financial annalysis

FINANCIAL ANALYSIS PROJECT

ACCT 6010 ACCOUNTING AND BUSINESS DECISIONS

PROJECT OVERVIEW

For this group activity, each group will prepare a financial analysis report in which they will compare a set of companies from the same industry and recommend which of those companies should be purchased as an investment. The Excel file named Financial Analysis Project Workbook is provided for this project.

First, each group will select an industry, then each group member will select one company within that industry. No industry may be selected by more than one group. The industry cannot be one of the financial services industries, such as banking, insurance, etc. Companies must be publicly-traded US companies, which are regulated by the Securities Exchange Commission. Each group member will individually summarize financial statement data and calculate financial analysis ratios for one company in a Company Data Sheet (Excel worksheet). Then, all group members will combine their individual analyses in a Financial Analysis Data Sheet (Excel worksheet) and prepare a Company Comparison Report (Word file).

PART 1: GROUP INDUSTRY/COMPANY SELECTION (5 points) Due 3/3

Graded based on completion. Each group will report the industry and companies selected by email to the instructor by email and each group member will submit in eLearn an electronic copy of the most recent 10-K report for your company (the filename should be 10-K <company name> <year> <your last name>). When you are making your company selection, be certain your company’s 10-K report is available before you finalize your selections!

Select similar companies for the analysis and obtain their most recent annual report (a 10-K report that is filed with the SEC) which is available from the companies' internet websites or from the SEC EDGAR website. Do NOT use financial statement information from other websites. Select companies in an industry that has NOT been selected by another group. You can find lists of companies by industry at the Yahoo Finance Industry Center website: https://biz.yahoo.com/ic/ind_index.html Send your industry selections to your instructor by email. Verify that

· The companies must be in the same industry but do not necessarily need to be the same size.

· They must be listed on a U.S. stock exchange (NYSE, NASDAQ, Pacific, Philadelphia, etc.)

· They should NOT be banks, insurance companies, healthcare organizations, or utility companies. Financial reporting formats and information requirements for these industries are different from typical companies and would include specialized, unfamiliar terminology.

PART 2: INDIVIDUAL PRELIMINARY REPORT (15 points) Due 3/10

Graded as: Data sheet accurate completion, 5 pts; essay content, 5 pts, and format, 2 pts; cover page, 1 pts; and attachments, 2 pt. Each group member will submit a report in eLearn.

Each group member will complete the Company Data Sheet for your company and write a one-paragraph essay explaining how and why you selected this industry and these companies. Your Company Selection Report must contain the following items in the order shown:

· Cover page including your name and course section;

· Selection essay explaining why you selected your company—What were your personal reasons for selecting this company? What interests you about this company? (typed, double-spaced, with 12-point Times New Roman font and one-inch margins all around);

· Company Data Sheet, copied from Excel into the Word document and appropriately formatted.

PART 3: INDIVIDUAL COMPANY ANALYSIS (30 points) Due 3/31

Graded as: Ratios, 18 pts; Horizontal/Vertical Analysis, 8 pts; other data, 4 pts.

Each group member will prepare the Company Analysis Data Sheet for only your company. Complete requirements for the Comparative Analysis (Horizontal Analysis, Vertical Analysis) and Ratio Analysis portions of the Financial Analysis Data Sheet using the financial statements for your company. Submit the completed Excel file in eLearn (filename: Company Analysis <company name> <your last name>). Provide a copy of your spreadsheet file to each of your group members.

· Ratios should be formatted as percentages or index numbers, as appropriate, and calculated to one decimal place (e.g., 12.3% or 4.5). Remember some ratios are percentages, some are index numbers. CREATE FORMULAS—DO NOT TYPE NUMBERS.

· The solutions must be submitted in eLearn before the deadline.

· Attach your Company Selection Report from Part I.

· Type “n/a” for any ratio that is not applicable for your company. For example, some companies do not have receivables or inventory. In that case, type “n/a” for any ratio related to receivables or inventory.

The Evaluation Notes worksheet is provided for your use only—you are NOT required to complete it or submit it. However, you may want to incorporate important parts of your notes into your Final Group Report.

PART 4: GROUP COMPARISON REPORT (50 points) Due 4/28

Graded as: Cover page, 2 pts; overall format, 3 pts; Content: Section 1, 5 pts; Section 2, 12 pts; Section 3, 12 pts; Section 4, 16 pts

As a group, complete the Financial Analysis Data Sheet and prepare a Group Comparison Report for your companies. Submit the report (filename: Financial Analysis Report <industry>.docx) and the Excel spreadsheet (filename Financial Analysis Data Sheet 2016 <industry>.xlsx).

Assume your group is an investment group trying to decide to invest in ONE of these companies. Write a short paper that summarizes the results of your analysis and makes an investment recommendation.

· The Financial Analysis Report paper will have a cover page that identifies the industry, the companies, and the group members. Creativity is appreciated and rewarded.

· The body of the Report will be organized into four sections (typed, double-spaced, with 12-point Times New Roman font and one-inch margins all around).

1. The introductory section of the Report will identify and briefly describe the companies and their industry, and provide your investment recommendation.

2. The second section of the Report will report the results from the Ratio Analysis portion of your Financial Analysis Questionnaire. This section will have six sub-sections. These sub-sections will include comparisons of the companies as to 

· Liquidity

· Asset Management

· Long-Term Solvency

· Profitability

· Market Strength

· Cash Flow Adequacy and 

· Non-Financial Information that you consider to be relevant to this analysis of your companies.

You do NOT need to report every fact from the questionnaire; just summarize important findings and significant differences.

3. The third section will summarize your findings from the Comparative Analysis portion of your Financial Analysis Data Sheet, including trends and structural changes in financial position and results of operations.

4. The final section will summarize the analysis and make a recommendation as to which company would be selected as an investment, citing reasons why you made this decision based on your analysis in the second and third sections.

· The first paragraph of the final section of the paper will briefly summarize important aspects of the analysis in the preceding section.

· In the last paragraphs, present your conclusions about the relative financial performance and health of your companies and make a recommendation as to which company would be selected as an investment. Describe the process by which your group developed your conclusions and recommendation, citing reasons why you made this decision. The reasons provided must be based on your analysis and should refer to one or more facts previously presented in the Report.