Company Analysis ProjectThe Company Analysis project is designed to give you a chance to practically apply the material
covered during the course in a “real-world” scenario as well as to familiarize you with the
business research resources available to you. After you have completed the project, you should
be comfortable researching any company in which you may want to invest, seek employment, or
do business.
Company Selection: Pick a firm that has been publicly traded for at least five year, pays
dividend and has debt. (Make sure it has long-term debt in the balance sheet). Do not pick a
bank or insurance company.
Report: Your written report should be 5-6 pages long (typed and double spaced; tables and
graphs can be submitted as appendices) and should include the following information:
1) Title page:
• The company name.
• Ticker symbol
• Stock exchange where your company trades.
• Recent stock price. You may use the stock price on the day you started working on this
report. (provide the date).
2) Company and Industry Description: Provide an introduction and description of the
company and the industry. What is the mission of the firm and what does the firm do?
Provide a brief history of the firm as well as a brief summary of any recent major news
events related to the company. Please remember to cite all your sources.
• Use the following link to find the Annual Report for your company:
https://www.sec.gov/edgar/searchedgar/companysearch.html
3) Financial Statement and Ratio Analysis:
• Use the past three years financial statements from “Yahoo Finance”.
• Provide a brief discussion of the Balance Sheet, Income Statement and Statement
of Cash Flows. This discussion should highlight a few key items that you consider
particularly noteworthy and not be a rehash of numbers from the statements
themselves.
• An analysis of the financial ratios, including trends, and explanation of their
significance. The most important part of this section is your interpretation and
analysis of the ratios rather than the ratios themselves.
• Using the Financial statements in Yahoo Finance, calculate the following ratios
for the past three years. (Please do this in excel and attach the excel file).
a) Current Ratio
b) Long-term Debt to Equity Ratio
c) Profit Margin
d) Return on Assets
e) Return on Equity
f) Price to Earnings (only most recent)
g) Market to Book (only most recent)
1
4) Cost of Debt:
• Provide an analysis of the credit-worthiness of your company (incorporate debt
and liquidity ratios). This section should include a discussion of the bond-rating
and resulting cost of debt capital.
• Use the following link to find the list of traded bonds and bond-rating for your
company: https://finra-markets.morningstar.com/BondCenter/Default.jsp?part=3
5) Cost of Common Equity:
• CAPM Model:
o This section should include your company’s Beta (from Yahoo Finance)
and the resulting cost of common equity using the CAPM model. (Assume
that the current Market Risk Premium is 6% and the Risk-free rate is
1.5%)
o Compare the Beta of your firm to the Beta of two other firms in the same
industry. (You can use the Beta from Yahoo finance for the Beta of the
comparable firms.)
o Provide a discussion of the riskiness of your company’s stock in terms of
Beta.
6) Dividends:
o How much and how often does the firm pay common stock dividends?
What is the dividend payout ratio? Do the comparable firms pay dividends
and what is their dividend payout ratio?
o Has the company significantly changed its dividend payments over the
past 3 years? If so, what factors could possible explain the shift? You may
consult the firm’s annual report to see if there is any discussion and/or
explanation for these changes.
7) Discuss the recent developments and issues facing your firm now and in the foreseeable future.
Talk about the firm’s future prospects. Address both positive and negative aspects of the firm’s
current condition and outlook.
8) Provide a conclusion with recommendations (buy, sell, hold) based on your analysis.
2
Part 3: Financial Statement and Ratio Analysis
Firm Name:
???
Firm Ticker:
???
Information needed for calculating ratios
Year 1
For the Fiscal Period Ending
Sales or Total Revenue
???
EBIT ==> Earnings before interest and taxes (Operating Income)
???
Interest Expense
???
Net Income to Company
???
Total Current Assets
???
Total Current Liabilities
???
Total Assets
???
Long-Term Debt
???
Total Stockholders Equity
???
Calculate the following ratios for each year using the above data
Year 1
Current Ratio
???
Long-term Debt to Equity Ratio
???
Profit Margin
???
Return on Assets
???
Return on Equity
???
Here we will calculate the market value ratios for the firm
Stock price
???
Number of shares oustanding (Common Shares Outstg. (M))
???
Market Capitalization = Stock price * Number of shares oustanding
???
Most recent Net Income (Net Income as of the most recent income statement)
???
Most recent earnings per share (EPS)
???
Price to Earnings (P/E) Ratio
???
Most recent Book Value (Total Equity as of the most recent Balance Sheet)
???
Book Value per share
Market to Book (M/B) Ratio
???
???
Analysis
Year 2
Year 3
???
???
???
???
???
???
???
???
???
???
???
???
???
???
???
???
???
???
Year 2
Year 3
???
???
???
???
???
???
???
???
???
???
Note: Collect the data from the Annual
Income Statement and Balance Sheet.
You can get this data from Yahoo Finance.
You have to calculate the Red ??? and
collect the data from Yahoo Finance for
your firm for the Black ???
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
