Reference no: EM131405454
You are a financial analyst with the mythical High Technology Corporation ("HTC"). HTC is an established manufacturer of a line of electronic components, which services an international market. HTC is currently a new fully-integrated wireless communication service for world-wide use. A competitive technical and economic product evaluation has determined that Sprint Corporation (S) is the best potential candidate for a long-term commitment. Sprint Corporation (S) is offering a competitively favorable deal. However, based on some serious general concerns about the fallout of companies in the industry in general, the CEO has asked your CFO to conduct a financial analysis of Sprint Corporation (S) to determine if it is prudent to commit to this company's communication system. The cost of cutting over to the new communications system is significant and any interruption in support during the next few years would adversely affect HTC's performance and profit. Specifically, the question is: will Sprint be financially viable over the next two to three years?
YOUR SPECIFIC ASSIGNMENT
Your specific assignment is to research, analyze, and prepare a report for the CFO on the actual financial performance of Sprint Corporation (S). In addition to reviewing the traditional financial performance indicators, you are also to review Sprint's past and current stock performance. Your report includes three parts:
(1) An evaluation of Sprint's financial performance for the last year. DuPont analysis and analysis of significant financial performance results are required for the last three years. (See detailed description below)
(2) An evaluation of Sprint's stock performance for the last one year.
(3) Finally, a specific recommendation, with supporting rationale, as to whether or not Sprint's recent trend in financial and stock performance is of sufficient financial strength to warrant entering into a long-term commitment.
To assist you in your task, the CFO has provided the following general guidance. Since it is recognized that the industry is undergoing a major contraction, it is very important to comparatively evaluate Sprint's financial and stock performance trends against its Industry.
You may wish to include all necessary and relevant financial performance and stock information, trends, and projections in supporting your recommendation. These factors may include, financial ratio trends and industry comparatives, capital spending, stock growth, Beta values, credit rating service valuations, bond rating valuations, and management and investment reports - when these documents are available.
YOUR SPECIFIC ASSIGNMENT
Research and analyze the following information for Sprint Corporation (S).
--Annual Balance Sheets for Sprint Corporation for the last three years.
--The Income Statements for Sprint Corporation (S) the last three years.
-- Annual reports, 10K or 10Q------
--Industry norms -----------
---Analysts' reports on performance
-- Management reports or press releases
Evaluation of the Financial Performance for Sprint Corporation
1-Background and Industry (one short paragraph).
2-Select of most significant financial performance results for the company: Compare Revenue, net income, working capital, total assets for the last three years and other results of your choice of the company against the industry or main competitor. Present the table with this information in your report. Write about 1 page of the analysis of these financial performance results..
3-Find financial ratios for the company and its major competitor in the Internet. Write about 1-2 pages of analysis of the ratio results you received... Compare the ratio results against the industry or main competitor.
4- Evaluate Return on Equity for the company for the last three years using the DuPont analysis... Compare the company's results to a major competitor.
Taking the information from the Income statements and the Balance sheets, calculate the company's return on equity using the DuPont technique for the company for three years. Show your calculation!
Write about 1 page of analysis of the results that you received. Compare the results to main competitor. If the management of the company would like to improve their return on equity, what should the management of these companies do?
5- Evaluate other areas of financial analysis: capital spending, stock growth, Beta values, credit rating service valuations (if possible), bond rating valuations (if possible), etc. Make an overall conclusion about financial performance of the company during the last years. Compare the results that you received against the industry or main competitor. Summarize the results that you received in 1 page. What are the firm's financial strengths and weaknesses?.
6- Collect and evaluate the data about stock performance of the assigned company's for the last one year. Compare the results that you received against the industry or main competitor.
Write about 1-2 pages of analysis of the ratio results you received.
7- Develop a specific recommendation, with supporting rationale, as to whether or not the assigned company's recent trend in financial and stock performance is of sufficient financial strength to warrant entering into a long-term commitment (about 1 page)
PRESENTATION OF PAPER AND WRITING:
-Organization, Format and Presentation of Paper including the Title page, Introduction, Body, and Summary.
Use of Tables, Figures and Other Graphics to Summarize and Support Analysis Presented in the Paper.
Logical and Smooth Flowing Transitions and Relationships Among Sections of the Written Report.
Research Sources and Significance of Research Information and Data, Use of APA Citation Methodology
Your final report is to be an executive-level financial report, directed to the CFO. This report should be about 8 double-spaced typewritten pages (without tables and graphs). Include suitable comparative, quantitative and qualitative analyses and conclude with a specific and supported recommendation on the projected financial viability of Sprint Corporation for the next several years.
Essential research data, financial calculations and other documentation as necessary to support your recommendation should be referred to in summary form in your report and attached in detail as enclosures. All major sources should be referenced. There is no set limit to the size of the enclosures, but it is recommended that only essential enclosures be attached. You should use references and bibliography to identify any remaining supporting documents you wish to include.
Format of the Research Project:
The paper should be written in APA style Research Paper format.
Please note that Use of APA Citation Methodology is required for the assignment.