Need help with Finance Project

FINANCIAL ANALYSIS PROJECT GUIDELINES

1. The Task : You are to play the role of a financial analyst working for a leading investment management company. Your boss, who also happens to be your instructor, has asked you to evaluate a company for possible inclusion in your firm’s portfolio. Specifically, your boss wants you to choose a company and describe its current financial status. You are to prepare a formal report of your efforts for your boss.

2. Information sources : Use this handout, the company's latest annual and quarterly reports, and business publications on the Internet and at the library as the basis for your analysis.

Good information sources on the Internet include:

‑ The company’s own website (good for overview information, annual and quarterly reports).

‑ www.sec.gov (search EDGAR for 10K and 10Q reports)

‑ http://finance.yahoo.com/ (Yahoo Financial Research)

‑ http://www.reportgallery.com/ (annual reports here)

‑ The Library has numerous places to find competitor and industry ratios and information (Business databases)

‑ Many others (“Google” search for your company’s name, for example)

Note: Wikipedia.com is NOT an acceptable information source for your report. Since anybody can edit its information and the owners of the site do not attempt to verify the accuracy of what is posted, it does not meet minimum academic standards.

3. Format : The paper should be prepared in Microsoft Word. Use the outline that begins on the next page (recommend you copy and paste the outline into a new Word document and use it as the basis for your report).

4. Schedule : Please submit the paper when due to allow the instructor the appropriate time to grade the papers.

5. Presentation: Five minute executive briefing, in class, (Ask Instructor).

Important Note on Using Information Obtained from the Internet

Caution: Most of the words in your report should be your own. Remember that the rule is that you should only quote when what has been stated is so unique that it would lose its impact or value if it were not kept together as a quote. (THIS IS RARELY THE CASE.) You may paraphrase and use quotes for emphasis when you need to, but when you do you must use quotes and identify the source of the information. APA style requires that you block indent long quotations. Given that requirement, I do not expect to see long quotes in your paper. Remember that you MUST provide a source for anything that is not your original words or thoughts. Failure to do so is a breach of the Webster University honor policy and will negatively impact your grade. Simply stated, it is plagiarism.

So to summarize, when you extract information from sources on the Internet for use in reports, there will be a strong temptation to copy and paste the information into your financial statement analysis. You should not routinely do this.

Citing sources on a reference page is not enough. Remember that words shown in your paper are presented as if they are your own unless you provide a citation so your readers know where the information came from. The identification of a source must be sufficient to allow the reader to go DIRECTLY to the source...including the page!

There are multiple style sheets available to show you how to cite outside work in your document. APA style is what has been adopted by Webster University so that is how the paper should appear. This approach enables the reader (me) to go directly to the source to confirm its veracity.

Be sure to ask me if you have any questions about the report in general or using quoted information in particular.

Good luck!

Dan

Graded Project Report Outline

(Your report should follow this outline)

COVER SHEET:

Financial Analysis of the xxxx Company

(address, phone number)

Your name, etc.

PART I, COMPANY OVERVIEW: (be sure to include these headings in your report!)

a. Brief description of the company (one paragraph, briefly summarizing the company’s business)

b. Company history (origin, major developments, etc.)

c. Organization (describe how the company is structured)

Note – Do NOT include a description or a lengthy list of the company’s board of directors. Your readers do not care how the board is organized or who the board members are. They want to know how the whole company is structured.

d. Main products and services (describe what the company sells; how it makes money)

e. Geographic area of operations (locations of main plants, subsidiaries)

f. Recent developments (list recent major news stories, if any)

- and so on (you may modify or add to this list depending on the nature of your company)

PART II, FINANCIAL OVERVIEW (Note: 2014 information may or may not be available yet, depending on when the company’s fiscal year ends and when they report – use 2012-14 if available)

a. Sales and Income Record:

-----Fiscal Years -----

2013 2014 2015

‑‑ Sales ____ ____ ____

‑‑ Percent change in

sales each year ____ ____ ____

‑‑ Net Income ____ ____ ____

‑‑ Percent change in

net income each year ____ ____ ____

GRAPH OF SALES & NET INCOME, FY 2013 ‑ 2015

‑|

‑|

‑|

‑|

‑| (Plot Sales and Net Income for the

‑| last three fiscal years on the graph)

‑|

‑| (Recommend preparing the graph in Excel,

‑| then copying and pasting into the report)

‑|

‑|

‑|

‑|‑‑‑‑‑‑|‑‑‑‑‑‑‑|‑‑‑‑‑‑‑|

2013 2014 2015

COMMENTS: Comment on the trends you see in your numbers and on the graph.

Be sure to include comments! The numbers and the chart are meaningless by themselves. Comment on what you see.

b. Expense distribution:

FY 2015 or most current

Major Expenses:

________

(list the major expense categories ________

from the latest income statement. ________

Be sure to include COGS!) ________

CHART OF EXPENSES, FY 2015 or most current

Note – Do not “explode”

the pie slices

(insert a pie chart of major expenses here)

COMMENTS: Comment on the company’s expense distribution.

c. Assets and Capital Structure:

Year-end FY 2015 or most current

Assets:

Cash ________

Accounts receivable ________

Inventory ________

Fixed Assets ________

Other Assets ________

CHART OF ASSETS, Year-end FY 2015 or most current

(insert a pie chart of major assets here)

COMMENTS: Comment on the company’s asset distribution.

