Management Question

Overview

For your first assignment, you will research how to evaluate stocks as an investment option and complete a company analysis using the provided template. You will start by selecting two companies to determine how free cash flow impacts their growth potential. Then you will select three competitors in the same industry to perform a company analysis. The point of this assignment is to practice finding and analyzing company financial information.

Instructions

Step 1: Gather the financial information.

• Use one or more of the following sources:
  • Yahoo Finance (Preferred Method): Links to an external site.
    • Search for your company.
    • Select the Financials tab to view the Income Statement, Balance Sheet, and Cash Flow Statement.
  • Morningstar: Links to an external site.
  • SEC Filings (10-K, 10-Q, and other reports): to an external site.
  • Company Investor Relations Website: Find financial reports under the Investor Relations section of the companys website.
  • D&B Hoovers (Industry Research):

Step 2: Complete the company analysis in the Company and Stock Analysis [EXCEL] template Download Company and Stock Analysis [EXCEL] template.

Note: Select the correct tab (Week 3 – Company Analysis) at the bottom of the Excel document.

• Determine the free cash flow for the last two most recent years for the two companies.
• Explain how a company’s free cash flow affects its growth potential.
  • Include the inferences you can draw from a company’s free cash flow.
• Complete the Company Analysis section, including the Industry and the names of the three companies.
• Complete the Income Statement section for each company’s Total Revenue, Gross Profit, Net Income, and/or EBITDA.
  • Net Income is a generally accepted accounting principle (GAAP).
• The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is not GAAP, because it usually presents more favorable numbers.
• Complete the Balance Sheet section for each company’s Total Assets, Total Liabilities, and Total Stockholders’ Equity.
• Calculate the following three ratios for each company and enter the results in the template (the formulas to calculate the ratios are provided in the template).
  • Debt-to-Equity Ratio.
  • Gross Margin.
  • Operating Margin.
    • Please list the figures used for the calculation of each ratio.
• Calculate the following ratios for each company using the 10k annual report and enter the results in the template (the formulas to calculate the ratios are provided in the template).
  • Profitability ratios.
  • Efficiency ratios.
  • Leverage ratios.
  • Liquidity ratios.
• Discuss three takeaways or an analysis of what you have learned about each company based on their financial data.
  • Include at least one paragraph for each company in the Template.

This course requires the use of Strayer Writing Standards (SWS). The library is your home for SWS assistance, including citations and formatting. Please refer to the for all support. Check with your professor for any additional instructions.

The specific course learning outcome associated with this assignment is as follows:

• Review concepts related to corporate finance, investment strategies, risk assessment, corporate valuation, and financial

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