FIN 300 CORPORATE FINANCIAL MANAGEMENT

PROJECT

FALL 2020

(THIS PROBLEM WAS ADAPTED FROM FUNDAMENTALS OF CORPORATE FINANCE TEXT BOOK)

This is your second interview with a prestigious brokerage firm for a job as an equity analyst. You survived the morning interviews with the department manager and the vice president of equity. Everything has gone so well that they want to test your ability as an analyst. You are seated in a room with a computer and a list with the names of five companies Boeing Co (BA), Exxon Mobil Corp (XOM), American Express Co. (AXP), UNH United Health Care Inc. (UNH), and JPMorgan Chase & Co. (JPM).

Complete the following tasks:

1.Download the annual income statements, balance sheets, and cash flow statements for the last three fiscal years from MarketWatch (www.marketwatch.com) for any three of the five companies listed. Enter the company's stock symbol and then go to "financials. Copy and paste the financial statements into Excel.

2. Find historical stock prices for each firm from Yahoo/ Finance (finance.yahoo.com). Enter the stock symbol, click "Historical Prices" in the left column, and enter the proper date range to cover the last day of the month corresponding to the date of each financial statement. Using the closing stock prices (not the adjusted close) to calculate the firm's market capitalization at each date, multiply the number of shares outstanding (see "Basic Weighted Shares Outstanding" on the income statement) by the firm's historic stock price.

3. For each of the three years of statements, compute thefollowing ratios for each firm which you chose:

Profitability Ratios:

Operating margin (use operating income after depreciation)

Net profit margin Return on equity

Financial Strength Ratios:

Current ratio

Book debt-equity ratio

Market debt-equity ratio

Interest coverage ratio (EBIT interest expense)

Compare the ratios across the three firms. How do you interpret the difference between them? In a final summary, rank the three companies which you chose from best investment to worst investment, detailing the reason for your decision and supporting your decision with the evidence gathered.

****Note: the length and complexity of this report is left to your discretion of its author****