financial analysis project

AC-638 Financial Statement Analysis

FINANCIAL ANALYSIS PROJECT

Overview

The final project for this class is a financial analysis of a publicly traded corporation.

The final result will be delivered in the format of a written paper. As a general guide, the written paper should be at least

EIGHT pages, double spaced. A cover page, works cited page, and appendix does not count toward the page

requirement.

Suggested Approach

Identify a publicly traded company that interests you. This should be a company for which historical

data are readily available. (NOTE: The chosen company must currently be paying a dividend).

In choosing the company, also consider the availability of other information that will be helpful in

completing the assignment.

Research background information on your company.

Gather the relevant data to complete the various analyses outlined on the next page.

Based on your analyses, determine if the company is a good investment choice.

Follow the format listed on the next page.

One student per company. The first student to submit an acceptable proposal will be granted that

company.

If you are having trouble choosing a company, contact your instructor as soon as possible.

To gather information on an entity, you must use your corporations most recent annual report (10-K). This can

be obtained by either doing an online search for the companys annual report or going to the companys

website directly.

E-mail the instructor with your intended company by no later than Saturday, April 11th

.

**NOTE: Use of AI to write the report or to copy and paste calculations is strictly prohibited. Any use of AI for

this purpose will result in a violation of the Tradition of Honor and will result in failure of this project.

Due Date

The paper is due by Monday, May 4th

.

The final project is worth 25% of the course grade.Project Format

1. Introduction:

Discuss what the project is about, the intent of it, and the company selected.

2. Brief Summary of the Company

History of the company

A short summary of the products the entity produces/sells

3. Comprehensive Financial Analysis

Conduct a financial analysis on the firm, based on the quality of the financial statements. To prepare a financial analysis,

one must include the following:

a) Prepare a full common sized balance sheet and income statement for the prior two years.

b) Manually compute the following ratios for you corporation for the prior two years. In this section, one must also

indicate if the ratios are strong or weak.

-Current Ratio

-Quick Ratio

Accounts Receivable Turnover

-Inventory Turnover

-Debt-Asset Ratio

-Return on Assets

-Return on Common Equity

-Times Interest Earned

-Gross Profit Margin

-Net Profit Margin

c) Cash Flow Analysis: Assess the health of the cash flow statement.

-Compute free cash flow for the prior two years

-Are there capital expenditures? If so, how much? Whats the trend?

d) Balance Sheet Analysis: Compute the firms capital structure for each of the prior two years.

-Whats the trend in the capital structure?

e) Debt Analysis: Find the companys credit rating.

-Do you believe that the credit rating is appropriate? Explain.

f) Inventory Analysis:

-What type of inventory accounting system is used? Find the note.

g) Stockholders Equity Analysis

–Have there been dividend payments and/or stock buybacks?

-What types of stock are issued?

-Are there any dividends in arrears on preferred stock (if applicable)? Find the note13

h) Pension Plan Analysis: Analyze the corporations pension plans. Use the notes to the statements.

-Does the corporation have a defined benefit plan, defined contribution plan, or both?

-If there is a defined benefit plan, whats the settlement rate?

4. Conclusion

-Based on the companys liquidity, solvency, debt, and profitability ratios, along with the cash flow and supporting

analysis, does your corporation appear to be a good investment choice? Explain in detail.

5. References

*All sources should be cited using an APA format.

*In addition to including a References Page, one must useproper in-text citations (using APA format)

6. Appendix

-Make sure to include supporting work for ratio computations in this section

* Beyond the papers content, writing skills (proper spelling, grammar, punctuation, sentence/paragraph

structure, etc.) will be factored into the grading of the research paper, as well.

*Note: It is required that one uses the 10-K and compute the ratios using Microsoft Excel or Google Sheets.

The formulas for the ratio computations must be included. Please do not include ratios found online in the

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