End of year paper
1. PROJECT AND REPORT: (20 Points)
Due Date: MAY 02, 2023 (TUESDAY)
Each student is required to perform research on a Corporate Finance project that involves writing a report (20-25 pages) on a publicly traded company based on its available current financial data. The project involves two parts, namely,
1) The Comprehensive Financial Analysis of a Company and
2) The Computation of Cost of Capital of the same company.
ALL CALCULATIONS FOR THE PROJECT SHOULD BE DONE IN EXCEL AND ALL EXCEL OUTPUTS HAVE TO BE SUBMITTED ALONG WITH THE PROJECT FOR EVALUATION.
1) Comprehensive Financial Analysis of a company:
The first part of the project (using the tools and techniques given in Chapter 3 of the textbook) and its subsequent report are based on the Financial Ratio Analysis (Du Pont Chart Analysis) of a company and its available current financial data. The students are required to evaluate the company based on the trends in its financial ratios over time and evaluate them against the industry standard (a major competitor). Details, including the selection of the company (for time-series evaluation) and its competitor (for cross-section evaluation), will be discussed throughout the semester. In general, the ratio analysis is done in the following steps:
• In writing, submit the name of the company (publicly traded) and the name of its major competitor company within the first two weeks of classes for approval.
• Select the company and its competitor you want to use for your Financial Management Project and submit the company names to me ASAP. I will make sure that no two students select the same companies. Therefore, the sooner you provide the company names to me, the more would be the chances that I will allow you to keep the companies (i.e., nobody else has already selected the company). By the beginning of the second week of the class, everybody will be required to select the company and its competitor for analysis. The student will not be allowed to complete the project in the course of submission if the submissions with publicly traded company names are not received by the instructor by the deadline.
• Evaluate the company using the following ratios: Current, Quick, Average Collection Period, Accounts Receivable Turnover, Inventory Turnover, Average Age of Inventory, Inventory to Net Working Capital, Total Asset Turnover, Fixed Asset Turnover, Fixed Charge Coverage, Basic Earning Power, Debt Ratio, Debt to Equity, Long-term Debt to Equity, Times Interest Earned, Total Profit Margin, Operating Profit Margin, Net Profit Margin, Return on Investment, Return on Asset, Return on Equity, Price-Earnings, Market-Value to Book-Value, Cash Flow per Share, Dividend Payout, and Dividend Yield ratios.
• Evaluate the company using the following accounting measures: Total Net Operating Capital, Net Operating Working Capital, Gross Investment in Operating Capital, Net Operating Profit after Taxes, Free Cash Flow, Operating Cash flow, Return on Invested Capital, Market Value Added, and Economic Value Added.
• Use the ratio values and accounting measures to show performance trends (time-series analysis) of the company (at least for five years).
• Find industry quartiles for each of the ratio and accounting measures and evaluate the company ratios and accounting measures against the industry norm (a major competitor company) (cross-section analysis).
• Write the analysis of the company on each of the ratio and accounting measurement areas (both time-series and cross-sectional analyses).
• Use the web resources available to obtain information on both time-series and cross-section ratios and accounting measures. A series of web addresses that also provide company financial and economic information are given below.
• Make sure to attach all the relevant printouts such as ratios and financial statements (submit them as attachments through the Assignment facility in the BlackBoard) you have obtained from various web sources with your final write-up.
2) Computation of Cost of Capital of the Company:
In the second part, the cost of capital should be computed using the tools and techniques given in Chapter 12 and utilizing the most recent data (different web-based resources should be used to find necessary financial data such as common and preferred stocks, bond prices, and the beta coefficient for the company). It should be done in the following steps:
• Compute the after-tax cost of debt of the company.
• Compute the cost of the preferred stock of the company.
• Compute the cost of internal equity capital using both the Dividend Valuation Model and the CAPM approach.
• Compute the cost of external equity capital.
• Compute the current capital structure (using the current financial statements of the company) to determine appropriate weights for different sources of capital.
• Compute the Weighted Average Cost of Capital the company should use to evaluate new projects.
• Use the web resources available to obtain information on both corporate growth rate, company beta, and calculation of the cost of equity. A series of web addresses that also provide company financial and economic information are given below.
• Make sure to attach all of the cost of capital printouts (submit them as attachments through the Assignment facility in the BlackBoard) you have obtained from various web sources with your final write-up.
3) General Project Requirements:
• A report (20-25 pages) from this research is to be turned in by Due Date: MAY 02, 2023 (TUESDAY). Details will be discussed throughout the semester.
• Use the Assignment facility in the BlackBoard to submit your Corporate Finance Project.
• The report must be of professional quality in terms of format, typing, grammar, spelling, etc. Severe grade reductions will result from failure to present a professional document. It is expected that there will not be any misspelled words or typos. The following format should be used to prepare the report:
1) Cover page 4) Financial (Ratio) Analysis 7) Bibliography
2) Abstract 5) Cost of Capital 8) Attachments
3) Company Introduction 6) Conclusion 9) Appendix (if any)
IMPORTANT PROJECT SUBMISSION INFORMATION
• Upload your project analysis as a word file and the project calculations as an excel document. You must complete your calculations in excel.
