The purpose of this assignment is to analyze the financial
performance of a company to make recommendations to potential investors about
the purchase of stock. Studying all aspects of a company’s financial statements
is necessary to understand the financial performance and health of a company.
This is particularly important for investors trying to determine whether to buy
stock in the company.
An investor has approached you about whether purchasing
stock in the company would be a wise investment. Using your financial analysis of
The Coca-Cola Co. (Ticker KO), you will send a letter to the investor
summarizing your findings and explaining whether or not you recommend a stock
purchase at this time. You will use information in the Form 10-K to complete
this assignment. Using the correct formulas and a separate tab for each
analysis, calculate the following ratios using Microsoft Excel:
Three liquidity ratios for the past 2 years
Three solvency ratios for the past 2 years
Three profitability ratios for the past 2 years
In addition, conduct research about a
competitor company PepsiCo (Ticker PEP). Using IBIS World or another applicable
resource, locate three ratios for the competitor company. Compare your company
to the competitor company and indicate the differences in the ratios for the
two organizations. Next, locate the same three ratios for the industry. Compare
your company to the industry average and discuss how well it is performing
compared to the industry. Note: you are not required to calculate the ratios
for this portion of the assignment, but proper citations are required for the ratios
used in the comparison. Justify your analysis by explaining your findings.
Using your research findings and analysis of company
performance with industry competitors, construct a 500- to 750-word letter
making stock purchase recommendations for a potential investor. In the letter,
address the following, referencing specific ratios and comparative numbers as
appropriate:
Discuss the overall financial performance of your
company with the specific competitor.
Discuss whether the company performed better or worse
than the industry average, providing specific numbers and an explanation
of what the numbers illustrate. For this portion of the memo, consider the
21 questions in Chapter 6 of the textbook to explain what the ratio
results tell the user of the financial statements about the health of the
company. Instead of providing calculations or showing numerical
comparison(s), describe the performance of the company and use the ratio
results to support your points.
Recommend whether the potential investor should
purchase stock in your company and justify your recommendation based on
your research and analysis of the company ratios and industry competition.
Submit the Excel file that contains your ratios and the
Word file letter.
While APA style is not required for the body of this
assignment, solid academic writing is expected, and documentation of sources
should be presented using APA formatting guidelines, which can be found in the
APA Style Guide, located in the Student Success Center.
This assignment uses a rubric. Please review the rubric before
beginning the assignment to become familiar with the expectations for
successful completion.
