FinancialAnalysisPaper:CompanyNameStudentname Date University Outline for paper Notes: • no abstract is needed for this paper • double spacing is required. The outline is presented in single space for presentation purposes. Important point: in the appendi

FinancialAnalysisPaper:CompanyNameStudentname

Date

University

Outline for paper Notes:

·         no abstract is needed for this paper

·         double spacing is required. The outline is presented in single space for presentation purposes.

Important point: in the appendices you present financial data and your ratio analysis calculations. Within the narrative sections, you are to analyze the data and describe what the data is indicating. What do the numbers mean? What are the trends and how, based on the analysis, is the firm performing for its owners (stockholders) and within its industry. Use the data to prepare financial analysis.

Simply regurgitating the financial numbers in your narrative is not analysis and is not sufficient to receive a passing grade for this project.

Outline of paper

1.      Page2:Description of corporation, major products, industries, markets served, and any significant developments over the past three years.

a.        Prepare a concise summary of your company using declarative sentences. The purpose of this section is to provide the reader with basic information on the company. Distilling your company down to one page of essential information should not be easy.  Eliminate any extraneous “fluff” and avoid providing any interpretations or analysis .Numerical analysis is not part of this section. It is the only part of the paper that numerical analysis should not be included. This is a factual section. Assume the reader is a business professional.

2.      Page3:Overall descriptive analysis of the financials for the last three years

a.        In this section you can now present key financial highlights of your company. At a minimum you should discuss sales and net income performance and any significant financial factors related to your company over the last three years. Useconcise $ figures. For example, use $7. 8mor$7. 8b instead of $7,800,000 or writing $7.8 million. There is more key financial information than one can easily fit into one page so you must determine what is most important for the reader to understand the financial picture of the corporation as of the most recent financials.

b.        If your firm has two or more published quarterly statements since the last annual report, be sure to prepare your analysis using the most recent quarterly data.

3.      Pages4-6:Descriptiveanalysisofthefirmsfinancialsandratioanalysis

a.        Inthissectionthewriternowgetsintothefinancialdetailsofthefirm.Thenarrativeinthissectionisbasedonthefinancials ofthefirm(Appendix A)andtheratioanalysis(AppendixB).

b.        Whatarethetrendsinyourratioanalysis?Whatarethetrends forthecompanyasawholeandincomparisontokeycompetitorsandindustryasawhole?

c.        RatiostoincludeareDebt/Equity,ROI,ROE,ROA,current,andassetturnover.Cashcoverageratioissuggestedtohelppreparethecashflowanalysissection.

Note:P/EratioandEPSaretobeanalyzedinthestockpricesection.IncludethisasaseparateanalysisinAppendix C,notinAppendix B.

4.      Page7:evaluation offirm’sstock pricehistory, earnings, and dividend policyforthelastthreeyears

a.        Ayear toyearcomparison of afirm’s stock pricedoes not provideenoughdata tosufficientlyanalyze trends and changes in thefirm’s stockpriceand subsequentlyP/EratioandEPS.

b.        Prepare a3-year quarterlyanalysisofthefirm’s stock priceand P/E ratio.PresentthisdatainAppendixC.

c.        Useasimilarformat asyourratioanalysispresentedinAppendix B.

d.        Moststockchartsthat youfindonlinewillshowthestockpriceatanygivendate.YouwillneedtocomparethestockpricetoquarterlyearningstodeterminethequarterlyP/Eneededforthissection.

5.      Page8:CapitalstructureanalysisandWACC

a.        Analyze thefirm’sratioof debt to equityfinancingincludingtrends in each.

b.        Usingtheexamples on the cost of capital,calculateyourfirm’scurrent WACC.

c.        IncludeanyadditionalsupportingfinancialanalysisforthissectioninAppendixC.

6.      Page9: Analysis of thefirm’s cash flowsforthe lastyear(minimum) orupto threeyears.

a.        In thissectionusethefirm’saccountingstatement ofcash flowstocalculatethefinancialcashflowfromassetsorfreecashflowforthefirm.

b.        Usetheinformationinchapter2oncashflowtoguide your analysis.

c.        CalculationspresentedinAppendixC.

d.        A1-yearanalysisforthis sectionissufficient.

7.      Page10:Descriptivesummary

a.        Inthissectionusetheanalysisinalloftheprevioussectionstowritea1-pagesummaryof yourcompanywithrespecttoitsfinancialhealthandperformance.

b.        Abriefmentionofperformancespecifictoitsindustryandthecurrenteconomyistobeincluded.

c.        Predictedfutureperformanceistobeinformedbythepastanalysis.

d.        This is not meant to bea “buy, sell, or hold”decisionanalysis.

e.        Whileyour opinion as a ‘businessanalyst’ is necessary, it should be validatedandsupportedbythefinancialanalysis.Inotherwords,usethenumberstotellthefinancialstory.

8.      Page11:Referencepage(useasecondpageifneededandnumberaccordingly)

9.      Pages12 andup:Appendicesofsupportingfinancialdataand analysis

Headingstructure:

Inthebodyof yourpaper,betweenthecoverpageandthereferencepage,thefollowingisthecorrectAPAstyleformatforheadings.Youshouldnotneedmorethan2levelsforthispaper.

Level               Format

1                                            Centered,Boldface,UppercaseandLowercaseHeading

2                                            FlushLeft,Boldface,UppercaseandLowercaseHeading

References

CorrectAPAreferencesrequired.Usethissiteto ensureyou areusingcorrectAPAformat:PurdueOWL(OnlineWritingLab)

http://owl.english.purdue.edu/owl/resource/560/01/

AppendixA

InAppendixA,youshouldincludeeitherspreadsheetsofselectedcompanyfinancialsfromincomestatement,balancesheet,andstatementofcashflows.Inthisformat, youdistilltheincomestatementdowntokeyaccountssuchassales,costof goodssold,grossmargin,operatingexpenses,depreciationexpenses,IBIT,interestexpense,taxes,netincome,earningsanddividendspershare.Inthisformatbesuretoincludeanyand allaccountvaluesneededtocalculateanyandallof yourselectedfinancialratios.

OR

Fullfinancialstatementsinsertedfrompdfsorspreadsheetsforthelastthreeyears.

Dependingonformatting,thismaytakemultiplepages.However,becautiousof‘cuttingandpasting’pages upon pages of financial statements.

Regardlessof yourapproach,theinformationinthisappendixshouldbeconsistentinformatwith therest ofthisreport.Haphazard ‘cuttingand pasting’ willreducethe overall professionalappearancereportscores.

AppendixB

UsingthefinancialdatainAppendixA,prepareafinancialstatementratioanalysisspreadsheet.

Theminimumisathreeyearanalysisbutafourorfiveyearanalysisispreferredandprovidesamoreaccuratetrendanalysis.

Belowisasampleformat thatyou mayuse.Youmayfindotherformatsinyour searchthatyoumayuse.Regardless,besureyourformatisconcise,easytounderstand,andincludesthe%changeineachratio yearto year.In the4year analysisbelow,the%changecolumnfor2009willuse2008datatocalculate.

Ataminimum,choosethreeratiosforeachofthefivecategoriesincludingtheindicatedratiosinsection#3above.Youmaychoosemore,orhaveunequalnumbersofratiosbetweenthecategoriesdependinguponwhat youfeelisimportanttoanalyzeandcommunicate.

Sampleratioanalysistemplate: