Description

For this milestone, submit a draft of the Time Value of Money section of the final project, along with your supporting explanations. Base your calculations on the data provided in the Final Project Excel Workbook, using your selected company’s financial data. Be sure to substantiate your claims with references and citations in proper APA style.Submit your calculations on the designated tab of the Final Project Excel Workbook and your supporting explanations as a Microsoft Word document. In your written analysis, be sure to substantiate your claims by using appropriate References and citations using proper APA style where required. This milestone will be used in your final project submission in Module Nine. Be sure to carefully review your instructor’s feedback and make any recommended changes before final submission in Module Nine. For additional details, please refer to the Final Project Guidelines and Rubric document and the Milestone One Guidelines and Rubric document.FIN 550 Final Project Guidelines and Rubric

Overview

Financial analysis involves examining historical data to gain information about the current and future financial health of a company. Financial analysis can be

applied in a wide variety of situations to give business managers the information they need to make critical decisions. The ability to understand financial data is

essential for any business manager.

The final project for this course is the creation of a financial analysis report. For this assessment, you will provide a financial analysis report for your selected

company. You will be asked to take the topics that you have covered throughout the course and display your mathematical and conceptual mastery of them. You

will conduct background calculations and provide managerial analysis for the following topics: time value of money, stock valuation, bond valuation, and capital

budgeting.

The project is divided into four milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality final

submissions. These milestones will be submitted in Modules Two, Four, Six, and Seven. The final project submission will be in Module Nine.

In this assignment, you will demonstrate your mastery of the following course outcomes:

•

•

•

•

•

Predict the effects of the time value of money on potential investments for ensuring an effective portfolio balance between risk and return

Assess the stock valuation process as a viable financing and investment option for maximizing shareholder value

Assess the bond issuance process for its viability as a financing option for raising adequate capital

Forecast the feasibility of corporate investment opportunities by utilizing capital budgeting estimates for ensuring effective decision making

Analyze macroeconomic variables that impact corporate financial decision making for ensuring alignment with strategic objectives

Prompt

Using the financial information you prepared for the company you selected from the first tab of the Final Project Excel Workbook, prepare a financial analysis

report. For your calculations, use the Final Project Excel Workbook which includes tabs specific to each milestone (the workbook is linked to in your course). Be

sure to include in your analysis the background calculations and managerial analysis for each of the following topics: time value of money, stock and bond

valuation, and capital budgeting. Also, include a discussion of macroeconomic variables that might impact the company’s financial decision making and strategic

objectives. Note that while these elements may seem separate and unrelated, together they will present a well-rounded view of the company’s financial position

with regard to the topics.

Specifically, you must address the critical elements listed below. Most of the critical elements align with a particular course outcome (shown in brackets).

I.

Time Value of Money

A. Using the Final Project Excel Workbook, calculate the following time value of money figures:

1. Calculate the present value of your selected company based on the given interest rate and free cash flows for the most current three (3)

fiscal or calendar year end values you entered into your selected company in the Final Project Excel Workbook.

2. Suppose the risk of your selected company changes based on an unanticipated decrease in the free cash flows by 10% annually during

the most current three (3) fiscal or calendar year end values you entered into the Final Project Excel Workbook. Recalculate the present

value of the company.

3. Suppose that a potential buyer has offered to buy this company in three years. Your selected company has projected that the free cash

flows will increase by 3% annually over the next three years. Based on the initial present value you calculated above in A1, and the

projected free cash flow increases mentioned above, what would be a reasonable amount for the potential buyer to pay for the

company? Note that the potential buyer has a required rate of return (discount rate) of 9% to account for the uncertainty that your

selected company’s potential 3% annual increases in free cash flows over the next three years does not occur. Enter your answer and

justify your reasoning in the Word document. In your written analysis, be sure to substantiate your claims by using appropriate

references and citations using proper APA style where required.

B. What are the implications of the change in present value based on risk? In other words, what does the change mean to your selected company,

and how would you, as a financial manager, interpret it? Enter your answer and justify your reasoning in the Word document. In your written

analysis, be sure to substantiate your claims by using appropriate references and citations using proper APA style where required.

