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Case - comprehensive financial statement analysis

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Case - Comprehensive Financial Statement Analysis

Assume that you just inherited $100,000 and want to invest your inheritance into the stock of a publicly traded company. Your task is to choose a company to analyze in order to determine if it is the company in which to invest your inheritance. You may choose any company listed on one of the major U.S. stock exchanges. This will ensure that there is plenty of information available for your analysis. You may obtain financial information from the company's website (usually under their "Investor Relations" webpage) or you can go to the SEC website.

https://www.sec.gov/edgar.shtml

1. Download the past four years of financial statements of your company.

2. Evaluate the company's past financial performance:

a. Prepare financial ratios related to profitability, efficiency (activity), liquidity, and solvency. These can be found in Chapter 7. How have these measures changed over time?

b. What are the company's business model and strategy? How do they influence the company's performance in its sales growth, efficiency, and profitability?

3. Project future financial performance:

a. Project out five years of future net income and cash flows (similar to Example 5 in chapter 12). Please include a list of all assumptions used in the forecast.

4. Based on the above information, would you risk your $100,000 in this company? Why or why not (be specific)?

Verified Expert

Financial analysis for the company helps investors to invest in either long term or long term investment. For an investor to do this very, he/she must have knowledge and skills about the future and the present investment method. Customers are always right when the company is building its reputation. For them to make a high customer base, they need to give them their products that are unique and less expensive.

Reference no: EM131471816

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