Question
Find a public company listed on NYSE or NASDAQ. The stock should have a closing price above $10 and a negative return ( < -5%)
Find a public company listed on NYSE or NASDAQ. The stock should have a closing price above $10 and a negative return (< -5%) from past year. You can get performance data from websites like finance.google.com, finance.yahoo.com, or morningstar.com. You can ignore any request for subscription. The free data would suffice the project need.
Review at least two major investment (capital budgeting) decisions by the company.
Explain how those decisions had affected the past performances.
Or explain how those decisions could improve the future performance.
Follow the guide in the appendix to collect financial data from www.morningstar.com (Links to an external site.)Links to an external site.. Instead of calculating the financial ratios, you can use the downloaded data file for analysis.
Review and analyze the financial indicators and ratio on the following categories. Focus on how the financials change over time (for example, last two or three years.)
Financials: Revenue, Net Income, Payout ratio %, Free cash flow, Working capital
Key ratio -> Profitability: Gross margin, Net Margin %, Asset turnover, Reutrn on Assets, Financial leverage, Return on Equity
Key ratio -> Growth: 3, 5, 10-year Revenue %, Operating Income %, Net Income %
Key ratio -> Cash Flow: Free cash flow / Sales %, Free cash flow/Net Income
Key ratio -> Financial health: Total Current Assets, Total asset, Long-term debt, Total stockholders Equity
Liquidity/Financial Health: Current ratio, Quick ratio, Financial Leverage, D/E ratio
Key ratio -> Efficiency Ratios: Receivables Turnover, Inventory Turnover, Fixed asset turnover, Asset turnover
Explain whether the change of financial ratios can explain the stock performance. For example, a decreasing Return on Equity could cause negative stock returns.)
Explain how the financial data can support the investment decisions. For example, cost cutting decision would increase the net profit margin.
Based on the above analysis, comment on the investment value of the stock. In particular, shall we invest in the stock?
You should copy the data as a table and add your analysis and comment.
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