C. Based on the present value of your selected company that you calculated, and being mindful of the need to effectively balance portfolio risk with

return, what recommendation would you make about purchasing the company as an investment at that price? Enter your answer and justify

your reasoning in the Word document. In your written analysis, be sure to substantiate your claims by using appropriate references and citations

using proper APA style where required.

II.

Stock Valuation

A. Based on the figures provided from the financial information you prepared for your selected company, calculate each of the following:

1. Fill in the yellow highlighted cells with the matching data prepared for your selected company.

2. The new dividend yields if the company increased its dividend per share by $1.75

3. The dividend yield if the firm doubled its outstanding shares using a stock split. Note that other numbers will be affected by a stock split

such as new stock price, actual dividends paid, and number of outstanding shares. Stockholders’ equity will not change.

4. Return on Investment—Calculate the rate of return on investment based on the data you calculated in Question 1.

B. What effect would you expect each of the calculations you performed to have in terms of shareholder value? In other words, suppose the

company’s goal is to maximize shareholder value. How will each of the situations support or inhibit that goal? Be sure to justify your reasoning

through research, references, and citations using proper APA style.

C. To what extent do you feel the company’s dividend policies support or hinder their strategies? For example, if the company is attempting to

grow, are they retaining and reinvesting their earnings rather than distributing them to investors through dividends? Be sure to substantiate your

claims through research, references, and citations using proper APA style.

III.

Bond Issuance

A. Your selected company issues a new bond For this exercise, certain assumptions are being made. Assume that your selected company issued a

new 10-year bond for $300,000 on October 1, 2021, that will mature on October 1, 2031. The future value of this bond is therefore $300,000.

The bond was issued at the current market rate of 5.0% fixed for 10 years, with interest payments paid semi-annually. What is the present value

of this bond using the three scenarios in Part II: Bond Issuance?

1. The present value of the bond at issuance

2. The new present value of the bond if overall rates in the market increased by 2%

3. The new present value of the bond if overall rates in the market decreased by 2%

4. The present value of the bond if overall rates in the market remains the same as at issuance

B. What effect would you expect each of the calculations you performed to have in terms of the company’s decision to raise capital in this manner?

In other words, for each situation, would you consider bond valuation to be a viable option for increasing capital? Be sure to justify your

reasoning through research, references, and citations using proper APA style.

C. To what extent do you feel the company’s bond issuance policies support or hinder their strategies? For example, if the company is attempting

to fund operating expenses, refinance old debt, or change its capital structure, are they issuing sufficient bonds to achieve these goals? Be sure

to substantiate your claims through research, references, and citations using proper APA style.

IV.

Capital Budgeting Data

A. Suppose that your selected company is considering a potential investment project to add to its portfolio. Choose one of the three (3) possible

investments shown in the Milestone Three Excel workbook and calculate the following items:

1. The net present value (NPV) of the project (Accept or Reject from the drop-down box)

2. The internal rate of return (IRR) of the project (Accept or Reject from the drop-down box)

B. What are the implications of these calculations? In other words, based on each of the calculations, and being mindful of the need to balance

portfolio risk with return, would you recommend that the company pursue the investment? Why or why not? Be sure to substantiate your

claims.

C. What is the difference between NPV and IRR? Which one would you choose for evaluating a potential investment and why? Be sure to support

your reasoning with evidence.

V.

Macroeconomic Items: The CEO of your selected company is convinced that financial analysis should hinge only on what is happening internally within

the company. Convince him otherwise based on the following:

A. Analyze the implications of interest rate changes on any of the calculations you performed. Be sure to substantiate your claims.

B. Explain how an issue (negative or positive) within the overall stock market might impact the company’s stock valuation numbers, other financial

variables, or its overall portfolio management. Be sure your response is supported by evidence through research, references, and citations using

proper APA style.

C. Analyze the impact of any external factor (i.e., external to the company) discussed throughout the course on the company’s financial position.

Be sure to justify your reasoning through research, references, and citations using proper APA style.

