Financial Analysis Project: Diamonds Food company is to be analyze. The report must be typed, double-spaced, 10 or 12 type-print. All references should be noted. As the course progresses, certain ratios or other figures will be checked by the instructor for accuracy.

At a minimum, the project should contain the following parts:

I. INTRODUCTION: Description of the company; explain the purpose of your report; discuss the companys social responsibility concerns; interesting facts about the company, various geographic locations, etc. Must be one full page

II. REPORTS: In this section, you are to research at least two articles about either your company or one of your companys competitors and how this report affects your companys financial position.

III. COMMON SIZE AND HORIZONTAL ANALYSIS

REMEMBER: THE COMMON SIZE ANALYSIS EXPRESSES EACH ACCOUNT AS A PERCENTAGE OF TOTAL ASSETS. This will be Appendix A.

THE HORIZONTAL ANALYSIS ILLUSTRATES THE CHANGES FROM ONE YEAR TO THE NEXT. This will be Appendix B.

a. Balance Sheet 2 years

Carefully review your data. Look for trends. Using your Common size and Horizontal analysis, determine what sort of changes has occurred from one year to the next.

Which accounts show the most significant changes increases (decreases)? How much of a change is this? Express your findings in terms of percentages. Can you explain any of these changes? Be specific. Be clear.

Is there any information throughout the annual report which you can use to support your analysis?

THE COMMON SIZE SPREADSHEET ALONE IS NOT SUFFICIENT.

b. Analysis of the Common and Horizontal Analysis Income Statement 3 years

Carefully review your data. Look for trends. Using your Common size and Horizontal analysis, determine what sort of changes has occurred from one year to the next. Which accounts show the most significant changes increases (decreases)? How much of a change is this? Express your findings in terms of percentages. Can you explain any of these changes? Be specific. Be clear.

Is there any information throughout the annual report which you can use to support your analysis?

THE COMMON SIZE SPREADSHEET ALONE IS NOT SUFFICIENT.

IV. RATIO ANALYSIS

Prepare a table for your ratios. This will be Appendix C. Be sure to show the numbers you used to calculate your ratios. And you may prepare this on an Excel Spreadsheet.

COMPANY NAME RATIO ANALYSIS Most recent year: Previous year Trend: Favorable or Unfavorable LIQUIDITY RATIO FORMULAS RATIO FORMULAS Current Ratio Example 2.14:1 $450,000/210,000 1.68:1 $370,000/220,000 Favorable Quick Ratio Cash Ratio ASSET MANAGEMENT RATIOS Receivables Turnover Days Sales in Receivables Inventory Turnover Days Sales in Inventory Total Asset Turnover SOLVENCY OR FINANCIAL LEVERAGE RATIOS Debt To Total Assets Times Interest Earned Cash Coverage Ratio PROFITABILITY RATIOS Profit Margin Return on Assets Return on Equity Quick Ratio For the numerator, use Cash, Cash Equivalents, Marketable Securities and Accounts Receivables, Other Short term Receivables.

For your discussion of each ratio, set up each category as above, discuss the trends, changes and implications of each ratio and how the company compared with the industry averages.

Is there any information throughout the annual report which you can use to support your analysis?

The chart is not sufficient to satisfy the requirement there must be a discussion on each ratio category.

IV. STATEMENT OF CASH FLOWS

The Statement of Cash Flows answers two basic questions: a. Where did the companys money come from? Inflows b. How did the company spend the money? Outflows

Your analysis is to cover three years. Divide your report into the following categories:

Operating Activities Pertains to net income and current assets and current liabilities. Where are largest additions to cash? Where are the largest decreases to cash? Can you explain why these sources/uses took place?

Investing Activities Pertains to long term assets. Did the corporation acquire any new fixed assets or investment? Did the corporation dispose of any fixed assets or investments?

Financial Investing Pertains to long term debt and equity accounts. Did the corporation pay dividends (how much); obtain new debt? Retired debt? Issue new stock? Retire stock (Treasury Stock transactions)

Overall, look for trends. Determine what sort of changes increases (decreases) to cash have occurred from one year to the next.

Which accounts had significant increases (decreases) to cash?

What are the implications of these changes?

Address questions such as: Is the firm a viable business? Has the firm incurred additional debt; retired debt; does the firm pay out dividends on a regular basis; is the firm expanding? shrinking? what other issues have you discovered? Be specific. State where you are finding the information.

Is there any information throughout the annual report which you can use to support your analysis. Be sure to footnote any appropriate information.

V. MARKET ANALYSIS

Study the history of the stock price you may have to go to the internet for this information. Be sure to appropriately footnote and prepare a bibliography for any information you use.

Analyze the Earnings to Shares (EPS) which can be found on the income statement three years) Also, analyze the Price to Earnings (P/E) ratio. You can find the 52 week high and low and current stock prices in the Wall St. Journal. You may be able to find a recent article that you can use here and in your conclusion. Discuss your findings.

VI. CONTINGENCIES

Look in the notes to financial statements to determine whether any lawsuits pending or other items are pending? What effect would this have on the company?

VI. CONCLUSION

Using the information you obtained in the body of your report and knowledge you have learned from the textbook and/or class discussions, discuss your ideas on whether or not you view this company as a good investment. What are your predictions for the future of this company. Would you invest in this company yourself? Keep in mind, that this is a finance report, not a marketing term paper.