—- FINANCIAL RESEARCH PROJECT ——-
Worth 25% of the course grade.
Due date is stated in the course schedule.
THE PROJECT IS DESIGNED TO BE COMPLETED INDIVIDUALLY.
The specific objective of this graded written research
exercise is to prepare an “executive level financial report” to the
Chief Financial Officer (CFO) of a mythical company in which you are employed
as a financial analyst. This report will
pertain to the financial evaluation of a real, publicly-traded, company. It
will require independent research (web-based or library), careful financial
analysis, and the proper application of key financial theories and formulas.
The company that is to be analyzed for this project is: Corning Inc.
Alternatively, you can request approval of another publicly
traded company. This request must be submitted before the end of the first week
of the course. The request must include
identification of the company by ticker symbol and name
a reasonable and appropriate explanation of why you want to
examine the alternative company
the source of the analyst’s report that will be used in the
analysis (which must be submitted to me)
acknowledgement by you that all of the specific elements of
the assignment (see below) will be prepared by you and included in the final
research project report
You are a financial analyst with the mythical High
Technology Corporation (“HTC”). HTC is an established manufacturer of
a line of electronic components, which services an international market. HTC is
currently a new fully-integrated wireless communication service for world-wide
use. A competitive technical and
economic product evaluation has determined that THE COMPANY THAT IS TO BE
ANALYZED FOR THIS PROJECT (Corning Inc. a real publicly-traded company) is the
best potential candidate for a long-term commitment.
Corning Inc. is offering a competitively favorable
deal. However, based on some serious
general concerns about the fallout of companies in the industry in general, the
CEO has asked your CFO to conduct a financial analysis of Corning Inc. to
determine if it is prudent to commit to this company’s products. The cost of merging this product line with
existing product offered is significant and any interruption current cash flows
during the next few years would adversely affect HTC’s performance and profit.
Specifically, the primary question is: will Corning Inc. be
financially viable over the next two to three years?
YOUR SPECIFIC ASSIGNMENT
Your specific assignment is to research, analyze, and
prepare a report for the CFO on the actual financial performance of Corning
Inc. (the assigned company). In addition to reviewing the traditional financial
performance indicators, you are also to review the companyâs. past and current
stock performance. Your report includes three parts:
evaluation of the assigned companyâs financial performance for the last three
years. (See detailed description below)
evaluation of the assigned companyâs stock performance for the last one year.
(See detailed description below)
(3) Finally, a
specific recommendation, with supporting rationale, as to whether or not the
assigned companyâs recent trend in financial and stock performance is of
sufficient financial strength to warrant entering into a long-term commitment.
To assist you in your task, the CFO has provided the
following general guidance. Since it is recognized that the industry is
undergoing a major contraction, it is very important to comparatively evaluate
the companyâs financial and stock performance trends against its Industry or
-To find the information for the assigned company you need to type the
stock symbol in the Search window to get into the companyâs page.
www.morningstar.com – To find the information for the
assigned company you need to type the stock symbol in the Quotes window to get
into the companyâs page.
find the information for the assigned company you need to type the stock symbol
in the Search window to get into the companyâs page.
www.finance.yahoo.com – To find the information for the
assigned company you need to type the stock symbol in the Search window to get
into the companyâs page.
www.nyse.com â Click on Data, then click on Stocks (under
Quotes), and type the name of the company or the stock symbol in the window
âKeyword or symbolâ to get into the companyâs page.
www.nasdaq.com – To find the information for the assigned
company you need to type the stock symbol in the Search window to get into the
YOUR SPECIFIC ASSIGNMENT
Using the information from the websites the students have to
develop evaluation of the financial and stock performance for Corning Inc.
(Totally 85% of the assignment grade)
-1âBackground and Industry (one short paragraph).
-2âAnalysis of the most significant financial performance
results. (15% of the project grade)
Select of most significant financial performance results for
the assigned company. Create a table that contains the companyâs financial
performance results for the last three years and for the major competitor or
industry for the last year: Revenue, net income, working capital, and other
financial performance results of your choice. Present the table with this
information in your report.
Write about 1 page of the trend analysis of these financial
-3â Financial ratio analysis. (15% of the project grade)
Find financial ratios for the assigned company for the last
1-3 years and its major competitor for the last year in the Internet.
ratios as the table(s) in your project.
Write about 2
pages of analysis of the ratio results that you found. Compare the ratio
results against the industry or main competitor. In your analysis you should
answer the following questions:
How liquid is the company?
How is the company financing its assets?
Is management generating a substantial profit on the
-4- Evaluate Return on Equity for the company for the last
three years using the DuPont analysis. (10% of the project grade)
Taking the information from the Income statements and the
Balance sheets, calculate the companyâs net profit margin, total assets
turnover equity multiplier, and return on equity using the DuPont formula for
the company for three years. Show your calculation!