Milestones

Milestone One: Time Value of Money (Section I)

In Module Two, you will submit a draft of the Time Value of Money section of the final project, along with your supporting explanations. Submit your

calculations on the designated tab of the Final Project Student Workbook and your supporting explanations as a Microsoft Word document. This milestone will

be graded with the Milestone One Rubric.

Milestone Two: Stock Valuation and Bond Issuance (Sections II and III)

In Module Four, you will submit a draft of the Stock Valuation and Bond Issuance sections of the final project, along with your supporting explanations. Submit

your calculations on the designated tab of the Final Project Student Workbook and your supporting explanations as a Microsoft Word document. This milestone

will be graded with the Milestone Two Rubric.

Milestone Three: Capital Budgeting Data (Section IV)

In Module Six, you will submit a draft of the Capital Budgeting Data section of the final project, along with your supporting explanations. Submit your

calculations on the designated tab of the Final Project Student Workbook and your supporting explanations as a Microsoft Word document. This milestone will

be graded with the Milestone Three Rubric.

Milestone Four: Macroeconomic Items (Section V)

In Module Seven, you will submit a draft of the Macroeconomic Items section of the final project, along with your supporting explanations. Submit your

calculations on the designated tab of the Final Project Student Workbook and your supporting explanations as a Microsoft Word document. This milestone will

be graded with the Milestone Four Rubric.

Final Project Submission: Financial Analysis Report

In Module Nine, you will submit your financial analysis report along with your completed Final Project Student Workbook. It should be a complete, polished

artifact containing all of the critical elements of the final project. It should reflect the incorporation of feedback from your instructor provided throughout the

course. This submission will be graded with the Final Project Rubric.

Deliverables

Milestone

Deliverable

Module Due

Grading

One

Time Value of Money (Section I)

Two

Graded separately; Milestone One Rubric

Two

Stock Valuation and Bond Issuance (Sections II and III)

Four

Graded separately; Milestone Two Rubric

Three

Capital Budgeting Data (Section IV)

Six

Graded separately; Milestone Three Rubric

Milestone

Four

Deliverable

Module Due

Grading

Macroeconomic Items (Section V)

Seven

Graded separately; Milestone Four Rubric

Final Project Submission: Financial Analysis Report

Nine

Graded separately; Final Project Rubric

Final Project Rubric

Guidelines for Submission: Your financial analysis report should be 7 to 12 pages, not including a title page and references page. It should use 12-point Times New

Roman font, double spacing, and one-inch margins. All citations and references should be formatted according to APA style. Also submit your completed Final

Project Student Workbook.

Critical Elements

Time Value of Money:

Figures

[FIN-550-01]

Time Value of Money:

Implications

[FIN-550-01]

Time Value of Money:

Value

[FIN-550-01]

Stock Valuation:

Calculations

[FIN-550-02]

Stock Valuation:

Shareholder Value

[FIN-550-02]

Stock Valuation:

Dividend Policies

[FIN-550-02]

Exemplary

Proficient

Accurately calculates requested

figures (100%)

Needs Improvement

Calculates figures, but with gaps

in accuracy or detail (70%)

Not Evident

Does not calculate figures (0%)

Value

6.33

Meets “Proficient” criteria and

demonstrates keen insight into

the interrelationship between

risk and present value (100%)

Meets “Proficient” criteria and

demonstrates keen insight into

using time value of money for

recommending investments

(100%)

Analyzes implications of change

in present value based on risk,

justifying reasoning (90%)

Analyzes implications of change

in present value based on risk,

but response or reasoning is

cursory or illogical (70%)

Makes recommendation about

purchasing company, but

response or substantiation is

cursory or illogical (70%)

Does not analyze implications

of change in present value

based on risk (0%)

6.33

Does not make

recommendation about

purchasing company

(0%)

6.33

Accurately calculates requested

figures (100%)

Calculates figures, but with gaps

in accuracy or detail (70%)

Does not calculate figures (0%)

6.33

Analyzes the effects of each

calculation on shareholder

value, justifying reasoning (90%)

