Company Analysis Project
FIN3400 Company Analysis Projects Overall Objective: Students will research the financial fundamentals of a public company and its market equity performance. Project #1: Company Fundamental Analysis (Due Week 6) Outcomes: 1. Professional Communication: Students will be able to communicate effectively in professional writing and public presentation. 2. Financial Management: Students will be able to understand and apply the concepts, principles, and tools of financial management used to make capital and financing decisions by the firm. In particular, students should be able to conduct basic fundamental analysis by applying principles and tools to company’s earnings, financial position, and cash flows. 3. Valuation and Risk: Students will be able to understand and apply the principles of valuation and the nature of risk to assess investment alternatives. Select a public company and obtain its most recent annual financial statements. The company’s annual report will provide you with extensive information on the company’s operations, investments, and, financing activities. You should be able to download the annual report from the company’s Website (it is usually contained in the Investor’s page). Websites such as www.marketwatch.com and www.bloomberg.com also provide financial statements for most companies. However, please be aware that both sites have standardized (it fits all) format for all financials. I strongly recommend to you to examine the annual financial statements published by the company for they have more detailed information on the company’s financial activities. The most common sources is a company’s “Investor Relations” section of website or the SEC’s website. For the sake of completeness, choose a company that has long-term debt (Balance Sheet), pays a dividend (Statement of Cash Flows), and, has been public for at least six years. Use report format with headings and subheadings. Make sure to cite and list all sources either using MLA or APA format. Please use font size 12 and double- spaced lines. In addition, make sure that you have visuals exhibiting all formulas and calculations. Visuals such as tables and graphs are highly encouraged. In your written report, provide the following information within a narrative style. 1. Company’s overview: a. Company’s History. Highlight the main events (when and who founded it, when it became public, mergers, acquisitions, new products introductions, and most recent events). b. Nature of the Operations/Market competition. Briefly describe the products/services http://www.marketwatch.com/ http://www.bloomberg.com/ your company offers. Make sure you highlight the main sources of revenue from these products and its global market penetration (if any). What is your company’s standing in the industry? Who are the company’s competitors? c. Corporate Citizenship. Briefly describe the company’s Code of Conduct/Ethics social responsibility, and philanthropic programs. 2. Financial Performance / Ratio Analysis: a. Earnings performance. Discuss the success of the company’s operations for the last two years. Sales/revenue growth rate, Operating Margin, and Net Profit Margin financial ratios to describe the company’s performance for the last two years. Please provide ratios in a table with their corresponding calculations. b. Financial Position: Discuss the company’s financial position for the most recent year. What are the major assets? Major liabilities? Who are the main financial stakeholders? Calculate the following ratios: for solvency use the Current Ratio, for asset management use the Total Asset Turnover Ratio and for debt capacity use the debt/total asset ratio. All ratios should be for the last two years. c. Market Performance: Describe the company’s stock market performance for the last two years. Obtain the closing price for the end of the year and calculate the Price/Earnings and Market Value ratios. What do they mean? Is the company being valued more? d. Analyze the Statement of Cash Flows for the most recent year. Where did the cash come from? In what was the cash spent on? What was the cash spent on? 3. Conclusions: a. State your conclusion based on the research and analysis provided in your report. Has this company performed successfully in the last few years? Why? In which areas has the company done well? Which areas are deficient? In your opinion, is the company’s code of ethics, social responsibility and philanthropic programs extensive enough? Would you invest in this company? Why or Why not?