I will assign a project for your class. The following description is an example of such a project. I may select the following company, may select a different company, or may allow you to choose your own company (with my approval) as the focus of the project.
The scope of the project and requirements will be the same as laid out below.
The specific objective of this graded written research exercise is to prepare an executive-level financial report to the chief financial officer (CFO) of a mythical company by which you are employed as a financial analyst. This report will pertain to the financial evaluation of a real, publicly-traded company. It will require independent research (Web-based or library), careful financial analysis, and the proper application of key financial theories and formulas.
You are a financial analyst with the mythical High Technology Corporation (HTC). HTC is an established manufacturer of a line of electronic components, and it services an international market. HTC is a new fully integrated wireless communication service for worldwide use. A competitive technical and economic product evaluation has determined that Disney (a real publicly traded company) is the best potential supplier. Disney is offering a competitively favorable deal.
However, based on some serious general concerns about the fallout of companies in the IT industry in general, the CEO has asked your CFO to conduct a financial analysis of Disney to determine if it is prudent to commit to this company's communication system. The cost of cutting over to the new communication 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 Disney be financially viable over the next two to three years?
YOUR SPECIFIC ASSIGNMENT
Your specific assignment is to conduct research, analyze it, and prepare a report for the CFO on the actual financial performance of Disney for the years 2009, 2010, and 2011. In addition to reviewing the traditional financial performance indicators, you are also to review Disney's past and current stock performance for the same periods. Your report is to consist of three parts:
- an evaluation of Disney 's financial performance for the periods 2009, 2010, and 2011
- an evaluation of Disney 's stock performance for the periods 2009, 2010, and 2011
- finally, a specific recommendation, with supporting rationale, as to whether or not Disney 's recent financial and stock performance are of sufficient financial strength to warrant entering into a long-term commitment with the company
To assist you in your task, the CFO has provided the following general guidance. As it is recognized that the telecommunications industry is undergoing a major contraction, it is very important for you to compare Disney's financial and stock performance trends with those of the industry.
You are to consider all necessary and relevant financial performance and stock information, trends, and projections in supporting your recommendation. Relevant factors include, but are not necessarily limited to, financial statement analyses, 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.