Choose one of the following three firms: Verizon (VZ), AT&T (T) or Sprint Nextel (S) to be the firm you will analyze in your project. Provide background information including a brief summary of a recent news article (include the source for the article) about the firm.
Who is your firm's closest competitor?
FINANCIAL RESEARCH PROJECT -------
The purpose of this assignment is to test the students' ability to research, analyze and present financial information. The students will be required to research key financial data, analyze the information, apply the appropriate financial concepts and formulas and prepare a credible management level financial report.
THE PROJECT IS DESIGNED TO BE COMPLETED INDIVIDUALLY AS ASSIGNED BY YOUR PROFESSOR) BY THE STUDENT.
OBJECTIVE
The specific objective of this graded written research exercise is to prepare an "executive level financial report" to the Chief Financial Officer (CFO) of a mythical company in which you are employed as a financial analyst. This report will pertain to the financial evaluation of a real, publicly-traded, company. It will require independent research (web-based or library), careful financial analysis, and the proper application of key financial theories and formulas.
The company that is to be analyzed for this project is (company selected by instructor). The list of the assigned companies is posted in the conference area titled "The list of the assigned companies for the project".
Alternatively, you can request me to approve another publicly traded company. This request must be submitted before the end of the first week of the course. The request must include:
a. identification of the company by ticker symbol and name
b. a reasonable and appropriate explanation of why you want to examine the alternative company
c. the source of the analyst's report that will be used in the analysis (which must be submitted to me)
d. acknowledgement by you that all of the specific elements of the assignment (see below) will be prepared by you and included in the final research project report
SITUATION
You are a financial analyst with the mythical High Technology Corporation ("HTC"). HTC is an established manufacturer of a line of electronic components, which services an international market. HTC is currently a new fully-integrated wireless communication service for world-wide use. A competitive technical and economic product evaluation has determined that THE COMPANY THAT IS TO BE ANALYZED FOR THIS PROJECT (COMPANY SELECTED BY INSTRUCTOR) (a real publicly-traded company) is the best potential candidate for a long-term commitment. THE COMPANY (COMPANY SELECTED BY INSTRUCTOR) is offering a competitively favorable deal. However, based on some serious general concerns about the fallout of companies in the industry in general, the CEO has asked your CFO to conduct a financial analysis of THE COMPANY (COMPANY SELECTED BY INSTRUCTOR) to determine if it is prudent to commit to this company's communication system. The cost of cutting over to the new communications system is significant and any interruption in support during the next few years would adversely affect HTC's performance and profit. Specifically, the question is: will THE COMPANY be financially viable over the next two to three years?
YOUR SPECIFIC ASSIGNMENT
Your specific assignment is to research, analyze, and prepare a report for the CFO on the actual financial performance of THE COMPANY THAT IS TO BE ANALYZED FOR THIS PROJECT (COMPANY SELECTED BY INSTRUCTOR) for the last three years. In addition to reviewing the traditional financial performance indicators, you are also to review THE COMPANY'S past and current stock performance for the last one year. Your report is to consist of three parts:
(1) An evaluation of THE COMPANY'S financial performance for the last three years.
(2) An evaluation of THE COMPANY'S stock performance for the last one year.
(3) Finally, a specific recommendation, with supporting rationale, as to whether or not THE COMPANY'S recent trend in financial and stock performance is of sufficient financial strength to warrant entering into a long-term commitment.
To assist you in your task, the CFO has provided the following general guidance. Since it is recognized that the industry is undergoing a major contraction, it is very important to comparatively evaluate THE COMPANY'S financial and stock performance trends against its Industry.
You may wish to include all necessary and relevant financial performance and stock information, trends, and projections in supporting your recommendation. These factors may include, financial ratio trends and industry comparatives, capital spending, stock growth, Beta values, credit rating service valuations, bond rating valuations, and management and investment reports - when these documents are available.
REPORT REQUIREMENTS
YOUR SPECIFIC ASSIGNMENT
Research and analyze the following information for THE COMPANY (SELECTED BY INSTRUCTOR).
--Annual Balance Sheets for THE COMPANY for the last three years.
--The Income Statements for THE COMPANY the last three years.
-- Annual reports, 10K or 10Q------
--Industry norms -----------
---Analysts' reports on performance
-- Management reports or press releases
Using this information the students have to develop evaluation of the financial performance for THE COMPANY (SELECTED BY INSTRUCTOR). (Totally 85% of the assignment grade)
1. Background and Industry (one short paragraph).
2. Select of most significant financial performance results for the company: Compare Revenue, net income, working capital, total assets for the last three years and other results of your choice of the company against the industry or main competitor. Present the table with this information in your report. Write about 1 page of the analysis of these financial performance results. (15% of the project grade)
3. Find financial ratios for the company and its major competitor in the Internet. Write about 1-2 pages of analysis of the ratio results you received. (15% of the project grade). Compare the ratio results against the industry or main competitor.
