Company Analysis Projects

Overall Objective: Students will research the financial fundamentals of a public company and its market equity performance.

Company Fundamental Analysis

Select a public company and obtain its most recent annual financial statements. The companys annual report will provide you with extensive information on the companys operations, investments, and, financing activities. You should be able to download the annual report from the companys Website (it is usually contained in the Investors page).

For the sake of completeness, choose a company that has long-term debt (Balance Sheet), pays a dividend (Statement of Cash Flows), and, has been public for at least six years.

In your written report, provide the following information within a narrative style.

1. Companys overview:

a. Companys History. Highlight the main events (when and who founded it, when it became public, mergers, acquisitions, new products introductions, and most recent events).

b. Nature of the Operations/Market competition. Briefly describe the products/services your company offers. Make sure you highlight the main sources of revenue from these products and its global market penetration (if any). What is your companys standing in the industry? Who are the companys competitors?

c. Corporate Citizenship. Briefly describe the companys Code of Conduct/Ethics social responsibility, and philanthropic programs.

2. Financial Performance / Ratio Analysis:

a. Earnings performance. Discuss the success of the companys operations for the last two years. Sales/revenue growth rate, Operating Margin, and Net Profit Margin financial ratios to describe the companys performance for the last two years. Please provide ratios in a table with their corresponding calculations.

b. Financial Position: Discuss the companys financial position for the most recent year. What are the major assets? Major liabilities? Who are the main financial stakeholders? Calculate the following ratios: for solvency use the Current Ratio, for asset management use the Total Asset Turnover Ratio and for debt capacity use the debt/total asset ratio. All ratios should be for the last two years.

c. Market Performance: Describe the companys stock market performance for the last two years. Obtain the closing price for the end of the year and calculate the Price/Earnings and Market Value ratios. What do they mean? Is the company being valued more? d. Analyze the Statement of Cash Flows for the most recent year. Where did the cash come from? In what was the cash spent on? What was the cash spent on?

3. Conclusions: a. State your conclusion based on the research and analysis provided in your report. Has this company performed successfully in the last few years? Why? In which areas has the company done well? Which areas are deficient? In your opinion, is the companys code of ethics, social responsibility and philanthropic programs extensive enough? Would you invest in this company? Why or Why not?