Easy Paper
1. Provide a one page write up about your company’s background.
a. Company IPO: Who were the underwriters? What were the fees? What type of
underwriting was used?
b. Company’s management: Who are they? Are the suitable for the job and why or
why not?
2. Provide a one page write up about your company’s sector. You can find your company’s
sector by typing your company’s name in the search bar in Morningstar and click on
company profile.
a. Make sure to mention your company’s top competitors.
b. Read the latest sector report provided on Morningstar. Discuss the points
mentioned in the report that relate to your company’s industry. How does this
affect your company’s future earnings? (Once you log into morningstar click on
markets to find the latest industry report. The industry reports will have a
summary for each sector)
3. Discuss the analyst report on your company.
a. What are the company’s strengths and weaknesses?
4. Find and discuss information concerning the standing of the company’s common stock in the market. This includes such information as the current stock price and price trends over the past three years both in the absolute sense and relative to a common market proxy, such as the S&P 500 or the Dow (provide a graph). You can create a comparative graph in yahoo
finance.
a. For the chart:
i. Go to yahoo finance
ii. Type in your company name in the search bar
iii. Click on chart
iv. Select 5Y period (they don’t have a default 3 year period). This will give
you the 5 year stock price movement.
v. You should see an option labeled “Comparison”. Click on that and select
the market proxy appropriate for your firm.
5. Report your company’s market capitalization (price*shares outstanding), and earnings trends
(Provide graphs).
a. As for the market cap history you can simply google “company name” market cap
history and the first link right below the price chart is the market cap graph.
6. Discuss current news about the company.
You will be doing all your calculations in excel first and then the paper write-up.
EXCEL Submission
1. Obtain year-end financial statement information for your assigned company for the last three
years. The statements should include the balance sheet, the income statement, and the
statement of cash flows. Download this information from Morningstar.com. Please access
Morningstar through Lindenwood database for ease of access and use.
The financial statement information is to be presented in a series of Excel Spreadsheets.
(Excel spreadsheet Sheet 1)
2. Obtain year-end financial statement information for your company’s major competitor for the
last three years. The statements should include the balance sheet, the income statement, and
the statement of cash flows.
The financial statement information is to be presented in a series of Excel Spreadsheets.
(Excel spreadsheet Sheet 2)
3. Calculate the financial ratios for each of the past three years in the manner shown in Chapter
3 or as close an approximation as you can, depending on available data.
These ratios must
be calculated for your company and the major competitor.
These ratios are to be
calculated by you from the financial statement information you gathered in Step 1. They are
not to be cut-and-pasted from external sources. (Present all ratios in Excel spreadsheet Sheet
1 (for your company) and Sheet 2 (competitor)). The cells in the excel spreadsheet should
have formulas in them so I can see that you calculated the ratios yourself)
The required ratios are those summarized in the illustration in Page 68 of the textbook (11
th
ed).
Calculate the following ratios:
Current ratio, quick ratio, NWC to assets, and interval measure
Inventory turnover, receivables turnover, fixed asset turnover, and total asset turnover
Debt-equity ratio, equity multiplier, long-term debt ratio, and times interest earned ratio
Profit margin, ROA, and ROE
Price-earnings, PEG, Price-sales, and market to book
4. Once you have calculated the ratios, create graphs to illustrate the three-year trends in the
ratios.
5. Calculate ROE using DuPont analysis for the past 3 years for your company and for your
company’s competitor. (Present calculations in Excel spreadsheet Sheet 3)
PAPER Submission
6. Ratio analysis section (Industry ratios can be retrieved from Morningstar.com and
Finviz.com. You will not find every single industry ratio but you will find a few ratios per
category)
a. Short term solvency:
i. Provide a brief definition of
every ratio
within the category
ii. Include graph for your firm that shows the trend analysis and another
graph that shows the competitors trend for the past 3 years.
iii. Discuss your ratios’ trend relative to the competitor’s three-year trend and
explain why they are similar or different.
iv. Discuss your firm’s ratios relative to the industry in the most recent year.
(i.e. are they higher or lower than the industry and what this means for
your firm). You only need to include industry ratios for current and quick
ratio.
b. Long term solvency:
i. Provide a brief definition of every ratio within the category
ii. Include graph for your firm that shows the trend analysis and another
graph that shows the competitors trend for the past 3 years.
iii. Discuss your ratios’ trend relative to the competitor’s three-year trend and
explain why they are similar or different.
iv. Discuss your firm’s ratios relative to the industry in the most recent year.
(i.e. are they higher or lower than the industry and what this means for
your firm). You only need to include industry ratios for D/E and times
interest earned ratio.
c. Asset Management:
i. Provide a brief definition of every ratio within the category
ii. Include graph for your firm that shows the trend analysis and another
graph that shows the competitors trend for the past 3 years.
iii. Discuss your ratios’ trend relative to the competitor’s three-year trend and
explain why they are similar or different.
iv. Discuss your firm’s ratios relative to the industry in the most recent year.
