Fincial Research project 1

Analysis of the financial performance of THE ASSIGNED COMPANY, financial trends, and projections. 

– Due at the end of week 2 of the course. 

This part of the project should be submitted in two ways:

· To the group project area- in order to receive comments from peer reviews and complete part 2 of the project

· To the Assignment folder – for grading by your instructor

 

SUGGESTED WEBSITES

www.marketwatch.com  -To find the information for your company you need to type the stock symbol in the Searchwindow to get into the company’s page.

www.morningstar.com - To find the information for your company you need to type the stock symbol in the Quoteswindow to get into the company’s page.

www.money.cnn.com  -To find the information for your company you need to type the stock symbol in the Searchwindow to get into the company’s page.

www.finance.yahoo.com - To find the information for your company you need to type the stock symbol in the Searchwindow to get into the company’s page.

www.nyse.com – Click on Data, then click on Stocks (under Quotes), and type the name of the company or the stock symbol in the window “Keyword or symbol” to get into the company’s page.

www.nasdaq.com - To find the information for your company you need to type the stock symbol in the Search window to get into the company’s page.

THE COMPANY’s websites

YOUR SPECIFIC ASSIGNMENT

Using the information from the websites the students have to develop evaluation of the financial performance for THE COMPANY (SELECTED BY INSTRUCTOR).

-1—Background and Industry (one  short  paragraph). 

-2—Complete common size analysis of the income statement and the balance sheet of THE COMPANY for the last three years.(20% of the Stage 1 grade)

In order to do that you will divide all income statement items by sales. As a result, all items in the income statement will be expressed as a percent of sales. To complete common size analysis of the balance sheet you will divide all items in the balance sheet by total assets. As a result all balance sheet items will be expressed as a percent of total assets. Present the results of your calculations in your project.

Write about 1-2 pages of the analysis of the financial conditions, its stability, and trends.

-3— Complete percentage change analysis of the income statement and the balance sheet of THE COMPANY for the last three years.((20% of the Stage 1 grade)

In this part you will calculate percentage change (growth rates) for all income statement items and balance sheet items  relatively to the first year.

Write about 1-2 pages of the report of the results that you received. What important information does this analysis provide?

-4— Financial ratio analysis. (25% of the Stage 1 grade) 

In this part of the project you will complete ratio analysis of THE COMPANY. Please remember that you are the financial analyst of THE COMPANY and should prepare the report to the chairman of THE COMPANY. So the ratio analysis should be completed from the point of view of THE COMPANY’s the management.

The chairman of THE COMPANY is especially concerned about the following groups of ratios:

· Liquidity (current ratio, quick ratio, and net working capital-to-sales ratio)

· Operating performance ratio (Days of Sales in Inventory, Days of Sales in Receivables, Days Payable Outstanding), CCC, turnovers

· Profitability ratios (Gross Profit Margin, Operating Profit Margin, Net Profit Margin)

· Return on Investment ratios: (Basic Earning Power ratio, ROA, ROE)

You can find financial ratios for the company for the last 3-5 years in the Internet or calculate them.

1. a) Present the ratios as the table(s) in your project. Create graphs for some ratios on your choice over three years to show trends.

2. b) Write about 2 pages of analysis of the ratio results that you found. In your analysis you should answer the following questions:

· How liquid is the company?

· Is management generating a substantial profit on the company’s assets?

· If the management of the company would like to improve their CCC, what should the management of THE COMPANY do?

-5- Evaluate Return on Equity for the company for the last three years using the DuPont analysis. (10% of the project grade)(20% of the Stage 1 grade) 

1. a) Taking the information from the Income statements and the Balance sheets, calculate the company’s net profit margin, total assets turnover, equity multiplier, and return on equity using the DuPont formula for the company for three years. Show your calculation!

 

ROE = Net profit margin x Total assets turnover x Equity multiplier

         = Net income/Sales x Sales/Total assets  x Total assets/Common equity

 

You can use Revenue instead of Sales.

Write about 1 page of analysis of the results that you received. In your report please answer the question: If the management of the company would like to improve their return on equity, what should the management of these companies do?

PRESENTATION OF PAPER AND WRITING (15%) of the project grade) (see description below)