and Limitations
Carlos B. Steinblock · [email protected]
Financial Reporting & Analysis
Recap
● The Income Statement
○ Net Sales · CoGS · Gross Profit
○ Operating Expense · Operating Profit
○ Other Income (Expense) · Equity Earnings
○ EBIT & Effective Tax Rate
○ Special Items · Net Earnings · EPS ·
Comprehensive Income
Agenda
● The Cash Flow Statement
○ ‘Cash is King’
○ Basic Principles - classification
○ Direct vs Indirect Method
○ Calculating CF · some examples
○ Analyzing CF
Cash Flow Statement

● reports the cash generated and spent during a specific
period of time (e.g., a month, quarter, or year). The
statement of cash flows acts as a bridge between the
income statement and balance sheet by showing how
money moved in and out of the business.
...https://corporatefinanceinstitute.com/resources/knowledge/acc
ounting/statement-of-cash-flows/
Cash is King
Purposes of the CF Statement
The statement of cash flows assists investors, creditors,
and others in
assessing such factors as:
● The company’s ability to generate positive cash flows in
future periods
● The company’s ability to meet its obligations and to pay
dividends
● The company’s need for external financing
● Reasons for differences between the amount of net income
and the related net cash
flows from operating activities
● Both the cash and noncash aspects of the company’s
investment and financing
transactions for the period
● Causes of the change in the amount of cash and cash
equivalents between the

beginning and the end of the accounting period.
Basic Principle
The statement of cash flows is, in reality, another way of
presenting the balance sheet of a company; except in the
case of a balance sheet, which shows amounts at the end
of the accounting period, the statement of cash flows
shows the changes in the balance sheet accounts between
periods.
Basic Principle
The change in cash between periods is explained by the
changes in all the other balance sheet accounts, and each
balance sheet account is related either to an operating activity
(e.g., accounts receivable, inventory, accounts payable, net
income in the retained earnings account), an investing activity
(e.g., purchase or sale of property, plant, and equipment), or a
financing activity (e.g., borrowing and repaying debt).
CF from operating activities
CF from investing activities

CF from financing activities
CF Statement
Exercise
Exercise
Exercise
Direct vs Indirect Method
Firms may use one of two methods prescribed by the Financial
Accounting
Standards Board (FASB) for calculating and presenting cash
flow from
operating activities: the direct method and the indirect method.
The direct
method shows cash collections from customers, interest and
dividends
collected, other operating cash receipts, cash paid to suppliers
and
employees, interest paid, taxes paid, and other operating cash
payments.
The indirect method starts with net income and adjusts for
deferrals;

accruals; noncash items, such as depreciation and amortization;
and
nonoperating items, such as gains and losses on asset sales.
Direct vs
Indirect Method
According to Accounting
Trends and Techniques,
495 firms out of 500 used
the indirect method in 2010.
The indirect Method
The indirect Method · the SAGE example
Cash Flow Quality & Analysis
Which company is in the stronger cash flow position?
Exercise
EBITDA, CF, FCF, FCFE & FCFF

http://www.youtube.com/watch?v=sTYjXC4Udrc
HP Inc.
HP Inc.
Let’s do some Analysis
Exercise
Exercise

● The Balance Sheet
○ Liabilities
→ Current
→ Accrued Liabilities / Deferred Tax Liabilities
→ Long Term Debt
○ Equity
Recap
Agenda
● The Income Statement
○ Net Sales · CoGS · Gross Profit
○ Operating Expense · Operating Profit
○ Other Income (Expense) · Equity Earnings
○ EBIT & Effective Tax Rate
○ Special Items · Net Earnings · EPS ·
Comprehensive Income
Common Size Income Statement · an Illustration

Net Sales
Understanding and assessing the Quality of the
Revenue figure.
1. What about Sales Returns & Sales Allowances?
Not to be confused with EPD! (hits the financial expense line)
2. What triggers difference from period to period?
Quantities or Price difference or even worse… Product Mix!
Costs of Goods Sold · (also called Cost of Sales)
● affected by the cost flow assumption used to value
inventory, the applied accounting method will make a
difference:
→ FIFO
→ LIFO
→ average cost
Gross Profit
● The Difference between the Net Sales and CoGS or
Cost of Sales is the Gross Profit.
...whilst...
● The Relationship between the two mentioned before
result in the Gross Profit Margin.
Discuss how that makes a substantial Difference!

