Project finance

1.      The objectives of this project are to:

a.       Enable you to do a comprehensive financial analysis of a publicly traded corporation; and

b.      Provide you with substantial information for you to make recommendations regarding investing in this corporation. That is, you must answer the question: “Should I buy this stock?” or, “Should I sell this stock?”

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2.      The midterm and final report must be written properly.

a.       They must include a title page, a table of contents, and a reference page

b.      For both midterm and final report, information sources from the web, etc. must be cited properly, using APA style. 

                                                                          i.      This means that every table that you cut and pasted or typed from the web must have a source at the bottom of the table AND that citing must also be included in a reference page at the end of the report. 

                                                                        ii.      Formatting will be graded.

3.      The parts of the report are discussed below. The midterm report (parts a through e) is due in the first half of class.  The complete report (parts a through i) is due on the last weekend of class. Your project should include:

a.       An overview of the corporation.

                                                                          i.      Provide general information regarding the type of business, products and/or services, location of headquarters, name of CEO, number of employees, and countries of operation, etc.

b.      The latest financial statements

                                                                          i.      Get the income statement, balance sheet, cash flow statement, and the statement of owners’ equity for the past fiscal year. Cut and paste them in your report. Do not forget to cite the source under each statement.

                                                                        ii.      If you cannot cut and paste them, you may have to type in the information in a table in your report.

c.       A summary of each financial statement

                                                                          i.      Take each statement and state the key parts in words.  Tell a story from each of the financial statements.  For example, for the income statement, the story starts like, “Total Revenues in 2010 were $10 billion, while Cost of Goods Sold were $8 billion, leaving a gross profit margin of $2 billion, or 20 percent of total revenues….After taking out interest and taxes from EBIT, the net income was $0.5 billion, or 5 percent of total revenues.”

d.      Ratio calculation  (five major types of ratios, See Chapter 3)

                                                                          i.      Organization this section based on the FIVE types of ratios listed in the text book.  Calculate the ratios from the financial statements in part c above using Excel or your calculator and present them in a table.

e.       Comparison of ratios with industry averages (find industry averages online)

                                                                          i.      Find industry financial ratios online and compare your corporation’s ratios to these industry ratios.

                                                                        ii.      Present your results following the five types of ratios discussed in part d.

                                                                      iii.      A table with both corporation and industry ratios is required.  You must also compare the ratios in words.  Do NOT just give me a table.

f.       Discussion of key statistics

                                                                          i.      There are many different other statistics available for your corporation. These include market value, beta, and diluted EPS, etc. Discuss some of the key statistics that you think can assist you to determine if this corporation is a good buy or sell.

g.      For you to decide if a corporation’s stock is a good buy or sell, you must forecast several key variables, including the stock price. 

                                                                          i.      Use historical prices (5 years of monthly data recommended) and forecast the stock price for the next year. Use regression analysis, and/or moving average, etc. to create your forecast. 

                                                                        ii.      Create a graph from the historical data and show your forecast on the same graph.  You can add a trend line to the graph to help you with a forecast.  Include the graph in your report.

                                                                      iii.      You need to say specifically what the forecasted value of the stock price is.  

                                                                      iv.      You must address the question, “Is this forecast reasonable?”  Must you amend your analysis to get a more reasonable forecast? 

h.      Other information pertinent to the corporation that could affect its future performance and stock price. 

                                                                          i.      This could include dividend policy, capital structure, bond ratings, expert opinions on TV, new projects, litigation, regulation, etc. Search for information on the web regarding this corporation. Look at company complaint blogs, etc.

i.        Recommendation regarding the future of this corporation. 

                                                                          i.      Is the stock a good buy, average buy, or a poor buy (implying a good sell)? 

                                                                        ii.      Include a justification of your recommendation based on your analysis and research. 

 

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