Analyzes the effects of each

calculation on shareholder

value, but response or reasoning

is cursory or illogical (70%)

Does not analyze the effects of

each calculation on

shareholder value (0%)

6.33

Assesses the extent to which

dividend policies support or

hinder company strategies,

justifying reasoning (90%)

Assesses the extent to which

dividend policies support or

hinder company strategies, but

response or reasoning is cursory

or illogical (70%)

Does not assess the extent to

which dividend policies

support or hinder company

strategies (0%)

6.33

Meets “Proficient” criteria and

demonstrates keen insight into

the effects of changing financial

variables on shareholder value

(100%)

Meets “Proficient” criteria and

demonstrates keen insight into

the relationship between

dividend policies and strategies

for increasing shareholder value

(100%)

Makes recommendation about

purchasing the company,

substantiating claims (90%)

Critical Elements

Bond Issuance: Bonds

[FIN-550-03]

Bond Issuance: Raising

Capital

[FIN-550-03]

Bond Issuance: Bond

Issuance Policies

[FIN-550-03]

Capital Budgeting

Data: Potential

Investment

[FIN-550-04]

Capital Budgeting

Data: Pursuing the

Investment

[FIN-550-04]

Exemplary

Meets “Proficient” criteria and

demonstrates keen insight into

the effects of changing market

conditions on decisions to raise

capital (100%)

Meets “Proficient” criteria and

demonstrates keen insight into

the relationship between bond

issuance policies and strategies

for raising capital (100%)

Proficient

Accurately calculates requested

figures (100%)

Analyzes the effects of each

calculation on the company’s

decision to raise capital,

justifying reasoning (90%)

Assesses the extent to which

bond issuance policies support

or hinder company strategies,

justifying reasoning (90%)

Accurately calculates requested

figures (100%)

Meets “Proficient” criteria and

demonstrates keen insight into

using NPV and IRR to judge

potential investment

opportunities (100%)

Analyzes the implications of

each calculation on the

recommendation to pursue the

investment, substantiating

claims (90%)

Capital Budgeting

Data: Difference

[FIN-550-04]

Meets “Proficient” criteria and

demonstrates keen insight into

using NPV and IRR to judge

potential investment

opportunities (100%)

Accurately characterizes the

difference between NPV and IRR

and explains which would be

chosen for evaluating a potential

investment and why, supporting

reasoning with evidence (90%)

Macroeconomic Items:

Implications

[FIN-550-05]

Meets “Proficient” criteria and

demonstrates keen insight into

the relationship between

interest rate changes and

financial variables in a company

(100%)

Analyzes implications of interest

rate changes, substantiating

claims (90%)

Needs Improvement

Calculates figures, but with gaps

in accuracy or detail (70%)

Analyzes the effects of each

calculation on the company’s

decision to raise capital, but

response or reasoning is cursory

or illogical (70%)

Assesses the extent to which

bond issuance policies support

or hinder company strategies,

but response or reasoning is

cursory or illogical (70%)

Calculates figures, but with gaps

in accuracy or detail (70%)

Not Evident

Does not calculate figures (0%)

Value

6.33

Does not analyze the effects of

each calculation on the

company’s decision to raise

capital (0%)

6.33

Does not assess the extent to

which bond issuance policies

support or hinder company

strategies (0%)

6.33

Does not calculate figures (0%)

6.33

Analyzes the implications of

each calculation on the

recommendation to pursue the

investment, but response or

substantiation is cursory or

illogical (70%)

Characterizes the difference

between NPV and IRR and

explains which would be chosen

for evaluating a potential

investment and why, but

response is cursory or inaccurate

or evidence is not supportive

(70%)

Analyzes implications of interest

rate changes, but response or

substantiation is cursory or

illogical (70%)

Does not analyze the

implications of each calculation

on the recommendation to

pursue the investment (0%)

6.33

Does not characterize the

difference between NPV and

IRR and does not explain which

would be chosen for evaluating

a potential investment and

why (0%)

6.33

Does not analyze implications

of interest rate changes (0%)

