Management Finance


Please carefully note the following important points: • This assignment is to be completed in teams of 4. • Your team submission should be made in a single Excel file, titled

“firstname_lastname_firstname_lastname”, etc. • Be sure to label your work generously to save me time in finding things. • Tax rates are found by dividing “provision for income taxes” by “income

before taxes”. Usually the latest year’s numbers are used for this calculation, but if the year looks unusual, look at previous years as well and use a rate that seems reasonable.

• Where a company’s statements are missing a year, simply leave that company out of the analysis for the year.

• Please submit on Moodle.

PART 1 Please carry out an external size-up for the U.S. economy and the U.S. home-building industry. It is not necessary to present your findings in a lengthy write-up – bullet points will suffice, but please provide more than just raw numbers without explanations/interpretation.

PART 2 Your task in this part of the assignment is to provide an internal, quantitative analysis of the U.S. homebuilder Toll Bros. to assess its health and performance. The other companies for which financial statements have been provided in the Excel file operate in the same industry as Toll Bros. They are there to allow you to provide some context to Toll Bros. performance and to make comparisons Ignore TTM (Trailing Twelve Months) data. In addition to the usual work included in an internal, quantitative analysis, please also include:

1) A decomposition of ROE, along with your interpretation of the results 2) An analysis of Toll Brothers’ cash conversion cycle (also known as “operating

cash flow cycle”) Throughout all of the analysis above, it is important to provide not only numbers/ratios, but also interpretation. This should be done across time and across the industry (for simplicity, consider the three companies you have data for “the industry”). Here, again, it is not necessary to write very much – the key is to put the results in context.