4. Evaluate Return on Equity for the company for the last three years using the DuPont analysis. (10% of the project grade). Compare the company's results to a major competitor.
5. Taking the information from the Income statements and the Balance sheets, calculate the company's return on equity using the DuPont technique for the company for three years. Follow the formulas on pages 437-438 of the textbook. Show your calculation!
6. Write about 1 page of analysis of the results that you received. Compare the results to main competitor. If the management of the company would like to improve their return on equity, what should the management of these companies do?
7. Evaluate other areas of financial analysis: capital spending, stock growth, Beta values, credit rating service valuations (if possible), bond rating valuations (if possible), etc. Make an overall conclusion about financial performance of the company during the last years. Compare the results that you received against the industry or main competitor. Summarize the results that you received in 1 pages. What are the firm's financial strengths and weaknesses? (10% of the project grade)
a. Collect and evaluate the data about stock performance of the assigned company's for the last one year. Compare the results that you received against the industry or main competitor.
8. Write about 1 page of analysis of the ratio results you received. (20% of the project grade).
9. Develop a specific recommendation, with supporting rationale, as to whether or not the assigned company's recent trend in financial and stock performance is of sufficient financial strength to warrant entering into a long-term commitment. (about 1 page) (15% of the project grade)
PRESENTATION OF PAPER AND WRITING (15%) of the project grade):
-Organization, Format and Presentation of Paper including the Title page, Introduction, Body, and Summary (4% of the project grade)
Use of Tables, Figures and Other Graphics to Summarize and Support Analysis Presented in the Paper (3% of the project grade)
Logical and Smooth Flowing Transitions and Relationships Among Sections of the Written Report (3% of the project grade)
Research Sources and Significance of Research Information and Data, Use of APA Citation Methodology (5% of the project grade)
Your final report is to be an executive-level financial report, directed to the CFO. This report must be about 5-6 double-spaced typewritten pages (without tables and graphs). Include suitable comparative, quantitative and qualitative analyses and conclude with a specific and supported recommendation on the projected financial viability of THE COMPANY THAT IS TO BE ANALYZED FOR THIS PROJECT (COMPANY SELECTED BY INSTRUCTOR) for the next several years.
Essential research data, financial calculations and other documentation as necessary to support your recommendation should be referred to in summary form in your report and attached in detail as enclosures. All major sources should be referenced. There is no set limit to the size of the enclosures, but it is recommended that
only essential enclosures be attached. You should use references and bibliography to identify any remaining supporting documents you wish to include.
The Individual Research Report must be posted to the LEO Student Assignments as a Attachments are limited to a maximum two files in doc, docx., xls. xlsx., or rtf. formats. OTHER FORMATS ARE NOT ACCEPTABLE, will not be reviewed and graded.
If these formats are not available, use the following option:
File - Save As - in the bottom of the window for saving file you see "save as type" - choose type Rich Text Format for doc. file, and previous option of Excel for Excel file.
Evaluation Rubric
An evaluation rubric is available for the research project. The evaluation rubric outlines the specific requirements and elements of the project. It is suggested that the rubric be used as a guideline for the content, preparation, and completion of the project.
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The rubric will be used for the evaluation and grading of the final research project. 1. Financial statements analysis of the assigned company
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Virtually no effort to develop financial statements analysis of the assigned company; not worthy of credit.
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Only a superficial effort to develop financial statements analysis of the assigned company
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The project contains some financial statements analysis of the assigned company, but should be considerably more developed
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Good effort is made to develop financial statements analysis of the assigned company
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Excellent and very thorough development and articulation of financial statements analysis of the assigned company
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2. Financial ratio trend analysis of the assigned company and industry comparatives.
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Virtually no effort to develop financial ratio trends analysis of the assigned company and industry comparatives; not worthy of credit
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Minimal effort to develop financial ratio trends analysis of the assigned company and industry comparatives.
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Some effort made to develop financial ratio trends analysis of the assigned company and industry comparatives, however the result are not explained and analyzed.
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Good effort to develop financial ratio trends analysis of the assigned company and industry comparatives, the result are well explained and analyzed
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Excellent and successful effort to implement financial ratio trends analysis of the assigned company and industry comparatives; very clear linkages between financial ratio results and investment decisions and recommendations;
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This report must be 8 double-spaced typewritten pages (without tables and graphs).
The Research Report must be posted to the LEO Student Assignments as a Attachments are limited to a maximum two files in doc, docx., xls. xlsx., or rtf. formats. OTHER FORMATS ARE NOT ACCEPTABLE, will not be reviewed and graded.
If these formats are not available, use the following option:
Pdf. files will not be accepted and graded.
All works must be Word processed. Handwritten and scanned work will not be accepted and graded.