What is the cost of equity for each company

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Assignment

Instructions for the Annual Report Project

• You can work in a team of up to 4 people. Of course, if you'd like, you can work on your own.

• Note on academic integrity: If you use material from the internet or any other sources, you must cite it. Unfortunately, there have been instances of plagiarism in the past and most have all been given "F" course grades and referred to the Dean's Office, so please cite the sources!

• For any number you include in the project, either cite the source (for example, "page 14 in the 2016 10K")
or show its full derivation (for example, "net debt = total debt - cash = $1,210M - $610M = $600M").

• There is no page limit or requirement on the minimum length. As a reference, in the past, most high-quality papers have been in the 3-5 page range.

• Here are the required components of the project:

o Pick two publicly-traded companies that you consider are competitors in an industry, and locate their annual reports in the SEC database

o Using Porter's Five Forces, discuss the industry and how they compete.

o Using the Blue Ocean Strategy, discuss what they can do to increase their revenue and market share.

o What is weighted average cost of debt for each company? How do they compare?

o What is the cost of equity for each company? You may use 1-year, 2-year, or any other time horizon to compute the beta. Discuss any assumptions you make and include any key relevant graphs and charts.

o Prepare common size income statements and balance sheets for both companies. What similarities / differences stand out? What may explain these?

o Compute 2 or more liquidity ratios that you think are the most relevant, and discuss.

o Compare their operating performance using appropriate ratios. Explain what you observe. o Perform risk and growth analyses for both companies. Discuss your findings.

o Have there been any unusual items, discontinued operations or major acquisitions for either company? Would these affect your analyses in any way? If so, how?

Reference no: EM131789865

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