finance project

| June 13, 2016

Question
FINC 322 FINANCIAL MANAGEMENT 1
Summer 2015

Financial Analysis Project
Goal

Procedure

Plagiarism will result in an automatic course grade of F
To apply the concepts (financial ratios) learned in class by evaluating the financial
performance of a company of your choice using publicly available financial information.
First, choose any firm of your interest but make sure they have all financial and stock
prices information for the last 4 years.
Second, save on Excel the annual income statement, balance sheet, cash flow for the
most recent last 4 years available for your firm. See page 3-7 how to get the
information.
Finally, based on the information, you calculate financial ratios (just for 2 years: 2012
and 2013) and write up your evaluation based on these 2 years only.

What to do:
1. Calculation of Ratios (30 points) on MS Excel
Use the Financial statements of your chosen firm to calculate the financial ratios. Save your
companys financial data (Most recent 4 years of i) Income Statement, ii) Balance sheet, iii)
Statement for Cash Flow, and iv) daily stock prices of 4 years) on Excel. Name and Save the
completed file.
Name it as your last name_+your first name_+Ticker Symbol_+Ratios For example, my
Excel file for Apple, Inc. will be named as Lee_Cheolwoo_AAPL_Ratios.xls or
Lee_Cheolwoo_AAPL_Ratios.xlsx
It should contain:
o Most recent 4 years Income Statement/Balance Sheet/Statement for Cash Flow
o Daily Stock Prices for 4 years (Last day of those 4 years will be the day you get the prices
data)
o Ratio Table (Use 2012 and 2013 only). Please show the ticker symbol (Ticker symbol is
explained in footnote 2 on page 3) for your firm somewhere in this table so I can check your
ratios with your firms numbers. Although you provide 4 years of data, you will use just two
years2012 and 2013in order to construct your ratios. If you use other 2 years, youll be
severely penalized.
2. Performance Evaluation (70 points) on MS Word (Usually between 7 to 10 pages)
Performance evaluation should be typed on MS Word and must be named as your last
name_+your first name_+Ticker Symbol_+Evaluation. For example , my word file will be
name as Lee_Cheolwoo_AAPL_Evaluation.doc or Lee_Cheolwoo_AAPL_Evaluation.docx
Part 1 [20 pts]: Write a short company analysis of the firm IN YOUR OWN WORDS such as:
o brief business history, what business the firm is in, the industry the firm is in,
o information on the firm such as the size of the firm in terms of revenues, number of employees,
assets and market value, the current officers, and how the industry as a whole is performing.
Part 2 [50 pts]: Write an evaluation of the firm by evaluating each ratio:
o what each ratio measures
o and whether the firm is doing better or worse compared i) to the previous year ( Time-trend
analysis) and also ii) to the industry average ( Peer group analysis) [See Appendix A on page 8 for
industry average].
o How would you explain your ROE performance over two years based on Du Pont Identity
analysis? What drove the increase or decrease in your ROE from 2012 to 2013?
o Would you invest or buy the stock of the firm based on your analysis? Why or why not? Explain
in detail.
Where to submit:
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FINC 322 FINANCIAL MANAGEMENT 1
Summer 2015

Send both of them to me at cheolwoolee@ferris.edu before or on 6/18/2015 by 5

pm.
# Read Carefully:
Any failure to follow the instructions described here will cause severe deductions.

Make sure your excel file and write-up include everything section what to do on page 1 describes
Writing with spelling errors and with low level of elaboration will be penalized.
I wont accept late project. Remember that you can turn in your project early but I will not accept
late project particularly for the following reasons: computer not working, disk lost, computer crashed,
file not compatible, a university excused activity. For a university excused activity, you should
arrange your project submission earlier than the submission deadline.
If you have any further question on the project, ask me after class or email me.
You are responsible for any consequence because you fail to read this information carefully.

Calculate the following 17 ratios
Column 1
Name of Ratio

Column 2
Write the Formula

1
2
3
4
5

Current Ratio
Quick Ratio
Total Debt Ratio
Debt/Equity Ratio
Inventory Turnover

e.g., CA/CL
(CA-Inv)/CL

6
7
8
9
10
11

Receivables Turnover
Capital Intensity Ratio
Profit Margin
ROA
ROE
Market Price

12
13

Number of Shares
Outstanding
Book value per Share

14

Market to Book (M/B) Ratio

15
16
17

EPS
P/E Ratio
EBITDA Ratio

2

Column 3 (C3)
Calculate Ratio for Year
2012

Column 4 (C4)
Calculate Ratio for Year 2013

*Total Debt is shown as Total Liabilities
*Cost of goods sold is shown as Cost of Revenue, Total; some services firms do not
have inv.
*Sales is shown as Revenue | *AR are shown as Total Receivables, Net
1/TAT