Gross Profit
· an Illustration ·
Operating Expense
● usually called SG&A (Selling, General & Administrative)
these would represent:
○ They include salaries, rent, insurance, utilities,
supplies, and sometimes depreciation and
advertising expense.
Operating Expense
● Impairment charges are the expenses recognized to
record a decline in value of a long-term asset.
Impairment charges may occur in connection with
goodwill or other intangible assets (SW) but can also be
recognized when asset values of property, plant, and
equipment decrease below book value.
Operating Profit · (also called EBIT)
● The Difference between the Net Sales and Expenses
associated with the usual activity is the Operating Profit.
...whilst...

● The Relationship between the two mentioned before
result in the Operating Profit Margin.
Other Income (Expense)
This category includes revenues and costs other than from
operations, such as dividend and interest income, interest
expense,
gains (losses) from investments, equity earnings (losses), and
gains
(losses) from the sale of fixed assets. The relative amounts will
be
dependent on the level of investments and the amount of debt
outstanding, as well as the prevailing level of interest rates.
Equity Earnings
Questions regarding use of cost or equity come into play for
stock investments of less than
50%, where consolidated financial statements are not prepared.
Accounting rules permit two
different methods to account for stock investments of less than
50%. The equity method
allows the investor proportionate recognition of the investee’s
net income, irrespective of the
payment or nonpayment of cash dividends; under the cost
method, the investor recognizes
investment income only to the extent of any cash dividends
received. At issue in the choice of
accounting methods is whether the investor exercises control
over the investee. The equity
method of accounting should be used when the investor can
exercise significant influence

over the investee’s operating and financing policies. No
problem exists where there is
ownership of 50% or more because, clearly, one company can
control the other.
EBIT & effective Tax Rate
● Earnings before Interest & Tax
● Tax Avoidance is not Tax Evasion
● Effective Tax Rate = Income Taxes / EBIT
Special Items
● Discontinued Operations
● Extraordinary Items · Business relevant events
● One Timer
Not likely to happen in the future again
Net Earnings · EPS · Comprehensive Income
● Net Earnings is the final calculated figure in the Income
Statement (after
Interest & Tax but before Dividends).
● Net Profit Margin is the relationship between Net Earnings
and Net Sales.
● EPS = Net Earnings available to common stockholders for the

period
divided by the average number of common stock shares
outstanding.
● Other Comprehensive Income: foreign currency translation
effects,
unrealized gains and losses, additional pension liabilities, and
cash flow
hedges.
Other Comprehensive Income · an Illustration
The Statement of Stockholders’ Equity
It details the transactions that affect the balance sheet
equity accounts during an accounting period. Changes to
the common stock and additional paid-in capital accounts
are due to employees exercising their stock options.
Exercise:
Exercise: Let’s pick randomly 3 mayor listed Corps
● Let’s take a look at their Income Statement and analyze
● Discuss and draw conclusions on how they performed
for the periods displayed.

● What have we learnt?
HP Inc. & subsidiaries
Instructions
1) Compute the following for 2018 and 2017. (Round to one
decimal place.)
a) Working capital
b) Current ratio
c) Quick ratio
2) Comment on the trends in the liquidity measures and state
whether the Corporation appears to be
able to satisfy its liabilities at the end of 2018.
3) Compute the percentage changes for 2018 in the amounts of
net sales and net income. (Round to
one-tenth of 1 percent.)
4) Compute the following for 2018 and 2019. (Round to one-
tenth of 1 percent. For items c and d, use the
year-end amounts stated above as substitutes for average assets
and average stockholders’ equity.)
a) Gross profit rate
b) Net income as a percentage of sales
c) Return on assets
d) Return on stockholders’ equity
5) Comment on the trends in the profitability measures

computed in parts 3.) and 4.)
Income Statement, Balance Sheet & Ratios
Agenda
● Hand shaking · introduce to each other
● What is accountable? Who is the Accounting for?
● Accounting Equation & Dual Aspect Principle
● On your tracks · Open logbook
Financial Statements
Let’s collect some words or tags you connect with Accounting!
Financial Statements
★ Sales
★ Balance Sheet
★ Revenue

★ Equity
★ Expenses
★ Shareholder
★ Assets
★ P&L
★ Inventories
★ Liabilities
★ Tax
★ EBIT
★ Cash ★ Margin
★ EPS
★ Income
★ Accruals
Why do we need Accounting and FS?
● Why do we conduct business in the first place?
● How long should it last?
● Who do we do accounting for?
● What is Materiality?
● What are the GAAP?
● What is ‘creative accounting’?

