OBJECTIVE
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
chosen by the student.
SITUATION
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 (a real publicly-traded company) is the best potential
candidate for a long-term commitment.
THE COMPANY 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 THE COMPANY to determine if it is
prudent to commit to this company’s communication system. The cost of cutting over to the new
communications system is significant and any interruption in support during the
next few years would adversely affect HTC’s performance and profit.
Specifically, the question is: will THE COMPANY 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 THE COMPANY
THAT IS TO BE ANALYZED FOR THIS PROJECT.
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:
(1) An
evaluation of THE COMPANYâS financial performance for the last year. DuPont
analysis and analysis of significant financial performance results are required
for the last three years. (See detailed description below)
(2) An evaluation of THE COMPANYâS stock
performance for the last one year.
(3) Finally, a
specific recommendation, with supporting rationale, as to whether or not THE
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.
You may wish to include all necessary and relevant financial
performance and stock information, trends, and projections in supporting your
recommendation. These factors may include, financial ratio trends and industry
comparatives, capital spending, stock growth, Beta values, credit rating
service valuations, bond rating valuations, and management and investment
reports – when these documents are available.
REPORT REQUIREMENTS
YOUR SPECIFIC ASSIGNMENT
Research and analyze the following information for THE
COMPANY (SELECTED BY STUDENT).
–Annual Balance Sheets for THE COMPANY for the last three
years.
–The Income Statements for THE COMPANY the last three
years.
— Annual reports, 10K or 10Q——
–Industry norms
———–
—Analystsâ reports on performance
— Management reports or press releases
Using this information the students have to develop
evaluation of the financial performance for THE COMPANY. (Totally 85% of the
assignment grade)
-1âBackground and Industry (one short paragraph).
-2âSelect of most significant financial performance results
for the company: Compare Revenue, net income, working capital, total assets for
the last three years and other results of your choice of the company against
the industry or main competitor. Present the table with this information in
your report. Write about 1 page of the analysis of these financial performance
results. (15% of the project grade)
-3âFind financial ratios for the company and its major
competitor in the Internet. Write about 1-2 pages of analysis of the ratio
results you received. (15% of the project grade). Compare the ratio results
against the industry or main competitor.
-4- Evaluate Return on Equity for the company for the last
three years using the DuPont analysis. (10% of the project grade). Compare the
companyâs results to a major competitor.
Taking the information from the Income statements and the
Balance sheets, calculate the companyâs return on equity using the DuPont
technique for the company for three years. Show your calculation!
Write about 1 page of analysis of the results that you
received. Compare the results to main competitor. 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, stock growth, Beta values, credit rating service valuations (if
possible), bond rating valuations (if possible), etc. Make an overall
conclusion about financial performance of the company during the last years.
Compare the results that you received against the industry or main
competitor. Summarize the results that
you received in 1 page. What are the firmâs financial strengths and weaknesses?
(10% of the project grade)
-6- Collect and evaluate the data about stock performance of
the assigned company’s for the last one year. Compare the results that you
received against the industry or main competitor.
Write about 1-2 pages of analysis of the ratio results you
received. (20% of the project grade).
-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
grade):
-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. Include suitable comparative,
1. Financial statements analysis of the assigned
company (15%) Virtually no effort to develop financial statements
analysis of the assigned company; not worthy of credit. Only a
superficial effort to develop financial statements analysis of the assigned
company The project contains
some financial statements analysis of the assigned company, but should be
considerably more developed Good
effort is made to develop financial statements analysis of the assigned company Excellent and very thorough
development and articulation of financial statements analysis of the assigned
company
2. Financial ratio trend analysis of the assigned company
and industry comparatives. (15%) Virtually
no effort to develop financial ratio trends analysis of the assigned company
and industry comparatives; not worthy of
credit Minimal effort to
develop financial ratio trends analysis of the assigned company and industry
comparatives. Some effort
made to develop financial ratio trends analysis of the assigned company and
industry comparatives, however the result are not explained and analyzed. Good effort to develop financial ratio
trends analysis of the assigned company and industry comparatives, the result
are well explained and analyzed Excellent
and successful effort to implement financial ratio trends analysis of the
assigned company and industry comparatives; very clear linkages between
financial retio results and investment
decisions and recommendations;
3. DuPont analysis of the assigned company. Compare with
main competitor. (10%) Virtually no
effort to develop DuPont analysis of the assigned company not worthy of credit Minimal effort to develop DuPont analysis of the assigned company. Some effort made to develop DuPont
analysis of the assigned company, however the result are not explained and
analyzed. Good effort to
develop DuPont analysis of the assigned company, the result are well explained
and analyzed Excellent and
successful effort to implement DuPont analysis of the assigned company very
clear linkages between DuPont analysis and
investment decisions and recommendations;
4. Other areas of financial analysis: capital spending,
