1. Analyze current and recent economic conditions. Provide a two-page (maximum) economic summary. Identify whether the economy is expanding (booming) or contracting (in recession). Justify your conclusion by citing economic statistics and trends over the past three years. You can obtain economic data from the Statistics Canada website. Analyze and interpret data trends (e.g., unemployment, inflation, real GDP, interest, housing starts) over the most recent three-year period to evaluate the economy and Canadas current economic status.
2. Briefly describe political and social trends that might affect the success of your companies in the long term. How will these trends affect your companies stock values?
3. Describe the business sector or industry in which each of the two companies operates. Focus on information that helps you understand whether the industry is healthy or struggling. Try to find news stories about these industries in the media and other sources, including searching the Internet. You can access The Globe and Mail and Financial Post. You can also access company news stories at the Globe Investor website by typing the trading symbol of a company into the Search box and clicking News. These news stories may be specifically about your company or about the industry and the companys competitors.
4. For each of the companies you have selected, find financial statements at the companys website or at SEDAR for the three most recent fiscal year ends. Then, for each company, perform the following steps:
5. Table the revenue/sales dollar amounts and net income after-tax dollar amounts for at least a three-year period.
6. Calculate all of the ratios (liquidity ratios, financial leverage ratios, etc.)shown in the learning objectives in Lesson 3for each of the companies for each fiscal year end over the past three years. If a ratio is irrelevantfor example, if there is no inventory in your chosen company (such as a bank or other service company)then indicate not applicable.
7. Be sure to show your complete calculations.
8. Identify the business/product cycle of your companies. Does the company introduce new products from time to time? Are current products still increasing sales, are they levelling off, or are they declining? How does this compare with competitors product cycles? Are each companys business cycles cyclical, counter-cyclical, or non-cyclical?
9. Identify and explain the risks that apply to each of the two companies stocks.
10. Assess managements abilities and strategies to the extent that information is available. (You can find management and strategy information by reading management reports in each companys financial statements or at sites such as those indicated in Step 3 above.)