Overview For your first assignment, you will research how to evaluate stocks as an investment option and complete a company analysis using the provided template. You will start by selecting two companies to determine how free cash flow impacts their growth potential. Then you will select three competitors in the same industry to perform a company analysis. The point of this assignment is to practice finding and analyzing company financial information.
Instructions Step 1: Gather the financial information. Use one or more of the following sources: Yahoo Finance (Preferred Method): https://finance.yahoo.com Links to an external site. Search for your company. Select the Financials tab to view the Income Statement, Balance Sheet, and Cash Flow Statement. Morningstar: https://www.morningstar.com/stocks Links to an external site. SEC Filings (10-K, 10-Q, and other reports): https://www.sec.gov/edgar/searchLinks to an external site. Company Investor Relations Website: Find financial reports under the Investor Relations section of the company’s website. D&B Hoovers (Industry Research): https://www.dnb.comLinks to an external site. Step 2: Complete the company analysis in the Company and Stock Analysis [EXCEL] template Download Company and Stock Analysis [EXCEL] template. Note: Select the correct tab (Week 3 – Company Analysis) at the bottom of the Excel document.
Determine the free cash flow for the last two most recent years for the two companies. Select one company on each of the two different domestic (U.S.) stock exchanges to review. Free cash flow is defined as cash flow from operations minus capital expenditures. Explain how a company’s free cash flow affects its growth potential. Include the inferences you can draw from a company’s free cash flow. Complete the Company Analysis section, including the Industry and the names of the three companies. Complete the Income Statement section for each company’s Total Revenue, Gross Profit, Net Income, and/or EBITDA. Net Income is a generally accepted accounting principle (GAAP). The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is not GAAP, because it usually presents more favorable numbers. Complete the Balance Sheet section for each company’s Total Assets, Total Liabilities, and Total Stockholders’ Equity. Calculate the following three ratios for each company and enter the results in the template (the formulas to calculate the ratios are provided in the template). Debt-to-Equity Ratio. Gross Margin. Operating Margin. Please list the figures used for the calculation of each ratio. Calculate the following ratios for each company using the 10k annual report and enter the results in the template (the formulas to calculate the ratios are provided in the template). Profitability ratios. Efficiency ratios. Leverage ratios. Liquidity ratios. Discuss three takeaways or an analysis of what you have learned about each company based on their financial data. Include at least one paragraph for each company in the Template. This course requires the use of Strayer Writing Standards (SWS). The library is your home for SWS assistance, including citations and formatting. Please refer to the Library site for all support. Check with your professor for any additional instructions.
The specific course learning outcome associated with this assignment is as follows:
Review concepts related to corporate finance, investment strategies, risk assessment, corporate valuation, and financial management. Week 3 Assignment – Company AnalysisWeek 3 Assignment – Company AnalysisCriteriaRatingsPtsDetermine the free cash flow for the last two most recent years for the two companies.15 to >13.5 ptsExemplaryDetermined the free cash flow for the last two most recent years for the two companies.13.5 to >12 ptsCompetentDetermined the free cash flow for the last two most recent years for the two companies, but the free cash flow calculated for one or two of the companies is incorrect or incomplete.12 to >10.5 ptsNeeds ImprovementDetermined the free cash flow for only one of the most recent years for the two companies.10.5 to >0 ptsUnacceptableDid not determine the free cash flow for the last two most recent years for the two companies./ 15 ptsExplain how a company’s free cash flow impacts its growth potential.15 to >13.5 ptsExemplaryExplained how a company’s free cash flow impacts its growth potential.13.5 to >12 ptsCompetentExplained how a company’s free cash flow impacts its growth