GROUP PROJECT 2

CREATING A DECISION SUPPORT SYSTEM (DSS)

PART 1

Each group will go to the website below and choose two firms in the Fortune 500 list (confirm with the instructor that no other group has a common firm):

Next, obtain the complete financial statements of these two firms for the year 2008 and create a Decision Support System (DSS) in Excel that will help an investor decide which of these two firms to invest in. The DSS must incorporate all the financial ratios shown in the Appendix. The group can include more ratios if they want. The DSS must then utilize all these ratios and come up with a decision for the investor. The Excel DSS must be a fully functional worksheet so that if someone wants to analyze two other firms they can do so.

(Hint: Devise a way to combine the ratios into a single number for each firm, so that the DSS can then compare the two numbers and make a recommendation to the investor.)

PART 2

Having made decision in Part 1 to invest in a firm in 2008, collect a detailed set of financial performance data for the year 2009 for these two firms and evaluate the recommendation of the DSS made in 2008. Did the firm recommended by the DSS outperform the other firm in 2009? What was the reason for the correct (wrong) recommendation?

PART 3

Each group will prepare a presentation in PowerPoint (duration approximately 10 minutes) and make a presentation of the capabilities / limitations of their DSS in front of the entire class (potential investors) with the intention of selling their DSS Software. Other faculty members may be invited to judge the presentation.

(Dress CodeFormal)

APPENDIX

  1. Current ratio =
  1. Acid test ratio =

  1. Cash flow from operations to current liabilities ratio
/ =
  1. Accounts receivable turnover ratio
/ =
  1. Number of Days Sales in Receivable =
  1. Inventory Turnover Ratio =
  1. Number of Days’ sales in inventory =
  1. Debt to equity ratio =
  1. Times interest earned =
  1. Debt service coverage ratio =

  1. Cash flow from operations to capital expenditures ratio
/ =
  1. Return on assets =
  1. Return on stockholders’ equity =
  1. Earnings per share =
  1. PE ratio =
  2. Dividend payout ratio =
  1. Dividend yield ratio =

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