Perform financial statement analysis of two companies

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Reference no: EM132164993 , Length: 3

Assignment -

INSTRUCTIONS FOR THE FINANIAL ANALYSIS AND STOCK SELECTION PROJECT:

Provide a good discussion and procedures in analyzing a company's financial statements, financial ratios and valuation analysis. Each group of students is required to submit a written report (on the due date specified on the attached class schedule) of the following:

1. Perform Financial Statement Analysis of TWO companies within the same industry: Common Size Statement Analysis of the Balance Sheet and the Income Statement (see the lecture PPT slides, compare the data of the selected 2 companies-no industry average data is required for Common Size analysis). Analyze the Balance Sheet, Income Statement and Statement of Cash Flows: provide comments based on your observation - which company has better financial data?).

2. Perform Financial Ratios Analysis of the TWO companies: Utilizing the company's financial statements, please calculate the following ratios: Long-Term Debt to Equity (or Total Debt to Total Asset), ROE, Net Profit Margin, P/E ratio (please show your calculations).

3. Compare the above financial ratios of the two companies (OR with the Industry Average, if available).

4. Perform Valuation Analysis: Determine and compare the Expected Return (Ke) and the Required Return (Kr) of each stock (see Chapters 8 and 9); OR calculate the Appraised (intrinsic) Value of the each company's stock and compare this value with the company's current stock price. Provide comments based on the above results.

5. Based on the above analysis: Select One Company (one of the two).

6. Provide a brief description of the selected company, its products/services, its management and the company's business strategy.

7. Discussion of the selected company's financial strength and reasons which this stock should be selected for investment.

8. Provide the selected company's stock symbol.

9. Provide the selected Company's closing stock price.

10. For the Final Report: Please submit (1) all calculations of Common Size statements, financial ratios and Appraised Values (2) discussions and conclusions. Please put in the appendix: The balance sheets, Income statements, Statements of Cash Flow (of the 2 companies).

Reference no: EM132164993

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