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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