I want to ensure you all do well in this final project. Here are some further guidance to help you with the project.
1. I know by now everyone has chosen a publicly traded company to analyze.
2. Obtain the most recent three year income statement and balance sheet from sec.gov or from other sources. For example, 2010, 2009, 2008.
3. Copy the three year income statement and balance sheet into a spreadsheet; vertically and horizontally. See pages 2 - 4 of the attached file for a vertical and horizontal presentation of the income statement and balance.
4. Review your income statement and balance sheet carefully before picking your financial ratios. The reason being, you might pick a ratio that you wouldn't have variables to calculate. See pages 5 and 6 of the attached file for some suggested ratios. Please pick at least 8 ratios from the list - liquidity, profitability, and debt or solvency ratios.
5. Explain why you have chosen those ratios.
6. Calculate your ratios with the formulas on a separate spreadsheet based on figures from the income statement and balance sheet. See page 11 of the attached file for format.
7. Based on your analysis; determine the creditworthiness of your chosen company using the Beaver Univariate Model. See pages 7 and 8 of the attached file for guidance. I recommend you use the Beaver Univariate Model; because it's straight forward; however you are welcome to use the multivariate model if you feel comfortable enough to use it. See page 8 for instructions on multivariate model.
8. Review your company's MD&A and choose at least four items that you believe will add some credibility to your report.
9. After you did all your analysis, write a one page executive summary in 12 point font, single space; an overview of the company, the problem or financial health of the company and suggested solution. See page one of the attached file for instructions on how to write your executive summary. Please use page one of the attached as template for your executive summary. Your executive summary should be the last paper to write, and it should be the first page of your project. The problem is, the content of your executive summary will be drawn from your analysis.
10. You may include charts and graphs if you are a visual person. See pages 9 and 10 for suggested charts and graphs.
Note: The order of your project:
1. Executive summary - first page
2. Appendix one, your three year analysis of your income statement and balance sheet - second page
3. Your chosen ratios and why you've chosen them - liquidity, solvency, profitability, debt and other ratios - page 3
4. The creditworthiness of your company - see pages 7 and 8 for the univariate model instructions - page 4
5. Four items from your MD&A that you believe will add credibility to your analysis - page 5.
Choose a publicly traded company and perform an expanded analysis on the financial statements. Please use the most current financial statements available on www.sec.gov. Perform horizontal and vertical analysis, selected liquidity, profitability, and solvency ratios, and other selected financial ratios. A one page executive summary outlining the basic financial health of the company and a brief opinion of the company’s forecasted financial health will be required with the calculations attached as appendices in Excel with formulas.