FINC 3304: Business Finance
Work the Web project : Part 2 (due 9/20/20)
Instructor: Dr. Nazif Durmaz
Work the Web Part-2, Instructions :
You will use some of the techniques discussed in Chapter-3 to do a basic financial analysis of the firm you are studying.
You will need to use/submit two files for this assignment : one Word file and one Excel file. The XL file will include the data needed for the Work the Web parts. The WW2 report (Word file) will include the following :
• Basic company information collected in WW1
• Trend analysis of profitability
• Ratio analysis vs competitors
• DuPont Analysis
Please find the attached XL file (SampleWW2.xlsx).
Please refer to this sample file so you understand what you must do for your company.
To start WW2 you will need to obtain historical data that will be used in WW2, WW3 and WW4. Even if you don’t use all the items in this report, make sure you save them in an Excel file that can be used later.
Using your choice of MSN Money, Yahoo! Finance or other financial websites, you must copy and paste balance sheet and income statements for the last 3 to 5 years. Include BS and IS in the same sheet in Excel. Make sure the columns align. Check how many years are provided in each website and then decide your source.
ROA and ROE are two of the most important variables that measure the performance of a company. Go to the MSN website and get the 10 year chart of ROA and ROE for your company. You can use the link below and then click on the
Management Effectiveness tab http://www.msn.com/en-us/money/stockdetails/analysis/fi-126.1.XOM.NYS
Once you include the information on your report, add your comments describing the trend. Is there a trend that you can see? Is it improving or deteriorating? Is there an especially bad year? If there is, try to explain it.
Another performance measure that investors care about is the stock price. Go to your favorite financial website and copy/paste a chart of the stock prices over the last 5 years (or 10 years if available). Compare to the previous chart. Do you see a relationship between profitability and stock prices? Describe the trend. Is it increasing or decreasing?
Is there an especially bad year? If there is, try to explain it.
Reuters.com is a very good website that provides financial ratios for company, industry and sector. You will go to this page http://www.reuters.com/finance/stocks/financialHighlights?symbol=XOM (input the ticker for your own company) and copy the 7 categories of financial ratios that Reuters reports for Company, Industry and Sector. Start with valuation ratios. Please ignore the data shown in ”Revenue & Earnings per share”. Repeat the process for the two competitors that you identified in WW1.
Copy the ratios into a new tab in Excel so the rows for your company and the 2 competitors match. Then rearrange the columns so you can see next to each other the values for your company, your competitor 1, your competitor 2, industry and sector.
Once you have them next to each other, you’ll start comparing the numbers trying to find where your company performs better and where your company show worse performance than competitors.
As a minimum, you must find one overall weakness and one overall strength as suggested by this comparison. It is not necessary to comment each of the financial ratios, only those that are perceived as strengths or weaknesses. You can report strengths or weaknesses in each financial ratio category but it is not necessary.
– Work the Web project : Part 2 2
Du Pont analysis
You will copy key data you got in Excel into a new sheet. The specific rows you need are : spacing
? Net Income
Based on these five rows of data you will calculate the 5 ratios involved in the Du Pont analysis for each of the years for which you have information; spacing
? Profit Margin
? Total assets turnover
? Return on Assets
? Equity Multiplier
? Return on Equity
Once you have all the ratios for all the years with data, compare the components of ROA and ROE against industry level and make an overall assessment of the performance of the company. Is the company doing well or not so well? Need to monitor PM TAT or EM? Include any recommendations that you believe are needed.