Reference no: EM13347948
1. Select two companies from the same industry
2. Gather financial data from web sites (refer items 2, 4, and 9 of related web sites at the bottom of this handout)
3. Discuss the economy and the industry.
a. Briefly discuss the current economic conditions (A discussion of Leading economic indicators).
b. Study the behavior of the industry to which your companies belong (whether the industry has some growth potential or wheth
industry is regulated?).
4. Discuss the following matters specifically related to two companies:
a. Corporate governance, including institutional Vs individual investors.
b. Any important changes in terms of:
1. mergers or acquisitions
2. leasing transactions
3. any bankruptcy proceedings
4. Corporate valuation:
i. Calculate the Weighted Average Cost of Capital for three years to study and discuss the trend.
ii. Calculate the Market Value Added (MVA) for three years and study the trend. (MVA = MV of equity - BV of equity)
5. Collect the financials for 5 years and study
i. growth in assets (in %)
ii. growth in Sales (in %)
iii. study the changes in Current ratio and Debt ratio
iv. study the changes in DSO and TATO
v. Study the changes in PM and ROA
vi. changes in capital structure (changes in debt and equity)
vii. the movement in the stock prices of two companies
6. What is the beta of each of the two stocks? How do you explain the risk with beta?
7. Would you invest in any of these stocks?