6.33

Critical Elements

Macroeconomic Items:

Stock Market

[FIN-550-05]

Exemplary

Meets “Proficient” criteria and

demonstrates keen insight into

the relationship between stock

market fluctuations and

financial variables in a company

(100%)

Proficient

Assesses the impact of an issue

within the overall stock market

on the company’s stock

valuation numbers or any other

financial variable, supporting

response with evidence (90%)

Macroeconomic Items:

External Factor

[FIN-550-05]

Meets “Proficient” criteria and

demonstrates keen insight into

the relationship between

external factors and a

company’s financial position

(100%)

Submission is free of errors

related to citations, grammar,

spelling, syntax, and

organization and is presented in

a professional and easy to read

format (100%)

Analyzes the impact of a factor

external to the company on the

company’s financial position,

justifying reasoning (90%)

Articulation of

Response

Submission has no major errors

related to citations, grammar,

spelling, syntax, or organization

(90%)

Needs Improvement

Assesses the impact of an issue

within the overall stock market

on the company’s stock

valuation numbers or any other

financial variable, but response

is cursory, illogical, or weakly

supported (70%)

Analyzes the impact of a factor

external to the company on the

company’s financial position, but

response is cursory, illogical, or

weakly supported (70%)

Not Evident

Does not assess the impact of

an issue within the overall

stock market on the company’s

stock valuation numbers or any

other financial variable (0%)

Value

6.33

Does not analyze the impact of

a factor external to the

company on the company’s

financial position (0%)

6.33

Submission has major errors

related to citations, grammar,

spelling, syntax, or organization

that negatively impact

readability and articulation of

main ideas (70%)

Submission has critical errors

related to citations, grammar,

spelling, syntax, or

organization that prevent

understanding of ideas (0%)

5.05

Total

100%

**CHOOSE ONE (1) OF THE COMPANIES LISTED BELOW FOR YOUR COURSE FINA

1. Insert your selected company name in the yellow highlighted cell:

2. Start your copy with the row where your company name appears.

3. Then scroll down to the row of the weighted average cost of capital. Then paste this information into rows 6 through 20 in

Lowe’s Companies Inc. (Stock Ticker: LOW) – (NAICS Code: 444110)

Dollars and Shares in Millions, Except Per-Share Data

Most Recent Calendar or Fiscal Year End—Then Two Prior Years

Enter Years

Net Cash Provided by Operating Activities

Capital Expenditures

Free Cash Flows

Cash Dividends per Share

Dividend Yield

Diluted Earnings per Common Share

Shareholder’s Equity

Total Common Shares Outstanding

Common Stock Closing Price per Share

Effective Tax Rate (Use 28%)

Weighted Average Cost of Capital (Use 5%)

Year

$

$

$

$

$

$

#DIV/0!

–

$

%

%

Johnson & Johnson (Stock Ticker: JNJ) – (NAICS Code: 325412)

Dollars and Shares in Millions, Except Per-Share Data

Most Recent Calendar or Fiscal Year End—Then Two Prior Years

Enter Years

Net Cash Provided by Operating Activities

Year

$

–

Capital Expenditures

Free Cash Flows

Cash Dividends per Share

Dividend Yield

Diluted Earnings per Common Share

Shareholder’s Equity

Total Common Shares Outstanding

Common Stock Closing Price per Share

Effective Tax Rate (Use 28%)

Weighted Average Cost of Capital (Use 5%)

$

$

$

–

$

$

#DIV/0!

–

$

%

%

Target: (Stock Ticker: TGT) – (NAICS: Code 452210)

Dollars and Shares in Millions, Except Per-Share Data

Most Recent Calendar or Fiscal Year End—Then Two Prior Years

Enter Years

Net Cash Provided by Operating Activities

Capital Expenditures

Free Cash Flows

Cash Dividends per Share

Dividend Yield

Diluted Earnings per Common Share

Shareholder’s Equity

Total Common Shares Outstanding

Common Stock Closing Price per Share

Effective Tax Rate (Use 28%)

Weighted Average Cost of Capital (Use 5%)

Year

$

$

$

$

$

$

#VALUE!

