The Financial Analysis Project

The Financial Analysis Project

(One Company versus its Industry) The student will analyze the financial history and status on one for-profit company for at least five (5) years and forecast the future growth and financial stability of the company for one – two years.

The company’s income statement, balance sheet, and cash flow statements should be sources and guides in developing and writing the analysis.

 Important topics to be discussed and estimated include

(1) the growth in net income,

 (2) growth in sales revenue,

(3)growth in operating income,

(4) the growth in assets, and

(5) the growth in various and significant costs.

You should compute the Economic and Market Value Added, earnings per share, price/earnings and earnings/price ratios, the movements in the stock prices over the past five or more years, and discuss the financial capability of the company to finance its future growth via equity, debt, or from other sources. Calculate the relevant ratios that may be used to analyze the company’s status. The student will interrelate and emphasize industry financial standards, norms, and ratios to those of the selected company. The student can incorporate macroeconomic variables such as changes in interest rates, the growth in the economy, inflation rates, and other variables that may affect the company’s and industry’s financial performance. For company and/or industry information, see Robert Morris Associates’ publications, forbes.com, marketguide.com, valuepro.net, chart.yahoo.com/d (for dividend data), morningstar.com, zacks.com, smartmoney.com, msnbc.com (for ratio data), and cbsmarketwatch.com. Furthermore, Dun & Bradstreet, Inc. at the Charlotte Public Library contains industry averages and key business ratios. You might also consult Value Line publications.

See below handout for format of the project.

FINANCIAL ANALYSIS PROJECT

Summary of Financial Analysis Project Paper

Purpose and Scope

Objective of Research

Data Sources

Research Methodology

Balance Sheet 

Asset Growth  

Asset Structure – Current Assets vs. Receivables vs. inventory vs. PPE

Liabilities and Equity Growth

Financial Structure Analysis: – Comparison over time of the share of the liabilities between long term debt, current liabilities, etc.

Income Statement

Income Statement: Income statement items – 1. Sales, COGS and Profit; 2. Expenses, EBT and Net income and Shares outstanding

Income Statement Margins: Net Sales and COGS comparison over time.

Income Margins over time: General Expenses, Depreciation, etc.

Cash Flow Statement: Cash Flow Growth

Ratio Analysis

Ratio Analysis – Current and Quick over time.

Asset Management Ratios

Debt Management Ratios

Profitability Ratios

Market Value Ratios

Other values

Other Important Values: Tax Rates and WACC

Economic Value Added and Market Value Added:

Stock Price

Macroeconomic Variables

Results

Foot Conclusion: 1 Page

Projections

Projections: draws on forecasts from Thomson and Morningstar.

 
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