The objectives/purpose of the research paper project are to enable you to do a comprehensive financial analysis of a publicly traded corporation; and provide you with substantial information for you to make recommendations regarding investing in this corporation.

Your financial analysis report will be driven by a rigorous ratio analysis, and aggressively supplemented with your written analysis, interpretation, and evaluation of the data.

Your research should be strategically driven by two probing questions:

-Would you invest your financial capital in the selected firm as a shareholder?

-Would you invest your human and intellectual capital in the firm as an employee?

Steps in preparation of financial analysis report:

1.) Select a publicly held company

2.) Select a benchmark firm to compare your company against. The benchmark firm is typically the largest competitor.

3.) Obtain the firm’s balance sheet, income statement, and statement of cash flows for

the past 5 years. Download or read the firm’s annual report.

4.) Go to: http://www.sec.gov/edgar/searchedgar/webusers.htm

Research EDGAR’s database for additional SEC report filings: 8-k, 10-Q.

4.) The following table is the type of Excel or Word table that should be used to gather and report your ratio and financial performance data. Note the 5 financial diagnostic categories that should be used in your analysis.

Financial diagnostic categories / Chosen company vs. / Benchmark competitor
1.) Liquidity of short-term assets / -Current ratio
-Cash ratio
-Quick ratio / -Current ratio
-Cash ratio
-Quick ratio
2.) Long-term debt-paying ability / -Debt ratio
-Debt-equity ratio
-Times interest earned / -Debt ratio
-Debt-equity ratio
-Times interest earned
3.) Profitability
-Net income/sales (profit margin)
-Net income/assets (ROA)
-Net income/shareholder equity (ROE) / -Net income/sales (profit margin)
-Net income/assets (ROA)
-Net income/shareholder equity (ROE)
4.) Asset utilization/ management efficiency / -Total asset turnover
-Inventory turnover measures
-Accounts receivable turnover / -Total asset turnover
-Inventory turnover measures
-Accounts receivable turnover
5.) Market measures / -Price/earnings ratio
-Earnings per common share
-Dividend payout / -Price/earnings ratio
-Earnings per common share
-Dividend payout

Use 2-3 ratios per diagnostic category. Place your ratio calculations in the table for your selected companies—primary company and benchmark competitor. Using 5 diagnostic categories, and 3 ratios to assess each category, results in 15 ratio measures per company that will be compared side by side.

6.) To validate your research, 5 years of data should be analyzed.

7.) The financial analysis report must be written properly. They must include a title page, a table of contents, and a reference page. For both midterm and final report, information sources from the web, etc. must be cited properly, using APA style.

This means that every table that you cut and pasted or typed from the web must have a source at the bottom of the table AND that citing must also be included in a reference page at the end of the report.