Project Instructions FINN $331$The goal of financial analysis is to use financial data to evaluate the current and past performance of a firmand to assess its sustainability. There are two important skills related to financial analysis. First, the analysisshould be systematic and efficient. Second, the analysis should allow the analyst to use financial data toexplore business issues. Ratio analysis and cash flow analysis are the two most used financial tools. Ratioanalysis focuses on evaluating a firms product market performance and financial policies; cash flowanalysis focuses on a firms liquidity and financial flexibility.In this project, you are required to analyse the companys financial statements. In doing so$,$ you shouldfollow the structure outlined below and make use of the material covered in class.A Hypothetical Case StudyPharmamax is a new pharmaceutical firm that began operating in the Palestinian market three years ago.Despite being an entrant to the industry, Pharmamax has made progress by employing innovativeadvertising strategies to provide a wide range of pharmaceutical products. The firm has been operating inthe Palestinian pharmaceutical market for more than two years, and its financial statements are available inthe appendix for your investigation and consideration.Requirements: Conduct some desk research to develop an understanding of the pharmaceutical industry in Palestine. Select one Palestinian pharmaceutical company to use in the benchmark analysis comparing financialstatus and performance with Pharmamax. Perform an internal analysis of Pharmamax financial performance and position by employing variousanalytical methods such as trend analysis, common$-$size analysis, financial ratios $($such as liquidity,profitability, and solvency ratios$),$ Dupont analysis, Z$-$score calculation, and other relevant tools thathad been covered throughout the semester. Furthermore, evaluate Pharmamax's findings externally by benchmarking $($use the company youselected in step $2)$ its ratios, conducting common$-$size comparisons$\mathrm{.}2$Please follow the following steps to conduct the financial analysis of Pharmamax:$1.$ Enter the attached financial statements into a New Excel and make sure that the numbers have beenentered correctly so that you may upload it after you have completed the entire assignment. $(5$marks$)2.$ Write an introduction that gives a brief outline of the Palestinian pharmaceutical sector. Includecritical information regarding the industry's market size, competitive landscape, export$-$importdynamics, and regulatory frameworks. $(5$ marks$)3.$ Construct a cash flow statement for Pharmamax using the attached financial statements. This needsto be done using both the direct and indirect methods. $(14$ marks$)4.$ Analyse the Pharmamax attached financial statements, including the cash flow statement, using thefollowing tools:a$)$ Financial ratios$($all the ratios covered in class$)$ of pharmamax and those of the Palestinianpharmaceutical company of your choice. $(15$ marks$)$b$)$ Vertical common$-$size analysis: to understand the relative proportions of account balances foreach of the available years $(20212022).$ Compare to those of the Palestinian pharmaceuticalcompany of your choice. $(10$ Marks$)$c$)$ Horizontal analysis: to determine trends and patterns of growth over time for the Pharmamaxcompany and compare to the competitor $(10$ Marks$)$d$)$ Dupont Analysis. $(8$ marks$)$e$)$ Z$-$score. $(8$ marks$)5.$ Interpret the company's financial performance based on ratio analysis and clarify the company'sliquidity performance, operational activity, profitability, and debt in comparison with thecompetitive company of your choice. $(10$ marks$)6.$ Given the financial statements, calculate the basic earnings per share and the dilutive earnings pershare for the year ended $2022.$ Accordingly, find the weighted average number of sharesoutstanding, and thereafter, find the basic and dilutive EPS, given that the company also has adilutive security represented in $15,000$ preferred stocks that pay $40\%$ of the dividends reported inthe income statement and are convertible into two common stocks each. In addition to $$60,000$ of$4\mathrm{.}5\%$ convertible bonds, there is a total of $12,000$ common shares. Consider the followinginformation: $(10$ marks$)3$Date Shares Changes Shares OutstandingJan $-22$ Beginning balance $100,000$Apr $-2230,000$ Shares issued $130,000$July $-2240,000$ Share repurchased $90,000$Oct $-2250\%$ stock dividend $135,00031$ Dec $-22$ Year$-$end Balance $135,0007.$ Finally, after you've completed your analysis, write a brief conclusion based on the results and yourown reasoning. $(5$ Marks$)$