Financial Statements are designed for Analysis
● A standard, but technical language is established to
protect the interests mainly of investors and creditors
● The goal of accounting information is to assist economic
decision makers with insight on key relationships and
trends
… but who are these decision makers and what do FS tell them
and what not?
Financial Statements are designed for Analysis
Financial Statements are within the Annual Report
● Let’s take a look before we get started with the basic
stuff.
Home Depot Annual Report
https://ir.homedepot.com/~/media/Files/H/HomeDepot-
IR/2019_Proxy_Updates/HDAnnualReport2018.pdf
Question · take your time and discuss
● Your successful company has been growing organically for
several years. Your
partners and Board of Directors believe that a merger or an

acquisition could
benefit faster growth and market dominance with new products
and services
easy to fit into your portfolio. There are 3 smaller competitors
that would be up
for sale for a decent price. Who would you engage to take the
first shot at
their financials (before engaging in Due Diligence)?
○ A senior auditor from Big Four
○ A senior accounting & tax expert
○ A senior financial analyst / controller with industry insight
The Dual Aspect Principle
● Things of Value
○ Checking Account: € 5.500,-
○ Savings Account: € 15.000,-
○ Stock (curr. val.): € 29.500,-
○ Total: € 50.000,-
● Amounts Owed
○ Personal loan: € 20.000,-
○ Total debt: € 20.000,-
We are the new lucky owners of a home for 130.000,- EUR
● Things of Value

○ Stock (curr. val.): € 14.500,-
○ House: €130.000,-
○ Total: €150.000,-
● Amounts Owed
○ Mortgage: €100.000,-
○ Total debt: €120.000,-
Let’s introduce the terms ASSETS, LIABILITIES & EQUITY
What is our Equity? In other words, what cannot be claimed
from us?
● ASSETS
○ Stock (curr. val.): € 14.500,-
○ House: €130.000,-
○ Total Assets: €150.000,-
● LIABILITIES
○ Mortgage: €100.000,-
○ Owner’s Equity: € 30.000,-
Total Equities: €150.000,-
● ASSETS
○ Stock (curr. val.): € 29.500,-
○ Total Assets: € 50.000,-

● LIABILITIES
○ Total Equities: € 50.000,-
before
after
● ASSETS
○ Stock (curr. val.): € 14.500,-
○ House: €130.000,-
○ Total Assets: €150.000,-
● LIABILITIES
○ Mortgage: €100.000,-
Total Equities: €150.000,-
● ASSETS
○ Stock (curr. val.): € 29.500,-
○ Total Assets: € 50.000,-
● LIABILITIES

○ Total Equities: € 50.000,-
before
after
We just discovered the Balance Sheet!
● What have we learnt? (your observations)
○ even though a substantial change in assets / liabilities we are
not
wealthier → owner’s equity is still 30k€
○ Neither creditors or owners can have claims in excess of total
assets
value: €150.000,- = €120.000,- + € 30.000,- → BALANCE!
The fact that ASSETS equal EQUITIES is the basic principle of
all accounting
theory and practice. It is often referred to as the basic
accounting equation or the
Dual Aspect Principle. All business transactions are recorded in
terms of their dual

effect on assets and equities.
● Clients · Purpose
● Reports · Layout types
● Standards
● Editor
● Area of Business
● Time Lapse
Sourcing
● Let’s understand the differences between
Management & Financial or Statutory Accounting?
● Clients · Purpose
● Reports · Layout types
● Standards
● Editor
● Area of Business
● Time Lapse
Sourcing
● Let’s understand the differences between
Management & Financial or Statutory Accounting?
● Street (public)
● P&L, BS, CF, etc
● GAAP
● CAO, Inv Rel
● Legal entity, Corp
● yearly, quarterly

● Management
● customized
● Internal Handbook
● Controller
● Division
● monthly, quarterly
Sourcing
● What information repositories does a company have?
The higher the quality of the source data, the more reliable
accounting will be
● Contracts: MSA, SLA, CL, OL, etc
● Purchase Orders
● Invoices (Inbound - Outbound)
● Inventories - scrap
● Operations reports (production)
● QA reports (rejects, reworks)
Sourcing
● What information repositories does a company have?
● Benchmarks (suppliers, competitors)
● Make or Buy comparatives
● Sales reports
● Accruals, Provisions, Reserves
● Capitalization, CapEx
● Tax, Interest Rate, Leverage, ...

PAST PRESENT FUTURE
Business size matters
https://ir.homedepot.com/~/media/Files/H/HomeDepot-
IR/2019_Proxy_Updates/HDAnnualReport2018.pdf
● Are we talking …
○ Family Business (1-4 employees)?
○ Start Up (5-15 employees, Seed Capital, Massive Growth)?
○ SME (3-1000 employees)?
○ Big LLC?
○ Public or listed Company?
● What information repositories (or MIS) do we have?
● How many areas of responsibility do we have?
○ Lines of Business
○ Cost Centers
○ Cost Bearer
○ Cost Types

○ Key Accounts
Cultural differences and locations matter
● Are we talking … ‘Management Accounting’, ‘Kosten und
Leistungsrechnung’ o ‘contabilidad analítica’?
What needs to be disclosed in the Financial Statements?
● Let’s discuss some examples
Checking your knowledge!
● Explain the nature and general purpose of financial statements
● Explain how GAAP are important for an understanding of
financial
statements
● Demonstrate how certain business transactions affect the
elements
of the accounting equation: Assets = Liabilities + Owners ’
Equity
● Explain how the statement of financial position, often
referred to as
the balance sheet, is an expansion of the basic accounting
equation

○ Assessing Financial Condition
○ Assets
→ Current
→ Fixed
→ Depreciation
● Accounting Choices
Recap
Agenda
○ Liabilities
→ Current
→ Accrued Liabilities / Deferred Tax Liabilities
→ Long Term Debt
○ Equity
Re-assessing the Basic Accounting Equation

● What does the right side of the Balance Sheet stand for?
● What is the cheapest source of funds for a company?
● How is that different between commodities,
manufacturing, merchandising and services?
discuss
Classifying Liabilities
1. Current liabilities (short-term liabilities) are liabilities
that are due and payable within one year.
2. Non-current liabilities (long-term liabilities) are
liabilities that are due after a year or more.
3. Contingent liabilities are liabilities that may or may
not arise, depending on a certain event.
Accounts Payable
● Arise from the credit extended by supplier for the
purchase of goods and services.
● Increase or decrease depending on the credit policies
available to the firm from its vendors and the business
cycle itself. .
● What could a significant change mean?

Short Term Debt and Current Maturities of LT Debt
● usually called notes payable represent liabilities in form
of promissory notes or renewable lines of credit.
● When longer term debt, like bonds, loans and
mortgages have portions of the principal due in the
upcoming year, these are reclassified into current from
long term.
Accrued Liabilities
● Result from the recognition of expense prior to the
actual payment.
● examples: semi-annual installment on loans, salaries,
rent, insurance, taxes, etc.
● some special accounts are called also Reserve Accounts
which are used for warranties, sales return or
restructuring charges.
Unearned Revenue or Deferred Credits
● Unlike looking to pay in arrears as much as possible
another form to get credit is a prepayment for future
delivery or upcoming performance. Unless Revenue can
be fully recognized any cash in excess of Revenue in the
Income Statement needs to be recorded as a liability.

Deferred Taxes
● Accounting choices can lead to a ‘temporary difference’
between filed financial statements and tax filings.
● There are also permanent differences for expenses
recorded for financial reporting, but not accepted as
deducible by the IRS or Tax Authority.
Long Term Debt or Liabilities
● Notes payable (loans & mortgages)
● Debentures (unsecured debt backed by credit rating)
● Bonds Payable
● Convertible Debt
● Long Term Warranties (non-monetary → goods/services)
Capital Lease Obligations
● Ownership transferred to the lessee
● Contains bargain purchase option
● has a lease term ≥ 75% leased property’s economic life
● minimum lease payments with present value ≥ 90% of
property’s fair value.
Pensions & Post-Retirement Benefits
● Promises made by the employers to employees, due
upon retirement.

Commitments & Contingencies
● Commitments refer to contractual arrangements that will have
a
significant financial impact on the company in the future.
● These section may appear with no value, but notes have to
disclose the contractual agreement: example operating lease.
● Contingencies stand for potential liabilities. Probably no
value
can be determined, but in the notes the firm has to disclose a
lawsuit for example.
● Let’s take a look at their liabilities and classify them by
type.
● Discuss and draw conclusions on how they fund their
business.
HP Inc. and subsidiaries
After having classified liabilities let’s look @ each type
critically