(i.e. are they higher or lower than the industry and what this means for
your firm). You need to include industry ratios for all the ratios in this
category. You can find the industry ratios on gurufocus.
d. Profitability:
i. Provide a brief definition of every ratio within the category
ii. Include graph for your firm that shows the trend analysis and another
graph that shows the competitors trend for the past 3 years.
iii. Discuss your ratios’ trend relative to the competitor’s three-year trend and
explain why they are similar or different.
iv. Discuss your firm’s ratios relative to the industry in the most recent year.
(i.e. are they higher or lower than the industry and what this means for
your firm). You should include the include industry ratios for PM, ROE,
and ROA.
e. Market valuation:
i. Provide a brief definition of every ratio within the category
ii. Include graph for your firm that shows the trend analysis and another
graph that shows the competitors trend for the past 3 years.
iii. Discuss your ratios’ trend relative to the competitor’s three-year trend and
explain why they are similar or different.
iv. Discuss your firm’s ratios relative to the industry in the most recent year.
(i.e. are they higher or lower than the industry and what this means for
your firm). You only need to include industry ratios for P/E, P/S, and PEG
7. DuPont analysis: explain the purpose to DuPont analysis
i. Discuss the three components of DuPont
ii. Include graph for your firm that shows the ROE trend analysis and another
graph that shows the competitors trend for the past 3 years.
iii. Discuss the weaknesses and strengths of your firm’s ROE relative to the
competitor firm over the past three years. Discuss the driving force behind
the movements in ROE.
iv. Discuss the weaknesses and strengths of your firm’s ROE relative to the
industry in the most recent year
8. Provide a summary of how your company is doing relative to the competitor and to the
industry in the five major categories (Short-term solvency, long-term solvency, asset
management, profitability, and market valuation).
Some guidance on retrieving industry ratios:
Morningstar
1. Log onto Morningstar
2. Type in your company name in the search box. This will bring you to the main page.
3. Under the “Quote” tab you will see sub-tabs. One of them read industry peers. Click on it
and scroll down. At the very bottom, you will see some of the industry ratios you need
Finviz.com
1. Go to finviz.com
2. Type in your company name in the search box
3. On the main page right under the graph, you will see the sector, industry, and country
your company belongs to. Click on the industry.
4. It will take you to an overview page with multiple tabs.
5. Click through the tabs to see the different set of ratios. If you click on Financial, you will
see the current ratio for all the firms in your company’s industry.
6. Copy and paste this data into excel
7. Take an average of the ratio. For example, take an average of all the companies’ current
ratio. That will be the industry current ratio.
As I mentioned before you are not going to find every single ratio and you are going to have to
do some digging through different sources.
Make sure you calculate everything in excel before starting your write up.
Excel Submission
1. Estimate the Internal Growth Rate and the Sustainable Growth Rate (as shown in Chapter
4) for each of the three years for which you have gathered financial data in project 2.
(Present all calculations in Excel spreadsheet Sheet 1)
2. Create a Proforma Income statement and balance sheet for your company only (Present
all calculations in Excel spreadsheet Sheet 2) Hint: For sales forecasting, you can use
information from Value Line or yahoo finance.
3. Calculate an estimate of External Funds Needed (EFN) as shown in Chapter 4. (Present
all calculations in Excel spreadsheet Sheet 2)
Paper Submission
1. ProForma
a. Discuss where you got the growth rates from. Cite your sources. You may also
use your internal growth rate or sustainable growth rate estimates.
b. Discuss what internal growth rate and sustainable growth rate for your firm is.
Are there any meaningful trends apparent?
c. Discuss your ProForma calculations for income statement and balance sheet.
Clarify any assumptions made and the reasoning behind your assumption.
d. Discuss EFN results.
i. Are there excess funds or external financing needed?
ii. If there are excess funds then what do you plan to do with excess funds
(i.e. increase dividends, reduce long/short term debt, repurchase stocks).
Explain your decision. Use financial ratios trend analysis as support for
your decision.
iii. If there are external financing needed then how do you plan to raise those
funds (i.e. reduce dividends, issue long/short term debt, issue stocks).
Explain your decision. Use financial ratios trend analysis as support for
your decision.
CITE YOUR SOURCES AND PARAPHRASE OR THE WHOLE GROUP WILL
RECEIVE A ZERO FOR PLAGARISM. I have zero tolerance for plagiarism!!!
What is considered plagiarizing?
Copying and pasting without proper citation.
Copying and pasting large sections of the paper from other sources even if it is properly
sourced. You are expected to paraphrase.
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