FINANCIAL RESEARCH PROJECT – EXPLANATION & INSTRUCTIONS

FINANCIAL RESEARCH PROJECT – EXPLANATION & INSTRUCTIONS.

The Research Project Assignment is worth 20% of the course grade.

Due date is stated in the Class & Assignment Schedule (End of Week 7).

THE PROJECT IS DESIGNED TO BE COMPLETED INDIVIDUALLY BY EACH STUDENT.

OBJECTIVE:

The specific objective of this graded written research exercise is to prepare an “executive level financial report” to a potential investor. This report will involve the financial evaluation of a real, publicly-traded, company. It will require independent research (web-based and library), careful financial analysis, and the proper application of key financial theories and formulas.

The companies that may be analyzed for this project are Yahoo (YHOO), IBM (IBM), Target (TGT), Oracle (ORCL), or Deere (DE).

 SITUATION

You are a financial analyst with a large investment banking firm.  Your work involves preparing financial research reports and recommendations for clients of the firm.  This project represents such a report.

YOUR SPECIFIC ASSIGNMENT    

Your specific assignment is to research, analyze, and prepare a report for the clients on the actual financial performance of THE COMPANY THAT IS TO BE ANALYZED FOR THIS PROJECT.  In addition to reviewing the traditional financial performance indicators, you are also to review THE COMPANY’S past and current stock performance. Your report includes three parts:

(1)        A comprehensive review of THE COMPANY’S financial performance for the last 3 years.   A DuPont analysis is also required. (See detailed description below) 

(2)        An evaluation of THE COMPANY’S stock performance for the last year.

(3)        Finally, a specific recommendation, with supporting rationale, as to whether or not THE COMPANY’S recent trends in financial and stock performance are of sufficient financial strength to warrant entering into a long-term investment commitment.

To assist you in the task, the CFO has provided the following general guidance.

It is very important to comparatively evaluate THE COMPANY’S financial and stock performance trends against its Industry and/or principal competitors.

You should include all necessary and relevant financial performance and stock information, trends, and projections in supporting your recommendation. This information may include, financial ratio trends and industry comparisons, 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 and Statements of Cash Flows for THE COMPANY the last three years.

— Annual reports, Form 10K Reports

 –Industry norms

—Analysts’ reports on performance

— Management reports or press releases, investor conference calls  

Using this information students will develop the evaluation of the financial performance for THE COMPANY. (85% of the assignment grade) 

1. Required Subheading: Background Information

Background and Industry (one short paragraph). 

2. Required Subheading: Financial Performance Results

Select the most significant financial performance results for the company: Compare Revenue, net income, cash flows, working capital, total assets for the last three years and other results for the company against the industry or main competitors. Present a table with this information in the report. Write about 1 page of analysis for these financial performance results. (15% of the project grade)

3. Required Subheading: Financial Ratio Analysis

Evaluate financial ratios for the company (the Mergent database available through the Library is a good source).  Write about 1-2 pages of analysis of the ratio data. (15% of the project grade). Compare the ratio results against the industry or main competitors.

4. Required Subheading : Return on Equity

 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.  This involves taking the information from the Income statements and the Balance sheets to calculate the company’s return on equity using the DuPont formula. Show your calculations!  Write about 1 page of analysis of the results that you prepared. Compare the results to main competitors. If the management of the company would like to improve its return on equity, what should the management do? 

5. Required Subheading: Other Financial Indicators

Evaluate other significant financial performance indicators including: capital spending, stock growth, Beta values, credit rating service valuations (if possible), bond rating valuations (if possible), etc. Present an overall conclusion about the financial performance of the company during the last 3 years based on these indicators. Compare the results that you developed against the industry or main competitors.  Summarize the results in 1 page by explaining the firm’s financial strengths and weaknesses? (10% of the project grade).

6. Required Subheading: Stock Performance

Collect and evaluate the data about stock performance of the assigned company for the last year. Compare the results against the industry or main competitors.  Write about 1-2 pages of analysis of the results. (20% of the project grade).

7. Required Subheading: Investment Recommendation

Develop a specific recommendation, with supporting rationale, as to whether or not the assigned company’s recent trends in financial and stock performance, and projected performance, are of sufficient financial strength to warrant entering into a long-term investment commitment (write 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).

The final report is to be an executive-level financial report, directed to the client. The report should be about 6 – 8 double-spaced typewritten pages (not counting the tables and graphs).

Essential research data, financial calculations and other documentation that is necessary to support the recommendation should be referred to in summary form in the report and included in the report as attachments.  All major references sources must be referenced. 

The Individual Research Report must be posted to the LEO Student Assignments.  Attachments are limited to a maximum two files in doc, docx., xls. xlsx., or rtf. formats. OTHER FORMATS ARE NOT ACCEPTABLE and will not be reviewed and graded.

 Pdf. files will not be accepted or graded.

All work must be Word processed. Handwritten and scanned work will not be accepted and graded.

The report is an individual effort and must be researched, developed and prepared by you. 

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Evaluation Rubric for the Research Project.

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.  The rubric will be used for the evaluation and grading of the final research project.

FINANCIAL RESEARCH PROJECT – EXPLANATION & INSTRUCTIONS

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