You are currently an Analyst working for a finance publication firm and as part of your responsibilities; you are required to provide a monthly forecast and analysis of certain companies drawn from a target group. This month's targets are companies listed in the FTSE 100.
You have been required to prepare an executive summary report under the following guidelines to be used in your firm's recommendation as listed in requirement 1-5 for the next edition of their magazine:
Part 1:
Research and describe the company's primary business activities in addition to providing information regarding:
1. The Company's history,
2. Position within their industry,
3. Competition,
4. Recent developments,
5. Future direction.
Part 2:
A ten-year market analysis is required on the financial statements.
Part 3:
Research into industry norms for commonly used ratios.
Part 4:
Analyze the corporate financial statements using trend analysis and proportion common sized size statement techniques.
Parts 5:
"Would you recommend a buy or sell for this Company's shares based on the current level of information you have and what is the bases for your decision?
Your firm requires reports from financial analysts to be at least one page for each section and states clearly that information which is used in arriving at conclusions be included in an appendix for easy reference.
Your firm has a manual for use in the preparation of such reports and the following can be found in the manual:
PART 1: Company Background
Purpose: Use a variety of resources to research a corporation and prepare a well-written paper describing your corporation
Requirements:
1. Research and then describe the company's primary business activities. Also include a brief historical summary, a list of competitors, the company's position within the industry, recent developments within the company/industry, future direction, and other items of significance to your corporation.
2. Include information from a variety of resources.
a. Review the Annual Report and be certain to read through the Letter to Shareholders, which summarizes the past year and highlights future opportunities.
Annual Reports are generally available online at the company's website in the investor relations section. Do not forget to closely examine the notes to the accounts
b. Explore the corporate website. A corporate website usually provides updated, comprehensive information including links to current news items and financial information. Note that the company provides the information posted on the website, and therefore, may be biased in favor of the company.
c. Select at least two significant news items from recent business periodicals.
Examples of business periodicals include The Wall Street Journal, Forbes, Fortune, Inc., and Business Week.
d. Use information from at least one financial service:
e. Submit a "Company Review" report that is two to five pages long. The report should be well written with introductory and concluding paragraphs. References must be appropriately cited. Please use Harvard referencing.
Format: Double-spaced, one-inch margins, using a 12-point Times-New-Roman font.
f. In the appendix, appropriately identify and place photocopies or a printout of the material used for your report noting the source. Highlight significant information and ensure to incorporate this information into your report. Fortune, Inc., and Business Week.
d. Use information from at least one financial service:
e. Submit a "Company Review" report that is two to five pages long. The report should be well written with introductory and concluding paragraphs. References must be appropriately cited. Please use Harvard referencing.
Format: Double-spaced, one-inch margins, using a 12-point Times-New-Roman font.
f. In the appendix, appropriately identify and place photocopies or a printout of the material used for your report noting the source. Highlight significant information and ensure to incorporate this information into your report.
PART 2: Stock Market Research
Purpose: Research the current stock quote of your company and analyze past market activity
Requirements:
a. Research the stock market activity of your company's stock, including the current stock quote and market activity over the most recent 10 years.
b. Summarize the results in a one-page report.
Format: Double-spaced, one-inch margins, using a 12-point Times-New-Roman font.
c. In the appendix, appropriately identify and place photocopies or a computer printout of the material used for your report noting the source. Highlight significant information.
PART 3: Calculate Ratios and Compare to Industry Norms
Purpose:
1. Research the primary SIC (Standard Industrial Classification) Code for your company
2. Use resources available to obtain industry averages for commonly used ratios
3. Compare company ratio results to industry averages
4. Prepare a well-written report summarizing the ratio analysis using appropriate business and accounting vocabulary
Requirements:
a. Obtain industry averages for commonly used ratios. Record the industry averages available for your company in the first column of the Ratios Analysis Worksheet.
Resources for industry average information include benchmark ratios
b. Obtain or calculate the ratios listed on the Ratio Analysis Worksheet for the three most recent years of information.
c. Submit a report that is at least one page long. The report should be a well-written paper that (1) comments on significant amounts, trends, and relationships of the three years of ratio information, (2) compares company ratios to industry averages, and (3) summarizes and comments on the information using the categories: liquidity, long-term solvency, management efficiency, profitability, and investment ratios
d. In the appendix, appropriately identify and place photocopies or a computer printout of the industry average and ratio information used for your report noting the source. Include any excel computation sheets of the corporate ratios. Highlight significant information.
PART 4: Prepare Financial Statements in Condensed Format and a Written
Analysis
Purpose:
1. Use resources available to obtain financial statements for the past four fiscal years
2. Prepare a classified balance sheet, multi-step income statement, and the statement of cash flows using the condensed format provided
3. Prepare a sources and uses of cash statement
4. Prepare trend analyses and common-size statements
5. Prepare a well-written analysis of each financial statement using appropriate business and accounting vocabulary
Requirements:
a. Obtain the financial statements for the past four fiscal years for the company you selected. Financial statements are available from a variety of online sources including This can usually be found on the company's website
b. Prepare a multi-step income statement, classified balance sheet, and statement of cash flows in condensed format. Condensed means some accounts are grouped into one summarized subtotal, but no numbers are left out of the computations. Each financial statement should total properly. Use the attached forms.
c. Prepare trend analyses and for the income statement, balance sheet, and the statement of cash flows. Prepare common-size statements and for the income statement, balance sheet, and the sources and uses of cash statement. Use the attached forms.
d. Submit at least one page of written analysis for each financial statement. The report should be well written using appropriate business and accounting vocabulary.
Comment on significant amounts, trends, and relationships. When appropriate, reference amounts from the trend analyses and common-size statements.
e. In the appendix, appropriately identify and place photocopies or a computer printout of the financial statement information used noting the source. Highlight significant information.