potential, but the explanation is incomplete and lacks clarity.12 to >10.5 ptsNeeds ImprovementExplained how a company’s free cash flow impacts its growth potential, but the explanation is incorrect.10.5 to >0 ptsUnacceptableDid not explain how a company’s free cash flow impacts its growth potential./ 15 ptsComplete the Company Analysis section including the Industry and the names of the three companies.7.5 to >6.75 ptsExemplaryCompleted the Company Analysis section including the Industry and the names of the three companies.6.75 to >6 ptsCompetentCompleted the Company Analysis section including the Industry and the names of two companies.6 to >5.25 ptsNeeds ImprovementCompleted the Company Analysis section, including the Industry and the name of one company.5.25 to >0 ptsUnacceptableDid not complete the Company Analysis section including the Industry and the names of the three companies./ 7.5 ptsComplete the Income Statement section for each company’s Total Revenue, Gross Profit, Net Income, and EBITDA.22.5 to >20.25 ptsExemplaryCompleted the Income Statement section for each company’s Total Revenue, Gross Profit, Net Income, and EBITDA.20.25 to >18 ptsCompetentCompleted the Income Statement section for each company’s Total Revenue, Gross Profit, Net Income, and EBITDA, but the data is incomplete.18 to >15.75 ptsNeeds ImprovementCompleted the Income Statement section for each company’s Total Revenue, Gross Profit, Net Income, and EBITDA, but the data is incorrect.15.75 to >0 ptsUnacceptableDid not complete the Income Statement section for each company’s Total Revenue, Gross Profit, Net Income, and EBITDA./ 22.5 ptsComplete the Balance Sheet section for each company’s Total Assets, Total Liabilities, and Total Stockholder’s Equity.22.5 to >20.25 ptsExemplaryCompleted the Balance Sheet section for each company’s Total Assets, Total Liabilities, and Total Stockholder’s Equity.20.25 to >18 ptsCompetentCompleted the Balance Sheet section for each company’s Total Assets, Total Liabilities, and Total Stockholder’s Equity; but the data is incomplete.18 to >15.75 ptsNeeds ImprovementCompleted the Balance Sheet section for each company’s Total Assets, Total Liabilities, and Total Stockholder’s Equity, but the data is incorrect.15.75 to >0 ptsUnacceptableDid not complete the Balance Sheet section for each company’s Total Assets, Total Liabilities, and Total Stockholder’s Equity./ 22.5 ptsCalculate the three ratios for each company and enter the results in the template.22.5 to >20.25 ptsExemplaryCalculated the three ratios for each company and entered the results in the template.20.25 to >18 ptsCompetentCalculated the three ratios for each company and entered the results in the template, but the results are incomplete.18 to >15.75 ptsNeeds ImprovementCalculated the three ratios for each company and entered the results in the template, but the results are incorrect.15.75 to >0 ptsUnacceptableDid not calculate the three ratios for each company and did not enter the results in the template./ 22.5 ptsCalculate the ratios for each company using the 10k annual report and enter the results in the template.22.5 to >20.25 ptsExemplaryCalculated the ratios for each company using the 10k annual report and entered the results in the template.20.25 to >18 ptsCompetentCalculated the ratios for each company using the 10k annual report and entered the results in the template, but the results are incomplete.18 to >15.75 ptsNeeds ImprovementCalculated the ratios for each company using the 10k annual report and entered the results in the template, but the results are incorrect.15.75 to >0 ptsUnacceptableDid not calculate the ratios for each company using the 10k annual report and did not enter the results in the template./ 22.5 ptsDiscuss three takeaways or an analysis of what you’ve learned about each company based on their financial data.22.5 to >20.25 ptsExemplaryDiscussed three takeaways or an analysis of what you’ve learned about each company based on their financial data.20.25 to >18 ptsCompetentDiscussed two takeaways or an analysis of what you’ve learned about each company based on their financial data.18 to >15.75 ptsNeeds ImprovementDiscussed one takeaway or an analysis of what you’ve learned about each company based on their financial data.15.75 to >0 ptsUnacceptableDid not discuss three takeaways or an analysis of what you’ve learned about each company based on their financial data./ 22.5 ptsTotal Points: 0