Your role in this term paper is to assume the function of a financial advisor. (A financial advisor is an individual that helps people manage their investments. They make recommendations about what stock or other investments to purchase or to get rid of.) In order to do this, you will complete a modified financial analysis of a publicly traded company. You may select any publicly traded company, but, make sure that the company you select is publicly traded. Though it might be fun to research IKEA or Spotify, it is easier to select a company based in the United States.

For this assignment you will need to:

• Research a companys annual reports for two years (minimum),
• Review industry information
• Review relevant corporate data
• Recommend about the wisdom of investing, or not investing money in the companys stock.

Required Elements Written Report

This report will require research from credible business publications. A good place to conduct research is from the COM online library. They have a very robust business database called Business Source Complete. Make certain that you include a bibliography with your report and that all references are appropriately cited. You need at least five (5) credible sources. Wikipedia and Investopedia are NOT acceptable for business research using them will cost you points.

The paper should have the following sections in this order:

Industry overview 15 points

Students are to review the industry that their selected company is part of. There should be an analysis of what is going on within the industry as a whole. Any trends, major competition, or risks should be evaluated with an analysis of how these factors may affect the entire industry.

For example, if you select Southwest Airlines as the company you want to research, you will need to research and include in your written paper an overview of the airline industry as well as current social, political and economic factors that impact the industry. This would include information about how the entire industry is reacting to the current pandemic. Good outside sources for information about current business factors include The Wall Street Journal, Inc. Magazine, Business Week, Forbes and Fortune.

Corporate overview 15 points

In this section, you should review how your company is positioned within the industry (i.e. is your company a market leader, innovator, laggard?). Other considerations for the overview would include the companys history and the position within the industry. Indicators to include here would include the companys mission and vision statement and the management predictions for their future performance.

This part of the report will require research in addition to a review of the presidents letter to the shareholders and other business publications, another place to look for information about the company is in the footnotes that accompany the annual report.

Going to our example about Southwest Airlines you would want to include relevant information about business model, such as the lack of international flights, going to smaller airports, and being seen as an alternative to driving to a location.

Ratio Analysis 20 points

This analysis will be used, along with the corporate and industry overviews, to guide you in making your recommendation. Here you will not only report on the ratio, but the importance of each ratio. What is a strong ratio for your companys industry, and how is your company performing compared to its largest competitor? This section should include a two-year analysis of the following six financial ratios for your company and its largest competitor:

• Profitability Ratios
  • Return on Equity
  • Earnings per Share
  • Profit Margin
• Liquidity Ratio
  • Cash Ratio
• Solvency Ratio
  • Debt-to-equity ratio
• Market Tests
  • Price/Earnings Ratio

A good place to find a companys annual reports is www.sec.gov/edgar.shtml (Links to an external site.) Then you can look up information about any publicly traded corporation. The annual reports are 10K reports so look for those.

(Hint you may actually need three years of information to complete this part of your analysis.)

Recommendation 10 points

Finally, based on the industry and corporate overviews along with the ratio analysis, and your understanding of how your chosen company is performing, compared to similar companies in the same industry you need to make a recommendation to your client of the soundness of your company as an investment. In other words, explain why this is a company to buy into, avoid, or purchase with certain reservations.

Citations - Bibliography 10 points

For this research paper you need to have a minimum of five properly cited sources. I should be able to find the article that you are citing if I wanted to. The SRJC online library is considered an appropriate place to find credible business research. Wikipedia and Investopedia are NOT acceptable for business research.

Grammar - 10 points

As this is a college term paper, it is expected that you will use appropriate spelling, punctuation, and grammar.

Deliverables

Paper is to be submitted in Canvas on or before the deadline.

It must be submitted in as a doc, or pdf file. Since you know about this assignment well in advance of when it is due, late papers will not be accepted.

While only a guideline, you should expect the paper to be about 7 10 pages in length not counting the bibliography or title page. If you can cover all of the relevant information with a shorter paper, great. If it takes you a little longer than 10 pages, because you really got into the project that is okay too.

I will grade your paper using the rubric and have papers graded