Fin 52010 evaluation project | Business & Finance homework help
Objective of Project:
Develop an ability to apply textbook concepts and analytical methods to evaluate the financial condition and estimate the value of an actual company.
prospects from the standpoint of common stock shareholders.
1) Prepare a paper of sufficient length and scope to adequately describe your analysis of the company’s financial condition, trends, and value. The paper should be in MLA or APA format with proper citations throughout. If you are in doubt as to the proper forms for citation, references are linked in the course Blackboard site: Course Information>Guide to Proper
Citation. Failure to cite sources properly may be interpreted as academic dishonesty.
2) Prepare a PowerPoint presentation illustrating the main features slides. The presentation should highlight the main points of your analysis and conclusions. It should be structured so that, if presented live, the duration would be about 15 minutes. This presentation should be copied into an Appendix at the end of your paper. If this is an on-ground section of the course, your live presentation will be scored as part of the point total for Item 10) under Content, below.
1) Obtain year-end financial statement information for you assigned company for the last three years. The statements should include the balance sheet, the income statement, and the statement of cash flows. This financial statement information is to be presented in a series of Excel Spreadsheets copied into an Appendix at the end of the paper. Suggested sources for these include SEC Edgar, Yahoo Finance, Google Finance, among others. The course Blackboard site contains links for these sites under Course Information>Term Project Information>Websites for Term Project.
2) 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 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.
The required ratios are those summarized in the illustration in Page 57 of the textbook. Do not omit any of these. Do not add any others.
Use graphs to illustrate the three-year trends in the ratios. Do not simply provide rows or columns of numbers.
3) Find the industry average for these ratios, or calculate the most recent ratios of a major competitor in the industry, or use a combination of the two. A good source for comparable information is http://www.reuters.com/finance/stocks/. Enter your company’s name or ticker symbol into the search box. When your company’s information appears, select the Financials tab. The blackboard site contains a link for this under Course Information>Term Project Information>Websites for Term Project, or you may link directly.
Another source for company and industry information is the Lexis-Nexis database available via Lindenwood University’s Butler Library:
A link for this is also available in Course Information>Term Project Information>Websites for Term Project.
4) Perform an extended DuPont analysis for you company for each of the past three years.
Analysis means using the DuPont method to highlight strengths and weaknesses, not just computing the ratios. Do the same for the industry and/or a major competitor for one year using the most recently available information.
5) Using the percent of sales method, make an estimate of External Funds Needed (EFN) as shown in Chapter 3. Hint: For sales forecasting, you can use information from Value Line.
6) Estimate the Internal Growth Rate and the Sustainable Growth Rate (as shown in Chapter 3) for each of the three years for which you have gathered financial data. Are there any meaningful trends apparent?
7) Analyze the trends in the information you have gathered for you company, and compare your company’s trends to those of the industry and/or competitors. What does this tell you about the company’s current position? What are its strengths and weaknesses?
8) Find 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. Also report your company’s market capitalization (price*shares outstanding), earnings trends, dividend trends, trends in the P/E ratio, and beta.
9) Choose the basic stock valuation method described in Chapter 9 that is most appropriate for your company. Explain why this is so. Use this method to estimate what you think the price of this stock should be (not necessarily what it is). Explain you assumptions and your reasoning.
Would you consider this company’s stock to be a good investment? Explain why or why not.
10) The PowerPoint presentation, highlighting the most important findings of your paper. For items 8) and 9) students should find valuable information in the Value Line summaries that are linked in Course Information>Term