MBA 7200 Financial Analysis Paper
FINANCIAL ANALYSIS PROJECT: COMPANY ; DOLLAR TREE
The course project will require students to complete a Financial Analysis of an assigned publicly traded corporation.The project deliverable will be in a structured Word Document includes Excel spreadsheets.
students will be given a publicly traded company to research.Project requirements must include the following analysis:
- One page description of the corporation:its products, markets.
- Overall trend assessment of the company’s balance sheet, income statement and statement of cash flows for the last three years.
- Selected ratio and trend analysis.Ratios must include liquidity, asset management, solvency, profitability, and market value ratios.A three year ratio analysis is the minimum expectation.
- Analysis of the company’s stock price and EPS trends for the last three years.Analysis must include comparison to key market competitors.
- Evaluation of the firm’s Beta in relation to a specified market index (ie: S & P 500, Nasdaq 100, Dow 30).
- Assessment of the firm’s capital structure including any significant changes in the firm’s capital structure over the last three to five years.
- (Balance sheet data).
- Assessment of the Firm’s cash flow and determination of the firms free cash flow over the last three years.
- Closing summary of the firms financial health in relation to the overall economy and with its industry.
- PROJECT DETAILS:Maximum 9 pages in length, not including a cover page ,
- Appendices and supporting references. Paper Format:APA required
- Supporting Financial data prepared using EXCEL Students may include additional reference materials such as financial statements
- Students are not to copy and paste financial statements or other materials directly from the web into their analysis (Word) file.Reference page includes all references sited, APA format for references.The gradingcriteria for the project will be broken down as follows:
- Description of the firms market, products and financial highlights(1 page maximum) —– ( 5 points Maximum)
- Financial statement assessment ( 1 page maximum)—- (10 points Maximum)
- Ratio and trend analysis prepared with supporting analysis (3 page Maximum)—( 30 points Maximum)
- Stock Price and EPS analysis (1 page Maximum) —(10 points Maximum)
- Capital Structure analysis and calculated WACC (1 page maximum)—15 points Maximum)
- Cash Flow analysis (1 page maximum) – 10 points Maximum
- Conclusion/summary of financial condition of firm— 5 points Maximum
- Excel documentation concise clear, supports narrative and requirements –5 points Maximum
Perfect spelling, punctuation, grammar, APA, concise business style writing, reference page—10 points Maximum.
MBA 7200 Financial Analysis Paper: Company Name
Outline for paper
· no abstract is needed for this paper
· double spacing is required. The outline is presented in single space for presentation purposes.
Important point: in the appendices you present financial data and your ratio analysis calculations. Within the narrative sections, you are to analyze the data and describe what the data is indicating. What do the numbers mean? What are the trends and how, based on the analysis, is the firm performing for its owners (stockholders) and within its industry. Use the data to prepare financial analysis.
Simply regurgitating the financial numbers in your narrative is not analysis and is not sufficient to receive a passing grade for this project.
Outline of paper
1. Page 2: Description of corporation, major products, industries, markets served, and any significant developments over the past three years.
a. Prepare a concise summary of your company using declarative sentences. The purpose of this section is to provide the reader with basic information on the company. Distilling your company down to one page of essential information should not be easy. Eliminate any extraneous “fluff” and avoid providing any interpretations or analysis. Numerical analysis is not part of this section. It is the only part of the paper that numerical analysis should not be included. This is a factual section. Assume the reader is a business professional.
2. Page 3: Overall descriptive analysis of the financials for the last three years
a. In this section you can now present key financial highlights of your company. At a minimum you should discuss sales and net income performance and any significant financial factors related to your company over the last three years. Use concise $ figures. For example, use $7.8m or $7.8b instead of $7,800,000 or writing $7.8 million. There is more key financial information than one can easily fit into one page so you must determine what is most important for the reader to understand the financial picture of the corporation as of the most recent financials.
b. If your firm has two or more published quarterly statements since the last annual report, be sure to prepare your analysis using the most recent quarterly data.