• You must upload my approval e-mail on the selection of companies. A screenshot of the e-mail can be uploaded as a valid document. I will not accept the project if the companies do not have my prior approval.
• I use safe assign to check for plagiarism in the project. Do not copy any materials from previous projects or the internet. I will penalize heavily on copied materials.
• A total of three documents must be uploaded:
• My approval e-mail on company selection.
• The project analysis is a word document.
• The project calculations as an Excel document.
Steps to Select a Publicly Traded Company and its Competitor
• Go to https://finance.yahoo.com/.
• From the top Menu options, click on “Industries” (https://finance.yahoo.com/industries).
• Select an “Industry Sector” of your choice. [DO NOT SELECT “FINANCIAL INDUSTRY SECTOR”].
• Select two competitive companies from the same industry sector and use the “Company Symbols” to collect Company Data. [DO NOT SELECT ANY “FINANCIAL COMPANY”].
Accessing Mergent Online Financial Data
To access Mergent Online financial data,
• First, log on to http://www.mergentonline.com
• At the Welcome screen, click enter Mergent online
• At the Basic Search screen, select Company Name or Ticker Symbol for identifier and type in the company name or ticker symbol in the search box below
• At the Search Results screen, click on your company
• At the Company Details screen, click on the appropriate tab to obtain financial data
• For example, if you are using data directly out of the financial statements, click on Company Financials to access Balance Sheet and Income Statement
• For example, if you want competitors’ data, click on Competitors
• For example, if you need data on selected ratios, click on Company Financial and then on Ratios
Note: YOU NEED TO PLAN FIRST (MUST HAVE A STRATEGY) BEFORE COLLECTING DATA.
Access industry (peer average) for your company
1. On the Company Details screen,
a. Click Create Reports
b. Click Comparison Reports
c. Click Compare Against Industry (you want to compare against industry)
2. At the Comparison Reporting Selection Screen
a. Select SIC (standard industrial classification – this is industry code for your firm)
b. Select Target country (USA) (you want US companies only)
c. Select all companies (you want to compare against all companies in the industry)
d. Check Use extended report items – a drop-down selection menu will appear
e. Select Ratios for Category and your ratio(s) for Sub-category.
f. Click on Add Report Item to put your ratio(s) in the criteria box
g. Check Include average in the heading below the criteria box
h. Select which year(s)
i. Finally, CLICK on Create Report
Industry average and ratio values for your firm and all firms in the same SIC industry will appear on the screen. You may download this data to Excel.
SAFEASSIGN ENABLED CLASS PROJECT
The class project in this course is required to be submitted through SafeAssign. SafeAssign is a plagiarism prevention tool that detects unoriginal content in papers by identifying areas of overlap between submitted assignments and existing works. Submitting an Assignment that has SafeAssign enabled is similar to submitting a regular Blackboard assignment, but there are unique features and characteristics of SafeAssign to be aware of.
The Steps to Submit SafeAssign Enabled Assignments:
• From the Course Menu, select the Content Area that holds the assignment, for example, “Assessments”
• Click the title of the assignment
• On the Upload Assignment page, click Browse My Computer and select a file to attach. (Optional: Enter comments to your instructor about the submission or assignment.)
• Click Submit.
View the SafeAssign Originality Report
• To view your submission and/or view your SafeAssign Originality Report, click the title of the assignment.
• On the following page, click the SafeAssign link.
• Next, click the View Originality Report button.
FOR FURTHER QUESTIONS ON SAFEASSIGN, WATCH THE FOLLOWING VIDEO
https://www.youtube.com/watch?v=WIkrupudGPU
End of year paper
1. PROJECT AND REPORT: (20 Points)
Due Date: MAY 02, 2023 (TUESDAY)
Each student is required to perform research on a Corporate Finance project that involves writing a report (20-25 pages) on a publicly traded company based on its available current financial data. The project involves two parts, namely,
1) The Comprehensive Financial Analysis of a Company and
2) The Computation of Cost of Capital of the same company.
ALL CALCULATIONS FOR THE PROJECT SHOULD BE DONE IN EXCEL AND ALL EXCEL OUTPUTS HAVE TO BE SUBMITTED ALONG WITH THE PROJECT FOR EVALUATION.
1) Comprehensive Financial Analysis of a company:
The first part of the project (using the tools and techniques given in Chapter 3 of the textbook) and its subsequent report are based on the Financial Ratio Analysis (Du Pont Chart Analysis) of a company and its available current financial data. The students are required to evaluate the company based on the trends in its financial ratios over time and evaluate them against the industry standard (a major competitor). Details, including the selection of the company (for time-series evaluation) and its competitor (for cross-section evaluation), will be discussed throughout the semester. In general, the ratio analysis is done in the following steps:
• In writing, submit the name of the company (publicly traded) and the name of its major competitor company within the first two weeks of classes for approval.
