Project on Accounting and Finance

FIN 306 Individual Project Structured External Assignme nt

Hello,

For the project, you are comparing two companies. So you do need two to compare them. Usually, you want them in the same industry but it is your choice. For example two car companies, or two department stores, or two telecommunication companies.

Week 2 covers capital budgeting. The reading will highlight the significance of the subject matter of: Long-term investment decisions Capital budgeting techniques Overview of capital budgeting

Payback period Net present value Internal rate of return

Consider stimulating ideas about these subjects read about Gold mine standards and the limits of payback analysis. Relates course material to real life situations. A ny calculator that adds,

subtracts, multiplies, and divides will do. See self-test problems and warm up exercises use u-tube and google

Assumption:

You are a financial analyst working for a major investment house. You have been given a major

corporation (actually it’s your choice*) to analyze for its investment potential

*Do NOT choose a financial organization, stay with manufacturing or retail companies that are

publicly traded.

Assignment:

Based on your analysis of the firm’s financial statements and any relevant supplementary information you can obtain about the firm and its operating environment. Consider using Value

Line as one of your sources. Identify areas in which the company is performing well (strengths) and advise your boss of any problem areas (weaknesses).

Include in your analysis an assessment of how the firm’s strengths and weaknesses affect its credit worthiness and investment potential.

Data:

The time period for the analysis should include a minimum of three full years (five is better) plus

interim statements for the most recent year. In addition to the financial statements and other

material in the annual and/or 10K reports, you should review relevant materials from other

sources mentioned in class or found in your text.

For comparison data use whomever you consider to be your major competitor.

Remember – your must use both financial ratios and a common-sized income statements.

Outline:

The attached outline is provided for guidance, but the analysis should be adjusted, as appropriate,

to conform to the individual characteristics of the firm.

Note to students: please remember do not select a financial institution for your company.

Suggested Outline for Financial Statement Analysis – PowerPoint

Presentation

For PowerPoints items in Sections 1 & 2 should be 1 slide each. For section 3 it’s your call.

Cover those important ratios and significant issues found in the common-sized income statement and in your analysis of the capital structure of the firm. Remember however that PowerPoint

slides are not meant to be an eye chart. If you have more than 6 typed lines on one slide – you

needed another slide!

I. Introduction

II. Firm, Industry and Environment (please be brief, this IS a finance and accounting course not a history class!)

A. Description of firm and its management B. Discussion of the competitive environment C. Economic climate and outlook D. Other factors as appropriate, e.g. governmental regulations, labor issues, litigation

pending

III. Evaluation of Financial Statements (note key word is “evaluation”)

A. Overview B. Short-term liquidity C. Activity Ratios

D. Financial Leverage (Debt Ratios) E. Profitability and Market Ratios F. Common-sized Income Statement Analysis G. Discussion of the Company’s capital structure

IV. Outlook, Summary and Conclusions

A. Outlook for performance (investment potential, credit assessment, etc.) B. Strengths C. Weaknesses D. Summary and Conclusions

IMPORTANT! Be sure to give credit to any source you use. While this is not an APA exercise,

the rules for plagiarism definitely apply.