Stockholders’ Equity
● Common Stock · par value or stated value
● Additional Paid In Capital (delta market - par value)
● Retained Earnings
● Other Equity Accounts
○ Preferred Stock
○ accumulated other comprehensive income/(expense): 1.)
unrealized G/L for
marketable securities 2.) Pensions 3.) Derivatives 4.) FX-rate
○ Treasury Stock
Liabilities · Digression
● Discuss Operating Leases vs Non Operating Leases
● Discuss Access over Ownership on the liabilities side
● Discuss Income Tax effect from Debt or Equity
Financial Statement Analysis

Recap
● What is accountable? Who is the Accounting for?
● Accounting Equation & Dual Aspect Principle
● On your tracks · Open logbook
Agenda
○ Assessing Financial Condition
○ Assets
→ Current
→ Fixed
→ Depreciation
● Accounting Choices
Financial Condition
● Analogy to Sports - are we talking power athletes or
endurance athletes?
● Sugar (carbohydrate) or Fat?
discuss
Financial Condition

● Analogy to Sports - are we talking power athletes or
endurance athletes?
● Sugar (carbohydrate) or Fat?
● Short Term or Long Term Position?
● Liquidity or Solvency?
Asset · Definition
● an asset is any resource owned by the business,
valuated in money terms. Anything tangible or intangible
that can be owned or controlled to produce value and
that is held by a company to produce positive economic
value or to be enjoyed is an asset.
https://en.wikipedia.org/wiki/Asset
Liquidity · Definition
● Liquidity describes the degree to which an asset or
security can be quickly bought or sold in the market at a
price reflecting its intrinsic value. In other words: the
ease of converting it to cash.
https://www.investopedia.com/terms/l/liquidity.asp
Classifying Assets
...https://corporatefinanceinstitute.com/resources/knowledge/acc

ounting/types-of-assets/
● Let’s take a look at their assets and classify them by
type.
● Discuss and draw conclusions on their financial
condition.
Asset classification by liquidity
After having checked financial condition let’s look @ each type
critically
Asset classification by liquidity
Quality ↯
Quality ↯
Quality ↯
What is this?
What is this?
What is this?
___!

https://www.investopedia.com/terms/o/othercurrentassets.asp
https://www.myaccountingcourse.com/accounting-
dictionary/goodwill
● If solvency stands for the possession of assets in excess
of liabilities; ability to pay one's debts, why are we
making a sound distinction?
○ liquidity gauges how quickly things can be turned into
currency
○ solvency looks more to what degree equity and long term
liabilities back the fixed assets
Liquidity vs Solvency
Current assets
● We have already discussed their quality
(obsolescence, storage conditions, security, …)
● Discuss good examples of ASSETS which are fixed
for some, whilst current for other Biz by definition
→ what can we conclude?
● What are toxic assets and how can we detect them?
Accounts Receivable
● How can we extract good information to analyze the
business’ financial condition?

● Which potential risks could hide behind this figure?
○ How to determine ageing?
○ Allowance for doubtful accounts?
Inventories
● Name a few companies whose business model make up
for completely different inventories!
● How would the above value their inventories? What
information should they disclose?
● Which Inventory Accounting methods do you know?
Fixed Assets · Digression
● Discuss Operating Assets vs Non Operating Assets
● Discuss Access over Ownership
● Market/Competition Strategy vs Financial Strategy
Depreciation & Amortization · Discuss
● Depreciation Methods
● Operations vs Accounting vs Tax Authorities
● Depreciation · Leasing · Renting · Leaseback · Refurbishment

Checking your knowledge!
● Explain the nature and general purpose of financial statements
● Explain how GAAP are important for an understanding of
financial
statements
● Demonstrate how certain business transactions affect the
elements
of the accounting equation: Assets = Liabilities + Owners ’
Equity
● Explain how the statement of financial position, often
referred to as
the balance sheet, is an expansion of the basic accounting
equation
MCO103 · Financial Reporting & Analysis Task brief &
rubrics
Case Study for Nvidia · NYSE:NVDA · SEC 10-K Financial
Statements
Nvidia is a strong and well-known semiconductor manufacturer.
After a failed merger with arm Corp for close to 40 billion
USD, the company is heavily and
strategically thinking about its next steps. Assume that the
board meets after 2021 (January 2022) close and decides to

invest in several acquisitions (20 billion
USD) to make their digital twin business area stronger and
market leading. Nvidia is already strong in AI chip production
(ASIC) and Graphic cards, both corner
stones of the digital twin business they are striving for.
Read the articles enclosed (in the links) to get a better picture
of what Nvidia is aiming at and use that information to make an
educated decision about how to
time, structure and finance future acquisitions given the current
stock market (and general economic outlook) situation.
As you can see above NVDA was selling for well below 100$
per share until COVID-19 situation was under control. The
march 2020 COVID-19 hit in fact wasn’t
that severe for Nvidia, like for many other corporations. In
Spring 2021 with the announcement of the arm M&A the market
reacted positively, but ever since
dropping the M&A plans stock price has been heavily declining.
Not even the excellent results from 2021 where able to halt
erosion. What are Nvidia’s options
under the current scenario?
• Read the enclosed articles and financial statements

