ASSIGNMENT
Fortune 100 Project #3
In this project, students will continue their analysis of the two companies chosen. Students need to understand companies’ accounting methods and estimates, and perform common size analysis, ratio analysis, and trend analysis to investigate and compare the companies’ profitability and risks.
Follow the Project#3 lab instructions , perform a comprehensive financial analysis for your two companies.
Write a report for the following questions:
How profitable are the companies in terms of Return on Assets (ROA), Return on Stockholders’ Equity ? Decide whether the companies’ profitabilities are low, medium or high. What has contributed to the profitability, e.g., the decomposition of ROA into Profit Margin of ROA and Asset Turnover, and the decomposition of ROCE into Profit Margin of ROCE, Asset Turnover, and Capital Structure Leverage, as well as further determinations of Profit Margin and Asset Turnover. What are the trends? Comments on the possible reasons for the trends. This analysis may require students to use some benchmarks, for example, comparing with each other and with industry norms , examining the companies’ historical performances, etc. Paste the screenshots of your lab results from Profitability sheet and DuPont sheet to appropriate places in your report. Cite the ratios from your lab results to support your argument.
Do the companies pose any liquidity and solvency risks? Decide whether the companies have low, medium, or high liquidity and solvency risks. What are the trends and possible reasons? What are the most recent bond ratings from the rating agencies including Standard & Poor’s, Moody’s, and Fitch? You would be able to find some other risk factors in the Item 1A of 10K form. You may also link these qualitative risk factors with the financial risk. Whether these risk factors are sustainable or not? Paste the screenshots of your lab results from Liquidity sheet and Financing sheet to appropriate places in your report. Cite the ratios from your lab results to support
