There is no limitation on the pages of the completed report, but do keep the report well organized, with size 12 font, and double spacing.

Please pick a public company with stocks listed and traded in the U.S. stock exchanges such as NYSE and/or Nasdaq.

Use the following format for your Security Analysis:

ANALYSIS OF ZYX CORPORATION

Table of Contents

I. Company Profile

Background and history of the firm, key events

Identify company products, markets, operations, strength and weaknesses and the competition

Examine the firm's current position and outlook: and include important economic and industry factors

II. Financial Analysis (tables, graphs and discussion)

Income Statement

Analyze the status and trend (growth rate) of the important variables such as:

Revenue

Costs and Expenses

Net income

Balance Sheet

Analyze the status and trend (growth rate) of the important variables depending on the business and industry, such as:

Cash

Accounts Receivable

Inventory

Fixed Assets

Short-term and Long-term debt

Equity

Ratio Analysis

Conduct trend analysis and industry/peer analysis for the relevant ratios and other important variables.

Liquidity: current and quick ratios

Asset Management: average collection period and inventory, fixed asset and total asset turnover

Leverage: Debt/Assets or Debt/Equity

Profitability: profit margin, return on assets, return on equity

Use DuPont decomposition to analyze the ROE ratio and illustrate the strength and weakness of the firm.

FIN474

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NOTE: The trend analysis should cover at least three years. The ratios should be compared to industry average ratios or closely comparable firms (peers).

If you cannot find an industry ratio or your firm's ratio is different from the above list, use a ratio of a comparable firm. If you cannot find important ratios, please see me.

III. Security Analysis

Conduct trend analysis (minimum 3 years' data) and peer analysis for the relevant ratios and other important variables.

Market Price ratios: PE, Price/Book, Price/Sales, Price/Cash Flow

EPS, DPS, CFPS

Examine the Risk (Beta)

IV. Recommendation and Summary

My recommendation is to buy/sell/hold this stock because......: provide an explanation based on your analysis.

V. REFERENCES:

Wall Street Journal, Yahoo! Finance, EDGAR, MSN Money, Reuters, Bloomberg, S&P Market Insight etc.

In your discussion of financial and security analysis, follow this format:

1. What is the trend of the ratio (cite specific numbers and refer to the relevant graph.) and why is it changing.

2. How does the ratio compare to the industry average (cite industry numbers).

3. What are the potential risks associated to the company's operations? What are the advantages compared to similar firms?

4. Please insert carefully prepared tables and charts in your report to help illustrate your anaylsis.

5. You can include the calculation of the ratios and other financial variables in the Appendix to keep the analytical report succinct.

6. Avoid subjective statements, opinions and self-references (me, myself, and I). This is a technical report.

Below are some examples of the wording and style that your analysis should follow:

ZYX's current ratio increased from 1.8 on Dec 31, 2006 to 3.1 Dec 31 2009 (Graph 1). During this period ZYX's current assets and current liabilities both declined as the firm downsized during the recession of 2001. By reducing receivables and liquidating inventories, XAY was able to repay short-term debt and increase its current ratio. ZYX's 3.1 current ratio is higher than the industry average 2.4.

ZYX's ROE has declined during the last three years because of a decrease in net profit margin, a decrease in asset turnover, and a decrease in financial leverage. ZYX's net profit margin is lower because of declining revenue. Although ZYX has been able to reduce its inventories, sales declines have been even greater and inventory turnover has declined. ZYX has used the funds generated from downsizing to reduce its debt.

ZYX is a cyclical firm and its sales have declined 20% over the last three years during the current recession. Its return on equity has declined because of a lower profit margin and lower asset turnover. Its current ratio, asset turnover ratios, and profitability are all higher than the industry average.