Part I Individual Company Report (3 to 5 pages)
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Each member of the team is required to prepare this portion of the assignment individually and without assistance from the other members of the group.
1. Identify overall corporate objectives of your company and strategies implemented to achieve those objectives.
To best understand and respond to the above question, I recommend that you first think through the overall business model of your company, including its targeted customers, products and/or services, markets, key business processes (internal allocation of resources), key alliance relationships (partnerships with external organizations), and external forces that impact the company’s ability to meet its strategic objectives. These items are a checklist of what is generally important to a company’s economic operations BUT it is not exhaustive – you will need to analyze your company to identify what affects the overall business model – these items are a good starting place. To the extent you find them important, they should be described in your paper.
2. Identify the significant risks that potentially could impede your company from achieving each objective. This includes risks inherent in the industry, the company and even accounting policy choices.
The 10-K lists a large number of risks in Part 1A. Not all of these risks are significant. You need to consider what your company does and identify the risks that are unique to that industry or that company specifically. For example, the following is not a significant risk:
“Adverse economic and geopolitical conditions and dislocations in the credit markets could have a material adverse effect on our financial condition, results of operations, cash flow and per share trading price of our common stock.”
Almost all companies will have this risk disclosure (or something similar) – this is like saying “If a meteor hits earth and destroys all living things, our business may be adversely affected” – no kidding. Find something more unique and explain how it affects the strategies you identified.
3. Select one (you can always select moreif you think necessary) of the significant accounting policies and explain why this policy is important to your company.
Risk assessment also occurs at the financial statement level. Identify what you consider to be the significant accounting policy areas for your company. “Significant” implies two characteristics: (1) the policy surrounds a transaction or operating characteristic that is material to the company and (2) there exists some complexity with regards to the accounting policy choice.
For example, almost all notes to the financial statements contain an accounting policy note (almost always Note 2) – most will also refer to an accounting policy on cash and cash equivalents. Unless your company uses cash in some unique fashion, this is a boilerplate disclosure that really is meaningless. Find a footnote that matters – one that has an effect on the strategies you described in part a. You can also review the “MD&A,” management’s discussion and analysis, for items that may be useful.
Provide a detailed explanation of the technical guidance with respect to this policy. How does your company’s choice with respect to this accounting policy compare with that of your company’s competitors? Are there other alternatives or choices that might be selected for these types of transactions? Do these accounting policies seem aggressive or conservative? To respond to this question, you are almost certainly going to have to review the accounting guidance on the type of transactions you selected – don’t be shy – use the Accounting Standards Codification to gather the current guidance on your policy.
4. Find the investor relations website and listen to at least the most recent analysts’ call on earnings.
Include a description of the issues the analysts discuss with the company leadership and have provided in any analysts’ reports. Provide your own interpretation.
5. Provide a conclusion that includes a buy/hold/sell recommendation for your company’s stock.
Provide a summary analysis that supports your recommendation.
Most if not all of the information can be found in the company’s Form 10-K for the most recent year. Public documents filed with the Securities and Exchange Commission can be found in the EDGAR system at www.sec.gov (for additional info go to: http://www.sec.gov/edgar/quickedgar.htm#.U9qvMuNkR…. Most companies also have an investor relations section of their website with information. The Bloomberg machines located in the Wells Fargo Financial Markets Lab in the Love Library also have the SEC filings (see the Excel-based project in Part 2 for more information). You should provide proper citations using either MLA or APA style (you may choose either, but be consistent. For tips:
You will have a strong urge to copy and paste from the source documents – avoid the temptation. I want YOUR assessment and analysis of the public information provided not simply a regurgitation of the information in a 10-K.
The final report & Excel (see below) should be submitted to Turnitin on November 24thby 9PM.
Part II: Individual Excel-based report
In addition to the written report, you will also need to prepare an excel-based report that presents the information in the table below. This information can be found in a number of places, including through the Love Library Mergent Online portal at: http://www.mergentonline.com.libproxy.sdsu.edu/bas….
You should download the necessary information into a “base” excel spreadsheet. You must then build the table and charts using links to the underlying data (no “typing” amounts into the final tables). In addition, you should format your tables to maximize a professional presentation when printed.
Submit your completed excel file to Turnitin on or before the scheduled due date.
The format should be clean and neat, similar to if you were presenting the information to a group of potential investors, your boss, or a client.
Prepare the following excel charts and tables:
1. Page 1 –
a. A five-year line chart with the following lines:
i. Your company’s stock price, and
ii. The mean stock price of your company’s five closest competitors.
b. Bottom of Page – a table showing for your company and each of the five nearest competitors:
i. Total Current Market Capitalization
ii. And for the most recent year:
1. Total Revenues
2. Operating Income
3. Net Income
2. Page 2 –
a. Top half of page – data table showing the growth ratesin percentages for your company over the most recent one, three- and five-year periods of time:
i. Revenue %
ii. Operating income %
iii. Earnings per share %
iv. Dividends %
v. Book Value/Share %
vi. Stock Total Return %
b. Bottom half of page – Profitability analysis table showing your company current and most recent five-year average and the most recent year end for the five nearest competitors:
i. Return on equity %
ii. Return on assets %
iii. Revenue/Employee $
iv. Fixed asset turns
v. Inventory turns