Year-end FY 2015 or most current

Capital Structure:

Current Liabilities ________

Long-term & Other Liabilities ________

Preferred Stock (if any) ________ Note – Ask your instructor

Common Equity ________ for instructions if common

equity is negative

CAPITAL STRUCTURE, Year-end FY 2015 or most current

(insert a pie chart showing capital structure here)

COMMENTS: Comment on the company’s capital structure.

PART III, RATIO ANALYSIS:

Include the following ratios in the following format:

Note: It can sometimes be difficult to obtain industry averages. Such information is available, but, with rare exceptions, you have to pay for it (which you are not required to do for this report). Sometimes you can find some industry average ratios at various websites (example: You can get some industry profitability ratios from Yahoo.com). Sometimes you can calculate the ratios yourself by averaging the ratios of several different competitor companies. An alternative is to just compare the company to its most significant competitor. Only as a LAST resort, when you can’t find any of the information or do the calculations, insert “not available.” It is highly unlikely that you will use this LAST option. Do everything that you can to avoid taking this final option.

(1) LIQUIDITY:

FY 2014 FY 2015

Current Ratio:

Company ____ ____

Industry Avg or Competitor ____ ____

COMMENTS ON THE COMPANY’S LIQUIDITY:

Be sure to include comments! The numbers are meaningless by themselves.

Comment on what you see. What story do the numbers tell? Analysis and

comments are a key to the course.

(2) ASSET MANAGEMENT

FY 2014 FY 2015

Total Asset Turnover:

Company ____ ____

Industry Avg or Competitor ____ ____

COMMENTS ON THE COMPANY’S ASSET MANAGEMENT:

(3) DEBT MANAGEMENT:

FY 2014 FY 2015

Total Debt to Total Assets:

Company ____ ____

Industry Avg ____ ____

COMMENTS ON THE COMPANY’S DEBT MANAGEMENT:

(4) PROFITABILITY:

FY 2014 FY 2015

Return on Assets:

Company ____ ____

Industry Avg or Competitor ____ ____

COMMENTS ON THE COMPANY’S PROFITABILITY:

(5) MARKET VALUE RATIOS:

FY 2014 FY 2015

PE Ratio:

Company ____ ____

Industry Avg or Competitor ____ ____

COMMENTS ON THE COMPANY’S MARKET VALUE RATIOS:

PART IV, CONCLUSIONS AND RECOMMENDATIONS

‑ Summarize your analysis. Review your comments in the financial analysis section and provide your assessment of the overall status of the firm. Include any recommendations you think are appropriate. Should we buy and add this stock to our portfolio today?

‑ List any other recommendations you have for the firm in view of your analysis.

* End of report Outline *

See additional instructions on the following pages!

Obtaining Company Information

from the Securities and Exchange Commission’s Website

1. With your computer online, go to www.sec.gov . This is the U.S. Securities and Exchange Commission’s website.

2. At the website, click on Filings and Forms (EDGAR)

3. On the SEC Filings & Forms (EDGAR) page, click on Search for Company Filings. That will take you to the “Search the EDGAR Database” page.

4. At the Search the EDGAR Database page, click on Companies and Other Filers in the General-Purpose Searches column. This will take you to the “EDGAR Company Search” page.

5. At the EDGAR Company Search page, enter the name of your company in the box. Leave the other boxes blank. When you are done, click the gray Find Companies button.

6. A list of companies matching the name you typed in will appear. The list may be short or long, depending on how many companies share the same words in their company names. Scroll down the list and locate the specific company you are interested in (you may have to go through several pages if the list is really long.) When you find your company, click the long red number in the left hand column next to the company name. This will bring up a page with a list of forms on it. Note – if there is only one company matching the name you typed in, the system will take you directly to the forms page. See the next paragraph.

7. On the forms page, scroll down the left hand column until you find an entry marked 10-K or 10-K405. These forms are the company’s annual report.

(Note – you will normally find more than one listed, because the companies file one for each year. The one you want is the one with the latest date. Check the date of the form in the Filing Date column on the right.)

When you have located the 10-K or 10-K405 form that you want, click on the red form number in the left hand column. When you do this, a bunch of hear information about the form will come up on the page.

8. Scroll down through the header information until you come to the first underlined link in red. It will say something like Document 1 - file: a2106077z10-k.htm. Click on this link. This will bring the 10-K report up on the screen.

9. At this point you can print the entire report (100+ pages!) or you can scroll down through the document to locate the part you are interested in. When you find it, simply highlight it with your mouse, and copy and paste it into a Word document for your review later on. Be careful here! You will be tempted to just paste it and move on. Don’t do that.