• Identify the main business areas Nvidia is on the market (you
can find in the FS 2021)
• Which risks has the board of directors identified for the near
future of the corporation?
• From your understanding and reading, which of the Nvidia
assets could hide substantial risks (from a valuation
perspective) if any? Explain.
• Look at their capital structure, compute the leverage, compare
with semiconductor industry, and analyze their options to
finance its 20 billion target
acquisitions.
• Will future earnings sustain the desired aggressive growth and
secure their market dominance in the near future?
Reading materials:
https://www.arm.com/
https://www.twi-global.com/technical-knowledge/faqs/what-is-
digital-twin
https://aecmag.com/digital-twin/nvidia-puts-spotlight-on-
omniverse-digital-twin-applications/
https://d18rn0p25nwr6d.cloudfront.net/CIK-
0001045810/ca04d49f-caab-436f-9e6f-e8493c8e8515.pdf
Formalities:

• Wordcount: 2500
• Cover, Table of Contents, References and Appendix are
excluded of the total wordcount.
• Font: Arial 12,5 pts.
• Text alignment: Justified.
• The in-text References and the Bibliography must be in
Harvard’s citation style.
Submission: Week 5 – November 6th (Sunday) @ 23.59 – Via
Moodle (Turnitin).
Weight: This task is a 40% of your total grade for this subject.
It assesses the following learning outcomes:
• Outcome 1: Understand the Corporation in its context and
pictured by regular Financial Statements (compulsory by SEC)
• Outcome 2: Find the relevant information for a detailed
analysis on any performance measure like profitability,
liquidity, solvency, leverage, …
• Outcome 3: Leverage Financial Reporting information to make
educated business decisions to deleverage, M&A, downsize, or
else…
• Outcome 4: Understand the balance sheet structure and the
inherent risk (valuation) of different asset categories.
https://www.arm.com/

https://www.twi-global.com/technical-knowledge/faqs/what-is-
digital-twin
https://aecmag.com/digital-twin/nvidia-puts-spotlight-on-
omniverse-digital-twin-applications/
https://d18rn0p25nwr6d.cloudfront.net/CIK-
0001045810/ca04d49f-caab-436f-9e6f-e8493c8e8515.pdf
Rubrics for MCO103 Case Study
Learning Descriptors Fail Below 70% Fair 70-79 % Good 80-
89% Exceptional 90-100%
Purpose &
Understanding
KNOWLEDGE &
UNDERSTANDING
15%
Very poor coverage of central
purpose, goals, research
questions or arguments with
little relevant information
evident. Virtually no evidence of
understanding or focus.
Minimal understanding of

purpose of the study; factual
errors evident. Gaps in
knowledge and superficial
understanding. A few lines of
relevant material.
Reasonable understanding and
clearly identifies the purpose,
goals, research questions or
argument.
Reflect partial achievement of
learning outcomes.
A sound grasp of, and clearly
identifies, the purpose, goals,
research questions or argument.
Some wider study beyond the
classroom content shown.
Effectively describes and explains

the central purpose, arguments,
research questions, or goals of
the project; explanation is
focused, detailed and
compelling. Recognition of
alternative forms of evidence
beyond that supplied in the
classroom.
Content
KNOWLEDGE &
UNDERSTANDING
15%
Content is unclear, inaccurate
and/or incomplete. Brief and
irrelevant. Descriptive. Only
personal views offered.
Unsubstantiated and does

not support the purpose,
argument or goals of the
project. Reader gains no
insight through the content
of the project.
Limited content that does not
really support the purpose of
the report. Very poor
coverage.
Displays only rudimentary
knowledge of the content
area. Reader gains few if any
insights
Presents some information
that adequately supports
the central purpose,
arguments, goals, or

research questions of the
project. Although parts
missing, it demonstrates a
level of partially proficient
area. Reader gains some
insights.
Presents clear and
appropriate information
that adequately supports
the central purpose,
arguments, goals or research
questions of the project.
Demonstrates satisfactory
area. Reader gains proficient
insights.

