Term Project–Fall II, 2020

For the project, students are required to obtain financial statement data, calculate ratios, and perform a ratio analysis for The Best Buy Co Inc (BBY) and Conn’s Inc. (CONN). The report is due on Sunday, November 15, 2020 by 11:59 pm CST and it should be uploaded as a word document on Bb9 along with the EXCEL data and ratio calculations file.

The report should be typed (Times New Roman 12, double space), but the tables should be filled using Times New Roman 10. The report should have the following parts

1. A title page with the title, Term Project, and the student name below it. The title page should also include Best Buy Co Inc vs. Conn’s Inc: A Comparative Ratio Analysis


2. A short history for each one of the companies (about one page) in your own words. They should also include a description of their industry and the economic outlook for the aforementioned. Student sources should be the companies’ filings, reputable news sources. They should not include blogs. Plagiarizing will result in a zero grade.


3. The project should include an in-depth comparative ratio analysis through time and against the other company. The analysis should be based on the tables and graphs (at least 2-3 additional pages. When students analyze the ratios, they must explain to the reader the meaning of each ratio. They should analyze the trend of each ratio through time for each company and compare it to the trend of the other company’s corresponding ratio. Include events in the history of a company or the economy, the political climate and global conditions that might explain why a ratio dropped or increased substantially and perform this justification for all ratios: best sources, 10-K forms, or Annual reports to shareholders or other filings by the companies.


4. A summary of the two companies’ performance.


5. The two tables and the ratio graphs. Students have the option to include the tables and graphs or portions of the tables within the analysis section of the text.


6. References (at least 10)- APA style of citation

The projects will be graded according to the following weighting scheme

• 40 percent ratio accuracy


• 40 percent in-depth ratio analysis


• 20 percent language and professional appearance of the document

Both the word file and the excel file should be saved with the same name, and that name should be your last name followed by the first letter of your name. For example, for Alexandra Theodossiou the file will be saved as theodossioua.

Steps for part C

1. Using the data from WRDS, students must fill-in the two tables below. All ratios for the two companies must be calculated using the downloaded data from WRDS and for their fiscal years. If there is no available data for the calculation of a ratio or the denominator of a ratio is zero, they should enter NA in the table for that company’s ratio. If the EPSPI is negative in a year for either one of the companies again, students should enter NA for the corresponding PE ratio. There is no meaning to a negative PE ratio. Accuracy should be four decimals for percentages or 2 decimals for numbers (i.e., in percentage format 14.32%, 5.11%, 3.00%, and in number format, for days, for example,15.10). Where appropriately, they should express the ratio as, times (2.30). The format of each ratio appears in the tables. They should create graphs in excel for all ratios for the two companies, i. e. for each ratio, there should be a single graph showing the ratios of the two companies for fiscal years 2014-2019. They should use consistently the same colors for the ratios of each company in each of the graphs.


2. Based on the tables and graphs they should write an in-depth analysis (at least two to three pages - excluding tables, graphs, and references) that will compare the ratios for each company through time and against each other. Students must refer to significant events that affected each one of these ratios and in what way.

Formulas to be used for the ratio calculation

• Quick ratio= (cash and short-term investments + receivables-total)/current liabilities-total


• Cash Ratio= cash/current liabilities-total


• Debt-to-equity ratio=liabilities-total/stockholder’s equity-parent


• Days’ in receivables=365/ (revenue-total/receivables-total)


• ROA=net income (loss)/assets-total


• PM=net income (loss)/revenue-total


• ROE=net income(loss)/stockholder’s equity-parent

o PE ratio=price close-annual-fiscal/earnings per share (basic)-including extraordinary items= Very important: Exclude negative PE ratios, enter NA in such cases

• Price-to-sales=price close-annual-fiscal / (revenue-total/(common shares outstanding*adjustment factor)). Students must use the parentheses exactly as they are shown above.


• For ratios with missing data enter NA, and the same applies for ratios with denominators equal to 0.

Table 1

Liquidity, financial leverage and asset utilization ratios for Best Buy Co Inc (BBY) and Conn’s Inc. (CONN)

Table 2

Profitability, and market value ratios for Best Buy Co Inc (BBY) and Conn’s Inc. (CONN)

Username: fina5311

Password: FinMgt#5311

STUDENT INSTRUCTIONS - How to download data from Compustat

For the analysis, students will need data from Compustat.

They must visithttps://wrds-web.wharton.upenn.edu/wrds/and enter as

The database allows only fifteen concurrent users. If more than fifteen students try to log in to WRDS, WRDS will not permit it. Students should follow the steps below.

In the page with the title “Please Review and Accept the WRDS Terms of Use:” read, scroll down and press

In the next page select Get Data, then Compustat-Capital IQ, then

North America-Daily, then Fundamentals Annual

In Step 1: Select the following options

Then select your dates to be 2014-01 to 2020-10

In Step 2: Select TICKER and then enter BBY CONN

Step 3: Under How does this work? select Search All

Then select the following Company Name by clicking in the circle before it, after that I will see Company Name under Selected

In the box that says Search All, type one by one the description of the variable (from below), if you see more than one match simply select the one whose symbol appears under Variable below

The second screenshot

It should show at the top (16) indicating that you selected 16 variables

In Step 4 select the following

9

At the bottom of the web, page students must mark check Save this query to myWRDS and under it they should write the first letter of their first name followed by their full last name. The previous step will help the instructor identify the student who downloaded the data. For example, for Alexandra Theodossiou the instructor should enter atheodossiou then selected Submit Query.

Students must wait until they get a page similar to the one below, but not the same since they will also have company names in the file.

• Please note that student files will have a different name

• To download their file, students should right click on the file link, choose Save Link As and give their file a name and its location (where you want to save it and under what name).


• Students must log out from WRDS by selecting the logout option at the top of the first web page in WRDS.