1. Choose an American publicly traded company in which you may want to invest.
2. Obtain a copy of a company profile and the annual financial statements for the most current two years. You should begin gathering information as soon as possible. The annual financial statements must be the 10k form on file with sec.gov.
3. Review the financial data that will assist you in making an investment decision. Use the techniques of financial analysis in Appendix C of your text to assist you in your investment decision and document their use in your report. The following is the minimum required:
a. Horizontal analysis of the Income Statement and Balance Sheet between for the two most recent years
b. Vertical analysis of Income Statement and Balance Sheet for the two most recent years
c. Ratio analysis to include at a minimum:
1) Current Ratio
2) Debt Ratio
3) Rate of Return on common stockholder’s equity (ROE)
4) Earnings per share
5) Price earnings ratio
6) Dividend yield
7) Previous year for same company for comparison of the above ratios
d. Stock price information in graph form (for at least the last five years) on the company.
You may find the following web sites helpful in you gathering of data and in your analysis:
finance.yahoo.com
money.cnn.com
moneycentral.msn.com
reuters.com
kiplinger.com
sec.gov
4. Prepare a well-formatted, word-processed (typed) report following the guidelines on the next page. Double spaced and 12-point font size.
Section 1: Executive Summary (one-half page maximum)
a. Highlights the important points of your report and conclusions. This should appear at the beginning of your report just prior to the main body of the text and must include your recommendation.
Section 2: Main Text of Document (two or three pages)
a. A brief description of the company and its major line of business
b. A summary of the financial data affecting your decision:
1. Give a description of the ratios, the formula, and what the ratios tell you.
2. In a table, compare two years of your company’s ratios, showing the calculations.
3. Discuss the results of your findings from the horizontal and vertical analysis and ratios (e.g is net income improving through time in dollar amounts and as a percentage of sales; is the company’s cash position improving through time as a percent of total assets?).
c. Your conclusion – including a “buy or not buy” recommendation and why. Justify your decision based on the analysis tools from previous section and your current new articles.
Section 3: Appendix
a. Horizontal and vertical analysis
b. Graph of stock prices
c. Two recent (web-based) news articles on the company as of the date of your report
d. A list of referencfktes used to gather your data