ASSIGNMENT 1: Comprehensive Analysis Project (CAP) - Stage 1

Due No Due Date
Points 40
Submitting a file upload

Directions

Step 1

Select a public company that you will be analyzing throughout this course. Each team should select a different company so as soon as you have picked your company send me a message and I will post your company name. The company should have the following characteristics:

Positive net income in fiscal 2017 and 2018 and forecast of positive income for 2019. (For a quick look at your company’s prospects, visit Yahoo! Finance Links to an external site.)
A positive balance in retained earnings and stockholders’ equity. Most, but not all companies have this characteristic.
Avoid banking, insurance, and automotive firms. Also, avoid companies like GE with complex lines of business and structures. The most straightforward companies to analyze have essentially one line of business, or multiple, but closely integrated products.
Select a company that has at least two competitors that you can compare your company’s performance against.

Step 2

Download the annual report for your company and one competitor. Hint: You should be able to find this on the “investors” section of the company’s website. You will use the competitor company in this assignment only on questions 2a and 2b below.

Step 3

Use the SEC EDGAR website to locate the most recent 10-K for your selected company. Download a spreadsheet version of the financial statements. See Module 1 (Appendix A) for details on how to do this.

Step 4

Answer the following questions about your company and post your solutions to Canvas by the end of the Live Session. If you are unable to attend the Live Session in person, you will need to watch the recording of the session and submit the assignment before the next Live Session the following week.

Assess your company’s business environment using either Porter’s five forces or a SWOT analysis. Use the annual reports of the company as well as any information that you find on the web to assist in your analysis. This should be about one to two paragraphs at the most.
Compute the following ratios for your company and the selected competitor and answer the related questions.
1. Calculate the return on equity (ROE) and return on assets (ROA) for each company for the most recent fiscal year-end. Which company appears to be stronger? Explain.
2. Disaggregate return on assets into the two-component parts as shown in Exhibit 1-9. Compare the ratios for each company. Explain any key differences.

Balance sheet analysis: Using the spreadsheet version of the company’s financial statements that you downloaded prepare a common size balance sheet for the current year and the most recent past year. Answer the following questions:

1. What are the company’s largest assets? Largest liabilities? Do these seem consistent with your expectations give the analysis in question 1? Why or why not?

Income statement analysis. Prepare or view the common size income statement tab in the spreadsheet. (This should include three years of earnings (the current year and the previous two years). Please post this in your CAP assignment. Discuss your findings.
Cash flow analysis: Examine the statement of cash flows and answer the following questions:

1. Is cash flow from operations greater than or less than net income? What was the biggest cause of the difference between cash flow from operations and net income?
2. Is cash flow from investing positive or negative? What does this number mean?
3. Did the company generate or use cash from its financing operations? Explain briefly.

Submit a WORD or PDF file via a file upload. Embed any Excel-based calculation in the text of the document. This makes it easier for me to follow and grade. Plus, it looks much more polished. You may submit an Excel file as a backup for any embedded calculations.