–

$

%

%

Kroger Companies: (Stock Ticker: KR) – (NAICS Code: 445110)

Dollars and Shares in Millions, Except Per-Share Data

Most Recent Calendar or Fiscal Year End—Then Two Prior Years

Enter Years

Net Cash Provided by Operating Activities

Capital Expenditures

Free Cash Flows

Cash Dividends per Share

Dividend Yield

Diluted Earnings per Common Share

Shareholder’s Equity

Total Common Shares Outstanding

Common Stock Closing Price per Share

Effective Tax Rate (Use 28%)

Weighted Average Cost of Capital (Use 5%)

Year

$

$

$

$

#VALUE!

–

$

$

$

%

%

Chevron: (Stock Ticker: CVX) – (NAICS Code: 324110)

Dollars and Shares in Millions, Except Per-Share Data

Most Recent Calendar or Fiscal Year End—Then Two Prior Years

Enter Years

Net Cash Provided by Operating Activities

Capital Expenditures

Free Cash Flows

Cash Dividends per Share

Year

$

$

$

$

–

Dividend Yield

Diluted Earnings per Common Share

Shareholder’s Equity

Total Common Shares Outstanding

Common Stock Closing Price per Share

Effective Tax Rate (Use 28%)

Weighted Average Cost of Capital (Use 5%)

$

$

#DIV/0!

–

$

%

%

Pepsico, Inc.: (Stock Ticker: PEP) – (NAICS Code: 312111)

Dollars and Shares in Millions, Except Per-Share Data

Most Recent Calendar or Fiscal Year End—Then Two Prior Years

Enter Years

Net Cash Provided by Operating Activities

Capital Expenditures

Free Cash Flows

Cash Dividends per Share

Dividend Yield

Diluted Earnings per Common Share

Shareholder’s Equity

Total Common Shares Outstanding

Common Stock Closing Price per Share

Effective Tax Rate (Use 28%)

Weighted Average Cost of Capital (Use 5%)

Year

$

$

$

$

$

$

#VALUE!

–

$

Southwest Airlines Co.: (Stock Ticker: LUV) (NAICS Code: 481111)

%

%

Dollars and Shares in Millions, Except Per-Share Data

Most Recent Calendar or Fiscal Year End—Then Two Prior Years

Enter Years

Net Cash Provided by Operating Activities

Capital Expenditures

Free Cash Flows

Cash Dividends per Share

Dividend Yield

Diluted Earnings per Common Share

Shareholder’s Equity

Total Common Shares Outstanding

Common Stock Closing Price per Share

Effective Tax Rate (Use 28%)

Weighted Average Cost of Capital (Use 5%)

Year

$

$

$

$

#VALUE!

–

$

$

$

%

%

General Electric Company: (Stock Ticker: GE) – (NAICS Code: 333611)

Dollars and Shares in Millions, Except Per-Share Data

Most Recent Calendar or Fiscal Year End—Then Two Prior Years

Enter Years

Net Cash Provided by Operating Activities

Capital Expenditures

Free Cash Flows

Cash Dividends per Share

Dividend Yield

Diluted Earnings per Common Share

Shareholder’s Equity

Year

$

$

$

$

$

$

#VALUE!

–

Total Common Shares Outstanding

Common Stock Closing Price per Share

Effective Tax Rate (Use 28%)

Weighted Average Cost of Capital (Use 5%)

$

Notes: North American Industry Classification System Codes:

The North American Industry Calculation System or NAICS is a

classification of business establishments by type of economic activity (process of production).

%

%

R YOUR COURSE FINAL PROJECT**

Then, copy and paste the information for your selected company below as follows:

ion into rows 6 through 20 into Tab 2—Selected Co. for Project

Year

$

$

$

$

Year

$

$

$

$

$

$

#VALUE!

$

$

$

$

#VALUE!

%

%

%

%

Year

$

Year

–

$

–

$

$

$

–

$

$

$

–

$

$

#DIV/0!

$

$

#DIV/0!