• Select the company and its competitor you want to use for your Financial Management Project and submit the company names to me ASAP. I will make sure that no two students select the same companies. Therefore, the sooner you provide the company names to me, the more would be the chances that I will allow you to keep the companies (i.e., nobody else has already selected the company). By the beginning of the second week of the class, everybody will be required to select the company and its competitor for analysis. The student will not be allowed to complete the project in the course of submission if the submissions with publicly traded company names are not received by the instructor by the deadline.
• Evaluate the company using the following ratios: Current, Quick, Average Collection Period, Accounts Receivable Turnover, Inventory Turnover, Average Age of Inventory, Inventory to Net Working Capital, Total Asset Turnover, Fixed Asset Turnover, Fixed Charge Coverage, Basic Earning Power, Debt Ratio, Debt to Equity, Long-term Debt to Equity, Times Interest Earned, Total Profit Margin, Operating Profit Margin, Net Profit Margin, Return on Investment, Return on Asset, Return on Equity, Price-Earnings, Market-Value to Book-Value, Cash Flow per Share, Dividend Payout, and Dividend Yield ratios.
• Evaluate the company using the following accounting measures: Total Net Operating Capital, Net Operating Working Capital, Gross Investment in Operating Capital, Net Operating Profit after Taxes, Free Cash Flow, Operating Cash flow, Return on Invested Capital, Market Value Added, and Economic Value Added.
• Use the ratio values and accounting measures to show performance trends (time-series analysis) of the company (at least for five years).
• Find industry quartiles for each of the ratio and accounting measures and evaluate the company ratios and accounting measures against the industry norm (a major competitor company) (cross-section analysis).
• Write the analysis of the company on each of the ratio and accounting measurement areas (both time-series and cross-sectional analyses).
• Use the web resources available to obtain information on both time-series and cross-section ratios and accounting measures. A series of web addresses that also provide company financial and economic information are given below.
•
• Make sure to attach all the relevant printouts such as ratios and financial statements (submit them as attachments through the Assignment facility in the BlackBoard) you have obtained from various web sources with your final write-up.
2) Computation of Cost of Capital of the Company:
In the second part, the cost of capital should be computed using the tools and techniques given in Chapter 12 and utilizing the most recent data (different web-based resources should be used to find necessary financial data such as common and preferred stocks, bond prices, and the beta coefficient for the company). It should be done in the following steps:
• Compute the after-tax cost of debt of the company.
• Compute the cost of the preferred stock of the company.
• Compute the cost of internal equity capital using both the Dividend Valuation Model and the CAPM approach.
• Compute the cost of external equity capital.
• Compute the current capital structure (using the current financial statements of the company) to determine appropriate weights for different sources of capital.
• Compute the Weighted Average Cost of Capital the company should use to evaluate new projects.
• Use the web resources available to obtain information on both corporate growth rate, company beta, and calculation of the cost of equity. A series of web addresses that also provide company financial and economic information are given below.
• Make sure to attach all of the cost of capital printouts (submit them as attachments through the Assignment facility in the BlackBoard) you have obtained from various web sources with your final write-up.
3) General Project Requirements:
• A report (20-25 pages) from this research is to be turned in by Due Date: MAY 02, 2023 (TUESDAY). Details will be discussed throughout the semester.
• Use the Assignment facility in the BlackBoard to submit your Corporate Finance Project.
• The report must be of professional quality in terms of format, typing, grammar, spelling, etc. Severe grade reductions will result from failure to present a professional document. It is expected that there will not be any misspelled words or typos. The following format should be used to prepare the report:
1) Cover page 4) Financial (Ratio) Analysis 7) Bibliography
2) Abstract 5) Cost of Capital 8) Attachments
3) Company Introduction 6) Conclusion 9) Appendix (if any)
Note: YOU NEED TO PLAN FIRST (MUST HAVE A STRATEGY) BEFORE COLLECTING DATA.
Access industry (peer average) for your company
1. On the Company Details screen,
a. Click Create Reports
b. Click Comparison Reports
c. Click Compare Against Industry (you want to compare against industry)
2. At the Comparison Reporting Selection Screen
a. Select SIC (standard industrial classification – this is industry code for your firm)
b. Select Target country (USA) (you want US companies only)
c. Select all companies (you want to compare against all companies in the industry)
d. Check Use extended report items – a drop-down selection menu will appear
e. Select Ratios for Category and your ratio(s) for Sub-category.
f. Click on Add Report Item to put your ratio(s) in the criteria box
g. Check Include average in the heading below the criteria box
h. Select which year(s)
i. Finally, CLICK on Create Report
Industry average and ratio values for your firm and all firms in the same SIC industry will appear on the screen. You may download this data to Excel.