Structured External Assignment
You are a financial analyst working for a major investment house. You have been given a major corporation (actually it’s your choice*) to analyze for its investment potential
*Do NOT choose a financial organization, stay with manufacturing or retail companies that are publicly traded.
Based on your analysis of the firm’s financial statements and any relevant supplementary information you can obtain about the firm and its operating environment. Consider using Value Line as one of your sources. Identify areas in which the company is performing well (strengths) and advise your boss of any problem areas (weaknesses).
Include in your analysis an assessment of how the firm’s strengths and weaknesses affect its credit worthiness and investment potential.
The time period for the analysis should include a minimum of three full years (five is better) plus interim statements for the most recent year. In addition to the financial statements and other material in the annual and/or 10K reports, you should review relevant materials from other sources mentioned in class or found in your text.
For comparison data use whomever you consider to be your major competitor.
Remember – your must use both financial ratios and a common-sized income statements.
The attached outline is provided for guidance, but the analysis should be adjusted, as appropriate, to conform to the individual characteristics of the firm.
Note to students: please remember do not select a financial institution for your company.
Suggested Outline for Financial Statement Analysis – PowerPoint Presentation
For PowerPoints items in Sections 1 & 2 should be 1 slide each. For section 3 it’s your call. Cover those important ratios and significant issues found in the common-sized income statement and in your analysis of the capital structure of the firm. Remember however that PowerPoint slides are not meant to be an eye chart. If you have more than 6 typed lines on one slide – you needed another slide!
II. Firm, Industry and Environment (please be brief, this IS a finance and accounting course not a history class!)
A. Description of firm and its management
B. Discussion of the competitive environment
C. Economic climate and outlook
D. Other factors as appropriate, e.g. governmental regulations, labor issues, litigation pending
III. Evaluation of Financial Statements (note key word is “evaluation”)
B. Short-term liquidity
C. Activity Ratios
D. Financial Leverage (Debt Ratios)
E. Profitability and Market Ratios
F. Common-sized Income Statement Analysis
G. Discussion of the Company’s capital structure
IV. Outlook, Summary and Conclusions
A. Outlook for performance (investment potential, credit assessment, etc.)
D. Summary and Conclusions
IMPORTANT! Be sure to give credit to any source you use. While this is not an APA exercise, the rules for plagiarism definitely apply.
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