Homework

  • You are a financial analyst earning hundreds of thousands of dollars a year.  You now need to advise your clients on a stock for them to purchase.  If you pick right, it could mean even more money for you but if you pick wrong, your clients could leave.
  1. Select 2 companies that are of interest to you and compare their financials. (40%)  This part should look at the financial statements and do financial ratios (minimally 6 ratios).  You may not use companies I used as examples in class.
  2. Evaluate their financials. (40%)  This part should talk about the ratios and numbers and find either good or bad points about each company.  Here you have to understand what the numbers are telling you.  Do not just say that some companies ratio is higher than another and so it is better or worse - tell what that number says about a company (i.e. why is the number good or bad).
  3. Based upon your evaluations, which company do you think is the strongest and why? (10%)  This part should look at the overall story from part (2) and pick a company that is overall the strongest.  Explain why you picked it, based upon the analysis of (2).  You should not get into marketing and product discussions here - this is purely a financial analysis.

Major "suggestion": when you compare things in business, use a table.  It is always easier to look at things side-by-side.

  • Deliverables:
  1. The financial ratios for each company.
  2. Evaluation of the financials
  3. Identification of the financially strongest company
  4. Attach the Balance Sheet and Income Statements for the companies
  5. What have you learned from this?
3.

Grading rubric:

  A B C D F
Professionalism Typed, stapled, no spelling or grammar errors. Typed, stapled, no spelling, minor grammar errors. Typed,stapled, minor spelling, grammar errors.  Not stapled, spelling and grammar errors. Not typed or stapled.  Grammar and spelling errors. 
General Homework is written like a report to your clients.  The report starts out with a description of the two companies.

Good use of tables. 

The report starts out with a description of the two companies.

Uses tables.

 Uses tables. Data is found only in narrative.   Data format is confusing and hard to follow.
Ratios At least 6 ratios.  For each ratio, the numbers used to calculate it are given.  Will show industry averages.   Extra credit: Ratios are given for two years of data. At least 6 ratios.  For each ratio, the numbers used to calculate it are given. At least 6 ratios.   No errors in math. Less than 6 ratios.  No math errors. Less than 6 ratios.  Math errors.
Analysis Discussion of what the ratio says about the company.  Will make inferences based upon the ratios.  Highlights the most important data.   Discussion of what the ratio says about the company. Highlights the most important data. Discussion of what the ratio says about the company. Lists ratios with minimal description or discussion.  Discussion may be incorrect on some.  Makes unsupported statements. Lists ratios with numerous incorrect descriptions.
Recommendation Selects company based upon the ratios that are most important.  Says why the ratios are important.   Extra credit: Talks about the trend (year over year) Selects company based upon the ratios that are most important. Selects company based upon number of ratios which are better than other company. Selects company based upon non-financial information without references. No good rationale for selection.
References Describes how the numbers were obtained and gives references. Describes how numbers were obtained. Gives no reference to how numbers were obtained. Gives no reference to how numbers were obtained. Gives no reference to how numbers were obtained.
Evaluation Describes the contribution of each member and strengths and weaknesses.  Says what could be done differently next time. Describes the contribution of each member and strengths and weaknesses. Describes the contribution of each member. Says everyone did well. Says everyone did well.
Teamwork

May lose all points depending upon evaluation of contribution by teammates.
Fully contributed ideas, time and effort.  The project was better because of their participation. Fully contributed ideas, time and effort. Minimal contribution to group's work. Contacted the team but did not contribute No contribution or contact with the team.