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Background Note
| HBS Case Collection
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2012
(Revised from original 2010 version)
Assessing a Company's Future Financial Health
by
Thomas R. Piper
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Abstract
The case provides students with (1) an understanding of the essence of long-term financial health; (2) familiarity with the calculation and meaning of various financial ratios; and (3) an understanding of the influence of a company's operating and competitive characteristics on its investment in various type assets, on the profitability of these investments, and on the financial structure of its balance sheet. The case also allows a discussion of (1) the incomplete and lagging nature of financial measures; (2) the influence of financial measures on behavior; and (3) the reality that financial analysis often results in better, more focused questions to be asked of management, not conclusive answers.
Keywords: Financial Condition;
Forecasting and Prediction;
Investment Return;
Operations;
Competitive Strategy;