3. Pages 4-6: Descriptive analysis of the firms financials and ratio analysis
a. In this section the writer now gets into the financial details of the firm. The narrative in this section is based on the financials of the firm (Appendix A) and the ratio analysis (Appendix B).
b. What are the trends in your ratio analysis? What are the trends for the company as a whole and in comparison to key competitors and industry as a whole?
c. Ratios to include areDebt/Equity, ROI, ROE, ROA, current, and asset turnover.Cash coverage ratio is suggested to help prepare the cash flow analysis section.
Note: P/E ratio and EPS are to be analyzed in the stock price section. Include this as a separate analysis in Appendix C, not in Appendix B.
4. Page 7: evaluation of firm’s stock price history, earnings, and dividend policy for the last three years
a. A year to year comparison of a firm’s stock price does not provide enough data to sufficiently analyze trends and changes in the firm’s stock price and subsequently P/E ratio and EPS.
b. Prepare a 3-year quarterly analysis of the firm’s stock price and P/E ratio. Present this data in Appendix C.
c. Use a similar format as your ratio analysis presented in Appendix B.
d. Most stock charts that you find online will show the stock price at any given date. You will need to compare the stock price to quarterly earnings to determine the quarterly P/E needed for this section.
5. Page 8: Capital structure analysis and WACC
a. Analyze the firm’s ratio of debt to equity financing including trends in each.
b. Using the examples on the cost of capital, calculate your firm’s current WACC.
c. Include any additional supporting financial analysis for this section in Appendix C.
6. Page 9: Analysis of the firm’s cash flows for the last year (minimum) or up to three years.
a. In this section use the firm’s accounting statement of cash flows to calculate the financial cash flow from assets or free cash flow for the firm.
b. Use the information in chapter 2 on cash flow to guide your analysis.
c. Calculations presented in Appendix C.
d. A 1-year analysis for this section is sufficient.
7. Page 10: Descriptive summary
a. In this section use the analysis in all of the previous sections to write a 1-page summary of your company with respect to its financial health and performance.
b. A brief mention of performance specific to its industry and the current economy is to be included.
c. Predicted future performance is to be informed by the past analysis.
d. This is not meant to be a “buy, sell, or hold” decision analysis.
e. While your opinion as a ‘business analyst’ is necessary, it should be validated and supported by the financial analysis. In other words, use the numbers to tell the financial story.
8. Page 11: Reference page (use a second page if needed and number accordingly)
9. Pages 12 and up: Appendices of supporting financial data and analysis
In the body of your paper, between the cover page and the reference page, the following is the correct APA style format for headings. You should not need more than 2 levels for this paper.
1 Centered, Boldface, Uppercase and Lowercase Heading
2 Flush Left, Boldface, Uppercase and Lowercase Heading
Correct APA references required. Use this site to ensure you are using correct APA format:
Purdue OWL (Online Writing Lab)
In Appendix A, you should include either spreadsheets of selected company financials from income statement, balance sheet, and statement of cash flows. In this format, you distill the income statement down to key accounts such as sales, cost of goods sold, gross margin, operating expenses, depreciation expenses, EBIT, interest expense, taxes, net income, earnings and dividends per share. In this format be sure to include any and all account values needed to calculate any and all of your selected financial ratios.
Full financial statements inserted from pdfs or spreadsheets for the last three years.
Depending on formatting, this may take multiple pages. However, be cautious of ‘cutting and pasting’ pages upon pages of financial statements.
Regardless of your approach, the information in this appendix should be consistent in format with the rest of this report. Haphazard ‘cutting and pasting’ will reduce the overall professional appearance report scores.
Using the financial data in Appendix A, prepare a financial statement ratio analysis spreadsheet.
The minimum is a three year analysis but a four or five year analysis is preferred and provides a more accurate trend analysis.
Below is a sample format that you may use. You may find other formats in your search that you may use. Regardless, be sure your format is concise, easy to understand, and includes the % change in each ratio year to year. In the 4 year analysis below, the % change column for 2009 will use 2008 data to calculate.
At a minimum, choose three ratios for each of the five categories including the indicated ratios in section #3 above. You may choose more, or have unequal numbers of ratios between the categories depending upon what you feel is important to analyze and communicate.
Sample ratio analysis template:
In this appendix include any additional financial data and calculations that are needed to support your analysis but cannot fit into the page limit restrictions.
Include your stock P/E and EPS analysis in this section.