Presents balanced, significant
and valid information that
clearly and convincingly
supports the central purpose,
arguments, research
questions or goals of the
project. Demonstrates in-
depth and specialised
area. The reader gains
important insights
Organization
COMMUNICATION
10%
Information/content is not
logically organized or
presented.

Topics/paragraphs are
frequently disjointed and fail
to make sense together.
Reader cannot identify a line
of reasoning and loses
interest.
Information/content is not, at
times, logically organized or
presented. Topics/paragraphs
are frequently disjointed
which makes the content
hard to follow. The reader
finds it hard to understand
the flow of the report.
Information/content is
presented in a reasonable
sequence.

Topic/paragraph transition is
unclear in places with
linkages for the most part.
Reader can generally
understand and follow the
line of reasoning, although
work needed to be
proficiently organized.
presented in a clear and
understandable sequence.
Topic/paragraph transition is
good with clear linkages
between sections and
arguments. Reader can
understand and follow the
line of reasoning.

presented in a logical,
interesting and effective
sequence. Topics and
arguments flow smoothly
and coherently from one to
another and are clearly
linked.
Reader can easily follow
the line of reasoning and
enjoyed reading the
report.
Style & Tone
COMMUNICATION
2,5%
Writing is poor, unclear and
unengaging, and the reader

finds it difficult to read and
maintain interest. Tone is
not professional or suitable
for an academic research
Writing is unengaging and
reader finds it difficult to
maintain interest. Tone is not
consistently professional or
suitable for an academic
research project. Work
Writing is usually engaging
and keeps the reader’s
attention. Tone is generally
appropriate for an academic
research project, although a
clearer and more
Writing style and tone is
generally good and sustains

interest throughout. Tone is
professional and appropriate
project.
Writing is compelling and
sustains interest throughout.
Tone is consistently
professional and appropriate
project.
project. A reorganization
and rewrite is needed.
needed on academic writing
style.
professional style and tone is
needed.

Use of References
COMMUNICATION
2,5%
Little or no evidence of
reference sources in the
report. Content not
supported and based on
unsubstantiated views.
Most references are from
sources that are not peer-
reviewed or professional,
and have uncertain
reliability. Few if any
appropriate citations are
provided. Reader doubts the
validity of much of the

material.
Professionally legitimate
references are generally
used. Fair citations are
presented in most cases.
Some of the
information/content/evidence
comes from sources that are
reliable, but more academic
sources needed to be
convincing.
Professionally and
academically legitimate
references are used. Clear
and accurate citations are
presented in most cases. The
majority of the

information/content/evidenc
e comes from sources that
are reliable.
Presents compelling evidence
from professionally and
academically legitimate
sources. Attribution is clear
and accurate. References are
75% from primarily peer-
reviewed professional
journals or other approved
sources.
Formatting
COMMUNICATION
2,5%
Research project exhibits
no formatting, or

frequent and significant
errors in Harvard
formatting.
There are too many errors in
the Harvard formatting to be
acceptable as a partially
proficient piece.
Harvard formatting is
employed in the research
project with minor errors. A
review and rework of format
and style of referencing in
text and in the bibliography
is needed.
Harvard formatting is used
accurately and consistently

throughout the research
project, although some
issues are apparent as the
reader is unable to find
sources.
Harvard formatting is used
accurately and consistently
throughout the research
project. Accurate hyperlinks
are included where required,
making it easy for readers to
review sources.
Written Communication
Skills
COMMUNICATION
2,5%
The written project exhibits

multiple errors in grammar,
sentence structure and/or
spelling. Inadequate writing
skills (e.g., weaknesses in
language facility and
mechanics) hinder
readability and contribute to
an ineffective research
project.
The written project exhibits
errors in grammar,
punctuation and spelling.
The written project comes
across as untidy and not
properly checked for
mistakes. Errors present in
written communication
make readability frustrating.

Written research project
displays good word choice,
language conventions and
mechanics with a few minor
errors in spelling, grammar,
sentence structure and/or
punctuation. Errors do not
represent a major distraction
or obscure meaning.
Readability of the project is
good due to the clarity of
language used. Grammar,
spelling and punctuation is
without error.
Spelling and grammar
thoroughly checked.