stock growth, Beta values, credit rating service valuations, bond rating
valuations, etc. (10%) Virtually no
effort to develop the analysis of the other areas of financial analysis:
capital spending, stock growth, Beta values, credit rating service valuations,
bond rating valuations; unworthy of much credit Minimal
effort to develop analysis of the areas
of financial analysis: capital spending, stock growth, Beta values, credit
rating service valuations, bond rating valuations Some effort made to analyze other areas of financial
analysis: capital spending, stock growth, Beta values, credit rating service
valuations, bond rating valuations but gaps are obvious Very good effort to analyze
other areas of financial performance: capital spending, stock growth, Beta
values, credit rating service valuations, bond rating valuations Outstanding effort to to analyze other areas of financial analysis:
capital spending, stock growth, Beta values, credit rating service valuations,
bond rating valuations
5. The evaluation of the assigned company’s stock
performance for the last year. (20%) No
effort to develop the evaluation of the
assigned company’s stock performance for the last year. Some effort made to develop evaluation of the assigned
company’s stock performance for the last year, but analysis is very short and
limited Good effort made to
develop the evaluation of the assigned company’s stock performance for the last
year, however the result are not
explained and analyzed. Good
effort made to develop the evaluation of
the assigned company’s stock performance for the last year, the result are well
explained and analyzed Excellent
and accurate evaluation of the assigned
company’s stock performance for the last year; very clear linkages between
stock performance results and investment
decisions and recommendations;
6. The student
developed 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. (15%) Little or no
effort to explain linkages between the assigned company’s financial and stock performance to warrant entering into a long-term
commitment Some effort made
to explain relationships of the assigned company’s financial and stock performance to warrant
entering into a long-term commitment, the analysis is poor and incomplete. Some effort made to explain
relationships the assigned company’s
financial and stock performance to warrant entering into a long-term
commitment, but there are significant gaps in the analysis Very good effort made to explain relationships
the assigned company’s recent trend in financial and stock performance to
recommend entering into a long-term commitment.
There are no significant gaps in the analysis Outstanding and very thorough effort to explain relationships the
assigned company’s recent trend in financial and stock performance. The results
are sufficient to warrant entering into a long-term commitment.
PRESENTATION OF PAPER AND WRITING
7. Organization, Format and Presentation of Paper including
Introduction, Body, and Summary (4%) There
appears to be no logical organization of the paper’s contents Presentation has numerous blemishes and there
may be a general lack of organization Paper
has some blemishes in presentation and may have some weaknesses in organization Paper is neatly presented without major
blemishes and is generally well-organized Paper
is extremely neat and has no blemishes; its organization is outstanding and
very easily followed
8. Use of Tables, Figures and Other Graphics to Summarize and
Support Analysis Presented in the Paper (3%) Use
of tables, figures and other graphics in support of paper is unworthy of credit Tables, figures and other graphics do
not provide much support for the paper; they may have inadequate labels; and
numbering sequence is inadequate Tables,
figures and other graphics provide marginal support for the paper; some labels
may be incomplete; there may be some problems with the numbering sequence Tables, figures and other graphics are
descriptive and provide solid support for the paper; they are properly labeled
and numbered Tables, figures
and other graphics are very descriptive and provide exceptionally strong
support for the paper; there are no errors in labels or in the numbering
sequence
9. Logical and Smooth Flowing Transitions and Relationships
Among Sections of the Written Report (3%) No
effort made to provide appropriate transitions Paper
makes minimal use of transitions Some
transitions used in paper Good
transitions used in most sections Very
effective transitions are used throughout the written analysis
RESEARCH APPROACH AND USE OF APPROPRIATE PROFESSIONAL
SOURCES OF INFORMATION AND DATA
10. Research Sources and Significance of Research
Information and Data, Use of APA Citation Methodology, use of double spaced,
with one-inch margins, and use 12-point Times New Roman font. (5%) No obvious effort to use professional and
supporting research sources Little
effort made to use appropriate professional and supporting research sources
which may be accompanied by inadequate documentation Some effort to identify and use appropriate and professional
and supporting research sources with some documentation Good effort to identify and use appropriate and
professional and supporting research sources; appropriate and professional use
of APA documentation, use of double spaced, with one-inch margins, and use
12-point Times New Roman font. Excellent
and successful effort to identify and use appropriate and professional research
sources including Library Search Engines, Websites, S&P, SEC, stock
exchanges, Morningstar, NYSE, Competitors, 10K Report, analyst reports, news
releases, articles, etc.; appropriate and accurate documentation
quantitative and qualitative analyses and conclude with a
specific and supported recommendation on the projected financial viability of
THE COMPANY THAT IS TO BE ANALYZED FOR THIS PROJECT 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
graded.
The paper should be written in APA style Research Paper
format.
Please note that Use of APA Citation Methodology is required
for the assignment.
An evaluation rubric is available for the research project.
The evaluation rubric outlines the specific requirements and elements of the
project. It is suggested that the rubric be used as a guideline for the
content, preparation, and completion of the project.
The rubric will be used for the evaluation and grading of
the final research project.
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