Financial statement analysis term paper

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PF 504

Your term paper assignment for this semester requires you to analyze the financial statements for your assigned companies. To satisfactorily complete this assignment, you are to make the calculations listed below on an Excel spreadsheet and carefully and thoroughly analyze your results. You will look atboth trends in each company’s ratios and one in comparison to the other. I will provide you with spreadsheets containing financial statement data for these companies. The first document to access is the company’s 10-K, usually available on the company’s web site. Look under Investor Relations. In addition, you are to access broker and analyst reports from any and all sources that are available toyou in the Trading Room and from other sources. You should use appropriate citations for these references. Structure your paper around the major economic characteristics of the firm that we are studying in the first half of the course. These are liquidity, financial flexibility, and operating efficiency, cash flow, profitability and leverage. Also calculate your company’s sustainable growthrate and compare it to its annual growth rates in sales and assets. The paper should begin with an overview of your company focusing on the nature of its business and an industry analysis based on Porter’s Competitive Forces article. The conclusion should focus on whether or not you would invest in this company. The maximum length of the text in the paper is 15 pages. Format should be standardmargins, Times New Roman font, 11 point type and single spaced.
The final term paper is due no later than May 2.
There are two reasons why I am asking you to write a term paper in which you analyze an assigned company’s financial statements. The first is that I want you to deepen your understanding of the analytical concepts in presented in Chapters 3, 4 and 5 of the Hawawini text (thesechapters are on the course website). To do this, I want you to apply the same calculations that we have made on the Target financial statements to your assigned company. The second reason for this assignment is to invite you to use the information resources available in the Trading Room and elsewhere on campus to get information relevant to analyzing your company.

Term Paper Sections
1. PorterCompetitive Forces Analysis of Industry
2. Discussion of Company Strategy
3. Ratio analysis leading to a type of du Pont framework explanation of trends in the company’s ROIC. This will include all measures listed below on five years worth of data.
4. Calculation of the company’s market value capital structure, WACC and EVA.
5. Free Cash Flow projections for 2 years.
6.Conclusion about which company is a better investment.

Company Pairs
1. Wal-mart and Target
2. Borders and Barnes & Noble
3. FedEx and UPS

1. Common Size Income Statement and Balance Sheet
2. Compound growth rates for each item on the balance sheet and income statement.
You should use these to substantiate interpretation of the ratios. Some inclusionof this material is expected.
3. Managerial Balance Sheet. Use this to discuss the overall asset and financial structure of the company.

4. Receivables Turnover
5. Average Collection Period
6. Inventory Turnover
7. Inventory Period
8. Payables Turnover
9. Payables Period
10. Operating Cycle
11. CashCycle
12. WCR/Sales
13. Days Working Capital
14. Current Ratio
15. Quick Ratio
16. Asset Turnover
17. Liquidity Ratio
* Long Term Funding
* Net Fixed Assets
* Net Long Term Financing
* Net Short Term Financing

Analyze your company’s statement of cash flow and cash flow model. Also in this section, include and discuss Cash...
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