Readability of the project is
enhanced by facility in
language use/word choice.
Excellent mechanics and
syntactic variety. Uses
language conventions
effectively (e.g., spelling,
punctuation, sentence
structure, paragraphing,
grammar, etc.).
Analytical / Critical
Thinking Skills
CRITICAL THINKING
25%
Research problem, concept or
idea is not clearly articulated,
or its component elements
are not identified or

described. Research
information is poorly
organized, categorized
and/or not examined;
research information is often
inaccurate or incomplete.
Presents little if any analysis
or interpretation;
Research problem, concept
or idea is not clearly
articulated at times and
confusing. Research
information is badly
organized, categorized,
and/or only superficially
examined; research
information is often
incomplete. Presents limited

analysis or interpretation;
inaccurately and/or
Adequately identifies and
describes (or sketches out)
the research problem,
concept or idea and its
components. Gathers and
examines information
relating to the research
problem, concept or idea;
presents and appraises
research information with
some minor inconsistencies,
irrelevancies or omissions.
Formulates a clear
description of the research
problem, concept or idea,
and specifies major elements

to be examined. Selects
information appropriate to
addressing the research
problem, concept or idea;
accurately and appropriately
analyses and interprets
relevant research
information. Effectively
Effectively formulates a clear
description of the research
problem, concept or idea,
and specifies major elements
to be examined. Selects and
prioritizes information
appropriate to addressing
the research problem,
concept, or idea; accurately
and appropriately analyzes

and interprets relevant
research information.
inaccurately and/or
inappropriately applies
research methods,
techniques, models,
frameworks and/or theories
to the analysis. Presents few
solutions or conclusions;
solutions or conclusions are
often not well supported, are
inaccurate and/or
inconsistent, and are
presented in a vague or
rudimentary manner.
inappropriately applies

research methods,
techniques, models,
to the analysis. Presents
some solutions or
conclusions but they are
often not well supported, or
logical.
Generally applies
appropriate research
methods, techniques,
models, frameworks and/or
theories although with
inaccuracies. Outlines
solutions or conclusions that
are somewhat logical and
consistent with the analysis
and evidence; identifies

and/or lists solutions or
conclusions although not
always clearly.
applies appropriate research
methods, techniques,
models, frameworks and/or
theories in developing and
justifying multiple solutions
or conclusions; solutions or
conclusions are coherent,
well supported and
complete.
Precisely and effectively
applies appropriate research
methods, employs advanced
skills to conduct research.
Uses techniques, models,

in developing and justifying
multiple solutions or
conclusions; solutions or
conclusions are insightful,
coherent, well supported,
logically consistent and
complete. Displays a mastery
of complex and specialized
areas.
Integration Skills
APPLICATION &
EVALUATION
25%
Shows little ability to employ
theory and practice across

the functional areas of
business in the assessment
of issues relating to the
research problem, concept,
or idea. Does not recognize
or correctly identify cross-
functional organizational
issues relevant to the
research problem, concept
or idea. Does not
adequately evaluate the
or idea in light of relevant
principles, theories and
practices across the
business functional areas.
Few if any solutions,
recommendations for action,

or conclusions are
presented, and/or they are
not appropriately justified
or supported.
Shows some ability to employ
theory and practice across the
functional areas of business in
the assessment of issues
relating to the research
problem, concept or idea.
Recognizes organizational
issues relevant to the research
problem, concept or idea but
does not show
understanding. Does not
adequately evaluate the
research problem, concept or

idea in light of relevant
practices across the business
functional areas. Some
solutions offered but difficult
to understand.
Recommendations for action,
or conclusions are presented,
but they are often not well
supported, or logical.
Exhibits application of
functional areas of business
to the analysis of the

or idea. With some
exceptions, outlines and
describes (or sketches out)
some cross- functional
organizational issues that
are relevant to the research
Adequately identifies and
describes (or summarizes)
solutions, recommendations
for action, or conclusions
that are, for the most part,
appropriate, but which need
to be more aligned with
principles and concepts in
the functional areas of
business.

Demonstrates an ability to
integrate and apply
or idea.
Identifies, examines and
critically evaluates important
cross- functional
organizational issues
associated with the research
Clearly justifies solutions,
recommendations for action,
or conclusions based on
analytics and an insightful

synthesis of cross-
disciplinary principles and
concepts in the functional
areas of business.
Demonstrates well-
developed ability to
integrate and apply
or idea. Effectively identifies,
examines and critically
evaluates important cross-
functional organizational
issues associated with the

research problem, concept,
or idea. Clearly and
effectively justifies solutions,
recommendations for
action, or conclusions based
on strong analytics and an
insightful synthesis of cross-
disciplinary principles and
concepts in the functional
areas of business. Can link
thinking across disciplines
and contexts.

Overview, Techniques, Ratios and LimitationsCarlos B. Stei.docx

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