FIN 3321 Financial Statement Analysis
Project Fall 2011 Updated 20 September, 2011
The project is a thorough analysis of the financial statements of a publicly-traded US corporation (excluding financial institutions). The purpose of the analysis is to determine the current and expected future condition of the company from the point of view of an external provider of capital. That is, you are to determine if you would be willing to make this company a loan or buy its stock.
The project is divided into five phases.
1. Company background and competition. [5 pages]a
2. Financial Statement Analysis [chapters 1 – 4]. [15 pages] a
Determine the current and near-term future financial condition of the company.
3. Analysis of disclosures [chapters 5 – 10]. [15 pages] a
Each chapter covers a specific area of the financial statements and there will be a brief analysis for the company on each topic with an emphasis on the quality of the disclosures on the topic and as it relates to key business activities. You may show the impact on financial statements due to presence of highly distortive items.
4. Forecast of Balance Sheet and Income Statement [chapter 11]. [10 pages] a
Forecast the balance sheet, income statement and statement of cash flows for the next 10 years. Discuss methodology, assumptions, profitability, asset growth and funding needs.
5. Analysis and Recommendation. [15 pages] a
Provide an opinion on whether or not you would be interested in providing the company with external capital (debt or equity). Use your analysis, estimates of cost of capital and valuations to support your opinion.
Submit spiral bound “booklet” containing entire project. Put in a table of contents. I will read and consider any revisions to previously submitted sections (1-4).
a Financial statements, figures and tables do not count against the page limit.
Grade Breakdown by section is a weighted average of the maximum number of allowed pages.