The research paper assignment is worth 220 points or 22% of the course grade.

| December 12, 2017

The research paper assignment is worth 220
points or 22% of the course grade. A grade of C or better is required as
per MBA policy as this is the Final Assessment for the course.

The objectives/purpose of the research
paper project are to enable you to do a comprehensive financial analysis of a
publicly traded corporation; and provide you with substantial information for
you to make recommendations regarding investing in this corporation.
Your financial analysis report will be
driven by a rigorous ratio analysis, and aggressively supplemented with your
written analysis, interpretation, and evaluation of the data.
Your research should be strategically
driven by two probing questions:
-Would you invest your financial capital
in the selected firm as a shareholder?
-Would you invest your human and
intellectual capital in the firm as an employee?
Steps in preparation of financial analysis
report:
1.) Select a
publicly held company
2.) Select a
benchmark firm to compare your company against. The benchmark firm is typically
the largest competitor.
3.) Obtain
the firm’s balance sheet, income statement, and statement of cash flows
for the past 5 years. Download or read the firm’s annual report.
4.) Go
to: .sec.gov/edgar/searchedgar/webusers.htm”>http://www.sec.gov/edgar/searchedgar/webusers.htm
Research EDGAR’s database for additional
SEC report filings: 8-k, 10-Q.
5.) The
following table is the type of Excel or Word table that should be used to
gather and report your ratio and financial performance data. Note the 5
financial diagnostic categories that should be used in your analysis.

Financial diagnostic categories

Chosen company
vs.

Benchmark competitor

1.) Liquidity of
short-term assets

-Current ratio
-Cash ratio
-Quick ratio

-Current ratio
-Cash ratio
-Quick ratio

2.) Long-term debt-paying
ability

-Debt ratio
-Debt-equity ratio
-Times interest earned

-Debt ratio
-Debt-equity ratio
-Times interest earned

3.) Profitability

-Net income/sales (profit margin)
-Net income/assets (ROA)
-Net income/shareholder equity
(ROE)

-Net income/sales (profit margin)
-Net income/assets (ROA)
-Net income/shareholder equity
(ROE)

4.) Asset utilization/ management
efficiency

-Total asset turnover
-Inventory turnover measures
-Accounts receivable turnover

-Total asset turnover
-Inventory turnover measures
-Accounts receivable turnover

5.) Market measures

-Price/earnings ratio
-Earnings per common share
-Dividend payout

-Price/earnings ratio
-Earnings per common share
-Dividend payout

Use 2-3 ratios per diagnostic category.
Place your ratio calculations in the table for your selected companies—primary
company and benchmark competitor. Using 5 diagnostic categories, and 3 ratios
to assess each category, results in 15 ratio measures per company that will be
compared side by side.
6.) To validate your research,
5 years of data should be analyzed.
7.) The financial analysis report must be
written properly. They must include a title page, a table of contents, and a
reference page. For both midterm and final report, information sources from the
web, etc. must be cited properly, using APA style.
This means that every table that you cut
and pasted or typed from the web must have a source at the bottom of the table
AND that citing must also be included in a reference page at the end of the
report.
The parts of the research paper are
discussed below. The completed report (parts a through h) is due day 7 of week
6. Your project should include:

An overview of the corporation.

Provide general information regarding the type of business,
products and/or services, location of headquarters, name of CEO, number
of employees, and countries of operation, etc.

The latest financial statements

Get the income statement, balance sheet, cash flow statement,
and the statement of owners’ equity for the past fiscal year. Cut and
paste them in your report. Do not forget to cite the source under each
statement.
If you cannot cut and paste them, you may have to type in the
information in a table in your report.

A summary of each financial statement

Take each statement and state the key parts in words.
Tell a story from each of the financial statements. For example,
for the income statement, the story starts like, “Total Revenues in 2010
were $10 billion, while Cost of Goods Sold were $8 billion, leaving a
gross profit margin of $2 billion, or 20 percent of total
revenues….After taking out interest and taxes from EBIT, the net income
was $0.5 billion, or 5 percent of total revenues.”

Ratio calculation (include 5 major types of ratios. Refer to
chapter 3, Analysis of Financial Statements)

Organization of this section is based on the FIVE types of
ratios listed in the text book. Calculate the ratios from the
financial statements in part c above using Excel or your calculator and
present them in a table.
Find industry financial ratios online (eg. Yahoo.com) and
compare your corporation’s ratios to these industry ratios.
Present your results following the five types of ratios
discussed in part d.
A table with both corporation and industry ratios is
required;

Discussion of key statistics provided by sources like Yahoo
finance.

There are many different other statistics available for your
corporation. These include market value, beta, and diluted EPS, etc.
Discuss some of the key statistics that you think can assist you to
determine if this corporation is a good buy or sell.

For you to decide if a corporation’s stock is a good buy or
sell, you must forecast several key variables, including the stock
price.

Use historical prices (5 years of monthly data recommended)
and forecast the stock price for the next year. Use regression analysis,
and/or moving average, etc. to create your forecast.
Create a graph from the historical data and show your
forecast on the same graph. You can add a trend line to the graph to
help you with a forecast. Include the graph in your report.
You need to say specifically what the forecasted value of the
stock price is.
You must address the question, “Is this forecast
reasonable?” Must you amend your analysis to get a more reasonable
forecast?

Other information pertinent to the corporation that could
affect its future performance and stock price.

This could include dividend policy, capital structure, bond
ratings, expert opinions on TV, new projects, litigation, regulation,
etc. Search for information on the web regarding this corporation. Look
at company complaint blogs, etc.

Recommendation regarding the future of this corporation.

Is the stock a good buy, average buy, or a poor buy (implying
a good sell)?
Include a justification of your recommendation based on your
analysis and research.

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