Financial Statement Analysis Project
Financial Statement Analysis Project
Overview: This assignment closely follows course material and provides you with an opportunity to apply course concepts to a real world situation. You are my financial advisor and I have asked you to recommend whether or not I should invest $1 M in a publicly traded (i.e., listed on the NYSE or NASDAQ) company of your choice. To advise me, perform a comprehensive financial statement analysis and write up your analysis in a 10 – 20 page paper. You must recommend, based on your analysis, if I should invest in the company.
Include in your analysis of the company’s recent financial statements, a comparison to a competitor company as well as their industry. You will use a FinSAS file for your ratio analysis (see below) and you must complete two separate files – one for your main company and one for your competitor.
Selecting Companies: Select your company as soon as possible because only one student can select a company. There will be discussion thread in eCollege to sign up so check to see if someone already has your company. The Company must be publically traded and listed on either the NYSE or the NASDAQ. The company must have at least $1 million in revenues. Other than this, the only other restriction is that you may not choose Apple, Nike, JC Penney, Epoch, Boeing or Lockheed Martin.
If you select a company in banking, oil and gas, insurance, transportation or regulated utilities, review the material in Chapter 12 ASAP to decide if this is the right company for you.
Obtaining Financial Statements: Pull the 10-K filings from http://edgar.sec.gov. Click on the blue box near the bottom right that says “Search Company Filings” and type in the company’s name. You can get them from other sources but it’s your responsibility to ensure you have the auditedfinancial statements, the audit opinion, and the MD&A.
Paper Details: Present your analysis of the company’s recent financial statements (3 years of I/S and 4 years of B/S data). You must compare the results to a competitor company, as well as their industry, to form a recommendation. Use the text, course tools, plus outside sources to corroborate and supplement your analysis. Look in Doc Sharing for a lot of helpful resources, including hints on populating the FinSAS file.
The text has an example of an analysis following Chapter 10 of the text (“Summary Analysis Nike, Inc.”). Do not follow this example. I will provide information about the paper during lectures.
References: Outside sources mean articles, websites, databases and other library sources, but notother people. However, your primary source of information must be the textbook and the financial statements. Be sure to cite your sources within your paper. When you use internet sources, your citation must provide a URL that goes directly to the material. When you use non-internet sources, you must make them available to me upon request.
Format: See the rubric for formatting requirements and other expectations.
- Use APA formatting
- Do not include an executive summary or table of contents.
- Use section headings, summaries, tables and other techniques to communicate effectively.
- You must include tables containing all the ratios from each type of analysis we study.
- Make sure all tables are clearly labeled and include a citation if not from your FinSAS file.
FinSAS File Requirement: Use the Financial Statement Analysis Spreadsheet (”FinSAS file”) in Doc Sharing, which you should download immediately. Enter financial statement data and it will calculate ratios for you. As discussed in class, add a formula to cells B-E/21. This will help you avoid errors. Occasionally the file doesn’t work properly; let me know if that happens.
Other Hints: Review this document when you’ve finished the paper. Here are some common problems:
- Many people lose points for failure to adhere to the assignment requirements (such as including references, not stating a recommendation up front).
- The first thing I look at is your FinSAS file.
- If it is missing data, such as Other, you will not receive all points, plus it will mess up your ratios. Same for Input Sources.
- If this is filled out incorrectly (e.g., A ≠ (L+E), wrong signs, tax rate and other data not formatted correctly, totals such as net income don’t tie to the 10-K) or you omit appropriate data from “other” you will not receive all the points, plus it will mess up your ratios.
- Things I look for in your paper:
- Appropriate intro & conclusion
- Adequate discussion of each ratio area, and appropriate ratio, plus your conclusion on how the company rates overall
- I don’t search through the tables for information. If it’s significant, discuss it. If insignificant to analysis, it’s preferable to mention that as well so I understand that you understand the ratio.
- Discussion of the competitor and an industry comparison (minimally on investor ratios)
- References list at the end
- Appropriate tables inserted in each section
Final Due Date: See the course schedule. Your submission must consist of two files listed below. Late papers are not accepted except under extenuating circumstances that have been approved by me in advance. Do not turn in the FinSAS file for your competitor company:
- Word document containing your written analysis. Use the following file naming convention: Lastname-Companyname-575.doc. For instance if I analyzed Apple, the file would be called Burke-Apple-575.doc.
- FinSAS spreadsheet containing your financial analysis. Use the following file naming convention: Lastname-Companyname-575.xls. For instance if my paper analyzed Apple, the file would be called Burke-Apple-575.xls.
RUBRIC FOR GRADING THE FINANCIAL STATEMENT ANALYSIS PAPER
|Content and Quality of Analysis
|Paper is responsive to the assignment requirements. If a “non-standard” industry (per Ch. 12) is used, ratios are adjusted appropriately. (20 pts max)
|Paper includes high quality analysis and demonstrates the ability to critically analyze and interpret information. Paper demonstrates original thought. (20 pts max)
|Paper uses the text and reputable sources (no Investopedia/Wikipedia-type refs) and contains appropriate citations. (10 pts max)
|FinSAS file is fully and correctly completed including the source of input tab (10 pts max)
|Formatting and writing quality
|Paper is well organized and written, and easy to read and understand. Includes a strong introduction and conclusion, both of which reference your recommendation. Contains wording that is concise, appropriate, and professional, and is free from excessive spelling and grammatical errors. (20 pts max)
|Paper uses a standard font, one-inch margins, double spacing and page numbering. Follows APA style including in-text citations and reference section. (10 pts max)
|Tables and exhibits are titled and labeled, list the source (if not from FinSAS), contain complete data, are neatly and consistently formatted. The selection of graphs, charts, etc. for data presentation is appropriate to the data. (10 pts max)
1 See below for the number of points by achievement category
|20 Point Scale
||13 pts or less
|10 Point Scale
||9 – 10 pts
||6 pts or less
|5 Point Scale
||3 pts or less