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Acct 201 Course Project Assignment #2-GROUP for [insert INDUSTRY name] page 2

Template for Course Project Assignment #2-GROUP[footnoteRef:1] due 12/10/13 [1: Robert Bowen and Jane Jollineau of the University of San Diego prepared this template. Revised: 8/18/13. ]

Analyzing and Evaluating the Companies in Your Industry

Industry

name

Your names

Sect #

Combine the data you collected individually and make comparisons across the industry.

Part 1: Compare Financial Ratios (compiled from your individual assignments)

Part 1A: Profitability, asset utilization and financial leverage

Insert the ratios below for each of the companies in your group based on the most recent available year. Note that the ratios are described in more detail in the textbook.

Company name	ROE	ROA	Profit margin	Asset turnover	Debt to Assets
1.
2.
3.
4.
5. (if needed)
6. (if needed)
Industry average**
Source of industry average**

** It is probably best to get the industry averages from external websites. Note that the ratios on these websites may have different names than we have used in class or in the textbook. Further, you may not find all of the ratios you have calculated so begin by comparing key ones you can find. One website to consider is the “Industry center” at http://biz.yahoo.com/ic/ind_index.html. See Blackboard for definitions of the terms used on Finance Yahoo. You may also find company and industry information by searching www.finance.yahoo.com and www.google.com/finance. If you cannot find industry ratios, also consider http://www.bizstats.com/corporation-industry-financials/ where you will have to drill down through their menus to find your industry. This will give you most of the ratios that you need for comparisons, but they may be old (e.g., from 2009). Finally, as a last resort, you can just average the firms covered by your group and call that the industry average. Regardless, please tell me the approach you used.

The purpose of the table below is to rank each company in your group from highest to lowest on the ratios above, except for Debt to Assets, which should be lowest to highest. Insert (an abbreviated company name) in each cell below:

Rank	ROE (highest = 1)	ROA (highest = 1)	Profit margin (highest = 1)	Asset turnover (highest = 1)	Debt to Assets (lowest = 1)
1
2
3
4
5
6

Part 1B: Liquidity

Compare the companies in your group on liquidity using the most recent available year:

Company	Current ratio	Quick ratio*
1.
2.
3.
4.
5. (if needed)
6. (if needed)
Industry average (& source**)

* Quick ratio = Quick assets (cash + short term investments + accounts receivable) ÷ current liabilities

** See the note below the table in Part 1A.

The purpose of the table below is to rank each company in your group from highest to lowest on the liquidity ratios above. Insert a company name in each cell below:

Rank	Current ratio (highest = 1)	Quick ratio (highest = 1)
1
2
3
4
5
6

Part 1C. Discuss your ratio analyses

What is your overall assessment of the (i) financial condition and (ii) performance of the companies you analyzed? Refer to any of the above numbers or ratios in your brief summary.

[insert your discussion here]

Part 2: Compare Stock Price changes (compiled from individual Stock Monitoring Worksheets)

A. Record the stock price data below for each of the companies in your group based on the most recent available year:

Company	Stock exchange*	Beginning stock price	Ending stock price	% change in stock price**
1.
2.
3.
4.
5. (if needed)
6. (if needed)

* Each company’s stock trades on a stock exchange, e.g., New York Stock Exchange (NYSE), Nasdaq, AMEX

** % change in the stock price = (ending stock price at 12/3/13 – beginning stock price at 9/24/13) ÷ beginning stock price at 9/24/13. You may express this as either a decimal fraction or a %.

B. Plot the Stock Prices of the Best and Worst performers above against a Stock Price Index

Of the companies above, plot the stock prices of the best and worst performers against the stock index that represents the greatest number of companies in your industry. Go to finance.yahoo.com and follow these steps:

· Enter a ticker symbol of the ‘best’ performing company (e.g., APPL).

· Choose “Interactive” below CHARTS in the left hand menu.

· In the lower right corner, insert the date range: 9/24/13 to 12/3/13 (#1 on the attached example).

· Click on the ‘Compare’ drop down menu at the top of the chart and type in the ticker symbol of the ‘worst’ performing company (e.g., HPQ). Next, select one index (e.g., Dow Jones, Nasdaq or S&P 500) that you believe is best to use for comparison. (See #2 on the example below.) This should generate three plots: the best performer, the worst performer and the index.

· Label each plot (see #3 on the example below). (Labeling this by hand is okay.)

Insert your chart below here. [Below is an example using a date range from a prior semester:]

C. Discuss the Stock Price Trends

Discuss below the factors that you believe resulted in the above stock market trends for the best and worst performers (relative to the broader stock index). Does this correspond to the ratio analysis you conducted in part 1 above?

[insert your discussion here]

Part 3. Your recommendation as an analyst/investor

Based on your analysis of each company and the industry, for each of the companies you covered, state whether you would recommend buying more (buy), holding the stock you have (hold) or selling (sell). Briefly state why in the space provided.

Company	Recommen-dation*	Briefly discuss your reasoning below
1.
2.
3.
4.
5. (if needed)
6. (if needed)

* Buy, hold or sell (and feel free to embellish if you feel strongly, e.g., “strong buy” or “strong sell.”)

Part 4. How would you rate this project for helping you learn about your companies, their financial reporting and their stock prices? (please circle one word below)

Excellent Very good Good Fair Poor Very poor

Part 5. Your recommendations on improving this project?

List your recommendations (if any) on improving this project for future students.

[insert any suggestions here and use additional pages if necessary] Thanks!