ROE = Net profit margin x Total assets turnover x Equity
income/Sales x Sales/Total assets x Total assets/Common equity
You can use Revenue instead of Sales.
the results to main competitor. For the major competitor you can use ratios
from the Internet or calculate them for the last year.
Write about 1 page of analysis of the results that you
received. In your report please answer the question: If the management of the
company would like to improve their return on equity, what should the
management of these companies do?
-5- Evaluate other areas of financial analysis: capital
spending, Beta values, credit rating service valuations (if possible), bond
rating valuations (if possible), etc. (10% of the project grade)
1) Find the data for capital spending. How much did Corning
Inc. spend on research, development, and engineering in the most recent year?
How did this compare with the previous year?
2) Find the current beta for the company and its major
competitor in the Internet.
Present beta results as the table in your project.
Write about 0.5 page of analysis of beta values that you
found. Compare the beta values against the main competitor. In your report
please answer the question: How risky the company is?
-6- Collect and evaluate the data about stock performance of
the assigned company’s for the last one year. (20% of the project grade).
1) Find the market ratios for the company for the last 1-3
years and its major competitor for the last year in the Internet.
Present the market ratios as the table(s) in your project.
Write about 1 page of analysis of the market ratio results
that you found. Compare the market ratio results against the industry or main
competitor. In your report please answer the question: Are the common
stockholders receiving an adequate return on their investment?
-2) Analysis of the historical stock prices trend for the
Collect and evaluate the data about stock prices of the
assigned company’s for the last one year for the company and its major
Create the chart(s) using the stock price chart tools on the
websites or Excel. Present the chart(s) in your project.
Write about 0.5 page of analysis the historic stock prices
trend for the last year.
3) Apply the Capital Asset Pricing Model (CAPM) Security
Market Line to estimate the required return on Corning Incâs stock. Note that
you will need the risk-free rate and the market return. Show this information
in your project.
To get the current yield on 10-year Treasury securities go
to Finance!Yahooâs at www.finance.yahoo.com
-click on Market Data –
Bonds. You will use the current yield on
10-year Treasury securities as the risk-free rate to estimate the required rate
of return on stocks. Show this information in your project.
To get the market return go to money.cnn.com , Click on
Market, then click on S&P 500.You will use 52-weeks change for S&P500
listed as âYear-to-Dateâ percentage change. Show this information in your
Calculate the required return on the assigned companyâs
stock using the Capital Asset Pricing Model (CAPM) Security Market Line. Please
show your work.
Find on the Internet the 52-weeks change of the stock price.
Compare the required return on the stock calculated using CAPM against it’s
historical return over the last 52 weeks, found on the Internet. Is there a difference
between these returns? Is Corning Incâs stock overvalued, undervalued, or
properly valued? Why? Explain your answer.
-7- Develop a specific recommendation, with supporting
rationale, as to whether or not the assigned company’s recent trend in financial
and stock performance is of sufficient financial strength to warrant entering
into a long-term commitment (about 1 page) (15% of the project grade).
PRESENTATION OF PAPER AND WRITING (15%) of the project
-Organization, Format and Presentation of Paper including
the Title page, Introduction, Body, and Summary (4% of the project grade)
Use of Tables, Figures and Other Graphics to Summarize and
Support Analysis Presented in the Paper (3% of the project grade)
Logical and Smooth Flowing Transitions and Relationships
among Sections of the Written Report (3% of the project grade)
Research Sources and Significance of Research Information
and Data, Use of APA Citation Methodology (5% of the project grade)
Your final report is to be an executive-level financial
report, directed to the CFO. This report should be about 8-10 double-spaced
typewritten pages (without tables and graphs). Include suitable comparative,
quantitative and qualitative analyses and conclude with a specific and
supported recommendation on the projected financial viability of the assigned
company for the next several years.
Essential research data, financial calculations and other
documentation as necessary to support your recommendation should be referred to
in summary form in your report and attached in detail as enclosures. All major sources should be referenced. There is no set limit to the size of the
enclosures, but it is recommended that only essential enclosures be attached.
You should use references and bibliography to identify any remaining supporting
documents you wish to include.
Format of the Research Project:
The Data Exercise must be posted to the LEO Student
Assignments as a Attachments are limited to a maximum two files in doc, docx.,
xls. xlsx., or rtf. formats. OTHER FORMATS ARE NOT ACCEPTABLE, will not be
reviewed or graded.
Please note that hand-written and scanned works, pdf. files,
jpg. files, as well as files posted in google drive, will not be accepted or
The paper should be written in APA style Research Paper
Please note that Use of APA Citation Methodology is required
for the assignment.
All works must be Word processed. Handwritten and scanned
work will not be accepted and graded.
This report is an individual effort and must be researched,
developed and prepared by you. All
questions related to this assignment, should be referred to the mythical CFO
(i.e., your instructor).
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