simulate the role of a potential investor in choosing a company in which to invest. Students will analyze two firms within the same industry and determine in which firm they would choose to invest.
Deliverable: Professionally prepared analysis detailing the pertinent information from the two firms and the final selection. This should contain the following information:
Spreadsheet containing at least three years of financial statements (balance sheet and income statement) and pertinent ratios (as found in the textbook on page 120), examples and pg 120 attached. The best way to complete this portion is to obtain simplified and consistent statements from a website such as finance.yahoo.com and enter the data in Excel with the account names down a column and the three dates across the columns. Ratios should be calculated in Excel so that your work is readily available. By using formulas in the spreadsheet, the formula can be easily copied across the years needed.
Trend analysis of each financial area, including liquidity, asset management, debt management, profitability, and market value. Students should dig deeper than the ratios. In other words, if leverage significantly increased there should be explanation of why.
Discussion of planned expansions, acquisitions, mergers, or product changes should be discussed. This information may be obtained through the firms annual reports, news releases, or analyst opinions.
Pertinent industry information that may affect one or both firms.
The report should conclude with an informed opinion regarding which company would be chosen. Students should provide financial support for their decision. This will require students to compare and contrast performance in each financial area as well as overall.
Steps:
Choose two firms from the same industry to analyze and provide the names to the instructor for approval. This must be completed by the end of Week 3.
Collect the firms annual reports, financial statements, and press releases from the last three years.
Prepare the spreadsheet of financial statements and ratios. This should look professional!
Analyze the firms individually in each financial area.
Compare and contrast the two firms to determine which would be a better investment.
Provide a professional report on your findings (as discussed above). Graphs or tables are encouraged for displaying the necessary information. Use of outside analysis or information should be fully cited (APA format). While students may use this information, they should justify why it was used and whether they concur with the findings.
