Financial Health Assessment of Barry Computer Company: Recommendations and Analysis

Posted on | by Linus

Financial Health Assessment: Barry Computer Company- Part 2

Note: In Week 5, you submitted Part 1 of the Module 2 Assignment. You will complete and submit Part 2 this week.

As a reminder, you will continue to act as a consultant hired by the operations director of the Barry Computer Company to do a financial analysis and comparison to the industry. You will conduct a financial ratio analysis to gain a good understanding of the company’s financial performance and will then write up an evaluation of the organization’s financial health, as well as your recommendations for how specific ratios can be improved within the next 3–5 years.

In your report, be sure to include relevant citations from the Learning Resources, the Walden Library, and/or other appropriate academic sources to support your work.

To prepare for this Assignment:

  • Return to your Module 2 Assignment Part 2 Template to complete Part 2 of your financial health assessment report.

Submit your assessment of a company’s financial performance, including the following:

Part 2: Recommendations (2–3 pages)

  • For each ratio that negatively falls outside the industry standards, develop at least one appropriate recommendation for the Barry Computer Company to improve financial      performance over time (over the next 3–5 years to meet industry standards).
  • Assess limitations of the exclusive use of ratio analysis for evaluating financial performance. In your assessment, describe any qualitative factors that could also complement the ratio      analysis and play an important role in improving financial performance.

🔴 Struggling with where to start this assignment? Follow this guide to tackle your assignment easily!

Step 1: Review Your Ratio Results From Part 1

Before writing Part 2, return to your completed ratio analysis and:

  • Identify which ratios fall below industry benchmarks

  • Group them into categories:

    • Liquidity ratios

    • Profitability ratios

    • Efficiency ratios

    • Leverage/solvency ratios

💡 Tutor tip: Only develop recommendations for ratios that negatively deviate from industry standards.

Step 2: Organize Part 2 Using Clear APA Headings

Use a professional, consultant-style structure such as:

  1. Introduction

  2. Recommendations for Improving Financial Performance

    • Liquidity Ratios

    • Profitability Ratios

    • Efficiency Ratios

    • Leverage Ratios

  3. Limitations of Ratio Analysis

  4. Role of Qualitative Factors

  5. Conclusion

This keeps your analysis logical and easy for the grader to follow.

Step 3: Write Targeted Recommendations for Each Weak Ratio

For each underperforming ratio, do the following:

  1. Briefly restate what the ratio measures

  2. Explain why the current performance is a concern

  3. Provide at least one realistic recommendation for improvement within 3–5 years

Examples:

  • Low current ratio: Improve cash flow management by tightening accounts receivable policies or reducing excess inventory.

  • Low profit margin: Reduce operational costs, renegotiate supplier contracts, or improve pricing strategies.

  • High debt-to-equity ratio: Gradually reduce debt through retained earnings or limit future borrowing.

Support each recommendation with finance theory or course readings.

Step 4: Maintain a Long-Term, Strategic Perspective

Your recommendations should:

  • Be realistic and measurable

  • Align with industry norms

  • Reflect gradual improvement, not immediate fixes

💡 Tutor tip: Emphasize strategic planning rather than short-term cost cutting.

Step 5: Assess the Limitations of Ratio Analysis

In this section, explain why ratio analysis alone is insufficient. Address limitations such as:

  • Ratios are based on historical data

  • Industry averages may not reflect company-specific strategies

  • Ratios do not capture market conditions or leadership effectiveness

  • Accounting methods can distort comparisons

Use scholarly sources to reinforce these points.

Step 6: Discuss Qualitative Factors That Complement Ratio Analysis

Identify non-financial factors that influence financial performance, such as:

  • Management effectiveness and leadership quality

  • Organizational culture

  • Innovation and technology adoption

  • Customer satisfaction and brand reputation

  • Competitive positioning in the industry

Explain how these qualitative elements can support or hinder financial improvement.

Step 7: Write a Concise Conclusion

Your conclusion should:

  • Summarize the company’s financial challenges

  • Reinforce the value of your recommendations

  • Emphasize the importance of combining quantitative and qualitative analysis

Step 8: Final Submission Checklist

Before submitting, confirm:

  • 2–3 pages (not including title and references)

  • APA 7th edition formatting

  • In-text citations and reference list

  • Clear linkage between ratios, recommendations, and outcomes

Helpful Academic & Financial Analysis Resources

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