Students examine areas of concern for financial managers: the financial analysis of the firm, including ratio analysis and fixed and variable cost analysis. For this project, the goal is to gather data about any publicly traded company in order to determine how the company has performed over time and gather conclusions on how the company might perform in the future.
The company can be the company you work for (if the company is publicly traded). I’d suggest this option if it is available to you. The key is to learn how to gather financial information, interpret it, and derive conclusions based on the information that is available to you as an external party for either investment or analysis purposes.
The total deliverables will include the paper, presentation and excel worksheet you use to derive your conclusions.
COURSE PROJECT OBJECTIVES & REQUIREMENTS
Gather three years’ worth of annual report (10-K) Financial information (Balance Sheet/Income Statement only) from the SEC’s websiteLinks to an external site. on any publically traded company of your choice.
Perform general research on the chosen company about the company, i.e., Headquarter location, nature of business (SIC Code is helpful here too), historical information about the company and key competitors.
Take the financial information anddownload the tablesLinks to an external site.from the annual reports into Microsoft Excel. Depending on the format of the company’s financial tables, this may be more difficult than others. Note: Financial institutions are more complex and the financial statements are more difficult to interpret (fair warning!!).
Once the information is in Excel, calculate all accounts as a percentage of total assets for the Balance Sheet and as a percentage of Revenue for the Income Statement. This is known as common sizing and is meant to take the sizes of firms out of the equation in measurement of financial performance.
Perform ratio analysis (ratios listed on page 2) for the company for each year. Note: it would be wise to have a separate tab within your excel workbook with each respective year ratio listed.
Review the trends within the ratios and determine where there are either strong points or weakening ones. Think of this as the trend analysis portion of the assignment. If you see issues with the company with declining trends or improvement within other areas, mark those for notation within the paper. Notes to the financial statements are a great guide to glaring changes or concerns about the company that would be great points of discussion within the paper itself.
Take your last year financial statement common size percentages and ratios and compare the available industry standard for each. For the industry average, you can go to comLinks to an external site. and search for the industry your company resides in. The SIC code within the annual report of your chosen company will inform you of the industry the firm you’ve chosen resides in.
Once your data and ratio analysis are complete, write a minimum of an 8 page paper. Note: it will be difficult to adequately communicate your findings in 8 pages, so you may want to shoot for 10-12 pages to make sure you cover all the following points.
The paper should have a cover page, table of contents, and include an introduction (to the company and the project), body which includes the general ratio analysis and key trends that were observed. Please write the paper in MLA format. The body will also have a section on how the firm compares to industry averages. Please feel free to develop tables or graphs to include in the paper as a way to illustrate points (this also helps with lengthening the paper).
It may be helpful to have sub headings in the body of the paper observing the different ratios below (liquidity, leverage etc.). Finish with a conclusion on the key takeaways on the company and how you would suggest ways to improve the company or just general overall comments. Again, I would also suggest implementing the notes of the annual reports as a useful conclusion reference within the paper.
Please cite the three years’ worth of financial statements (including URL’s) of each annual report within the references page at the end. Please use MLA formatting as the university standard. A sample paper is provided for your reference.
In your conclusions, remark on how your perceptions of the company would entice you to personally invest, work for them, or work as a partner from the firm you currently work in now (if applicable). In other words, does your new understanding of this company’s financial position entice you to want to be directly involved with them?
Prepare a financial analysis associated with any of the coursework done within the class. I realize this is a very vague portion of this assignment, but it does allow for a higher level of creativity on your end to show a class activity or assignment that you’d like to associate to your paper.