*Find the price in http://finance.yahoo.com. Use the last trading days stock price for
each year (year-closing price). See pages 5-7 for instructions
*See the bottom of the Balance Sheet for Total Common Shares Outstanding
*expressed in millions
=(Total Equity /number of shares outstanding)
* TE and no. of shares outstanding are expressed in millions
(Year-closing stock price/Book value per share)
* yearclosing stock price is the last trading days stock price for that year.
=NI/# of shares outstanding (EPS=earnings per share)
Price to Earnings Ratio=Market Price/EPS
* Enterprise Value = Total market value of the stock + The book value of all liabilities Cash
* Total market value of the stock = year-closing price (item 11)* number of shares
outstanding (item 12)
* Use Total Liabilities for the book value of all liabilities
* EBITDA=Operating Income + Depreciation/Amortization

FINC 322 FINANCIAL MANAGEMENT 1
Summer 2015

Instructions: How to find the financial statements information in the internet. Attach the web
page by copying the page and pasting it to your project.
How to get the financial statements:
1. Go to https://www.google.com/finance
2. Type in your ticker symbol1 (if you dont know what the ticker symbol is, please refer to the
original project packet)
3. Click on Financial

4. Choose Annual Data. Make sure you click on Annual, not Quarterly, in order to use annual
financial statements information.
1 Ticker Symbol:
An arrangement of characters (usually letters) representing a particular security listed on an exchange or otherwise
traded publicly. When a company issues securities to the public marketplace, it selects an available ticker symbol for its
securities which investors use to place trade orders. Every listed security has a unique ticker symbol, facilitating the vast array of
trade orders that flow through the financial markets every day.
Stock symbols are the most recognized type of ticker symbol. Stocks listed and traded on U.S. exchanges such as the
NYSE have symbols with up to three letters. Nasdaq-listed stocks have four-letter symbols.
Ticker symbols for options are structured to represent the underlying stock ticker they are based on and also their
expiration date and contract type (either a put or a call option). Mutual fund ticker symbols are usually alphanumeric and end
with the letter X to differentiate them from stock symbols.
e.g.) General Electric (GE), Goldman Sachs (GS), Starbucks Corps (SBUX), Progressive (PGR)

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FINC 322 FINANCIAL MANAGEMENT 1
Summer 2015

5. You will see I/S, B/S, Cash Flow under Financials. Clicking on Income Statement Balance
Sheet Cash Flow will get you what you need.

6. Simply highlight 4 years of data and paste into your Excel spreadsheet. When you paste, use
paste special and select text if copy and paste is not working as you intended.

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FINC 322 FINANCIAL MANAGEMENT 1
Summer 2015

Instructions: In order to find Historical Stock Prices
Source: http://finance.yahoo.com
1. Type in your ticker on Quote Lookup field on the left

2. Then, click on Historical Prices

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FINC 322 FINANCIAL MANAGEMENT 1
Summer 2015

3. Enter
the information being asked such as a start date, and end date, daily.

4. At the bottom of the page, you will find Download To Spreadsheet. Click and save it.

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FINC 322 FINANCIAL MANAGEMENT 1
Summer 2015

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FINC 322 FINANCIAL MANAGEMENT 1
Summer 2015

Below is how your excel file saved looks.

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FINC 322 FINANCIAL MANAGEMENT 1
Summer 2015

Appendix A. Industry Averages of Financial Ratios
Assume that ratios in this table are the industry averages for the firm you choose for two years
you consider. Use information in this table when you write up Part 2 of the Performance Evaluation

1
2
3
4
5
6
7
8
9
1
0
1
1
1
2
1
3
1
4
1
5
1
6
1
7

Name of Ratio
Current Ratio
Quick Ratio
Total Debt Ratio
Debt/Equity Ratio
Inventory Turnover
Receivable Turnover
Capital Intensity Ratio
Profit Margin
ROA
ROE

Industry
Average
1.5
1.3
0.5
1
7x
8X
0.5
10%
15%
20%

Market Price
Number of Shares
Outstanding
Book value per Share
Market to Book Value
EPS
P/E Ratio
Enterprise Value/EBITDA
Ratio

5x
$2
3x
5x

For items from 11 to 13, you dont have to discuss in comparison to industry average.
x means times

Ethical Integrity: Plagiarism

Plagiarism or cheating of any kind will result in an automatic F. No tolerance and no
second chance on this issue.

For more information, http://www.ferris.edu/htmls/colleges/artsands/languages-and-literature/writing-center/Other-Writing-References.htm

Alternatively, refer to http://www.suite101.com/content/a-definition-for-plagiarism-a10232

It is your responsibility to know what defines plagiarism and how to avoid it; there is a huge
amount of sources on the internet.

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