–

$

–

–

$

%

%

%

%

Year

$

$

$

$

Year

$

$

$

$

$

$

#VALUE!

$

$

$

$

%

%

#VALUE!

%

%

Year

$

$

$

$

Year

$

$

$

$

$

$

#VALUE!

$

$

$

$

#VALUE!

%

%

%

%

Year

$

$

$

$

Year

–

$

$

$

$

–

#VALUE!

#VALUE!

$

$

$

$

$

$

%

%

%

%

Year

$

$

$

$

Year

$

$

$

$

$

$

#VALUE!

$

$

$

$

%

%

#VALUE!

%

%

Year

$

$

$

$

Year

$

$

$

$

$

$

#VALUE!

$

$

$

$

#VALUE!

%

%

Year

$

$

$

$

$

$

%

%

Year

$

$

$

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#VALUE!

$

$

#VALUE!

$

$

%

%

%

selected company below as follows:

Information Location

Mergent INTELLECT

Mergent INTELLECT

Formulated Cell Will Self-Populate (Do Not Change)

Mergent INTELLECT

Formulated Cell Will Self-Populate (Do Not Change)

Mergent INTELLECT

Mergent INTELLECT

Yahoo Finance – Stock Market Live, Quotes, Business & Finance News

Yahoo Finance – Stock Market Live, Quotes, Business & Finance News

Information Location

Mergent INTELLECT

Mergent INTELLECT

Formulated Cell Will Self-Populate (Do Not Change)

Mergent INTELLECT

Formulated Cell Will Self-Populate (Do Not Change)

Mergent INTELLECT

Mergent INTELLECT

Yahoo Finance – Stock Market Live, Quotes, Business & Finance News

Yahoo Finance – Stock Market Live, Quotes, Business & Finance News

Information Location

Mergent INTELLECT

Mergent INTELLECT

Formulated Cell Will Self-Populate (Do Not Change)

Mergent INTELLECT

Formulated Cell (Do Not Change)

Mergent INTELLECT

Mergent INTELLECT

Yahoo Finance – Stock Market Live, Quotes, Business & Finance News

Yahoo Finance – Stock Market Live, Quotes, Business & Finance News

Information Location

Mergent INTELLECT

Mergent INTELLECT

Formulated Cell Will Self-Populate (Do Not Change)

Mergent INTELLECT

Formulated Cell Will Self-Populate (Do Not Change)

Mergent INTELLECT

Mergent INTELLECT

Yahoo Finance – Stock Market Live, Quotes, Business & Finance News

Yahoo Finance – Stock Market Live, Quotes, Business & Finance News

Information Location

Mergent INTELLECT

Mergent INTELLECT

Formulated Cell Will Self-Populate (Do Not Change)

Mergent INTELLECT

Formulated Cell Will Self-Populate (Do Not Change)

Mergent INTELLECT

Mergent INTELLECT

Yahoo Finance – Stock Market Live, Quotes, Business & Finance News

Yahoo Finance – Stock Market Live, Quotes, Business & Finance News

Information Location

Mergent INTELLECT

Mergent INTELLECT

Formulated Cell Will Self-Populate (Do Not Change)

Mergent INTELLECT

Formulated Cell Will Self-Populate (Do Not Change)

Mergent INTELLECT

Mergent INTELLECT

Yahoo Finance – Stock Market Live, Quotes, Business & Finance News

Yahoo Finance – Stock Market Live, Quotes, Business & Finance News

Information Location

Mergent INTELLECT

Mergent INTELLECT

Formulated Cell Will Self-Populate (Do Not Change)

Mergent INTELLECT

Formulated Cell Will Self-Populate (Do Not Change)

Mergent INTELLECT

Mergent INTELLECT

Yahoo Finance – Stock Market Live, Quotes, Business & Finance News

Yahoo Finance – Stock Market Live, Quotes, Business & Finance News

Information Location

Mergent INTELLECT

Mergent INTELLECT

Formulated Cell Will Self-Populate (Do Not Change)

Mergent INTELLECT

Formulated Cell Will Self-Populate (Do Not Change)

Mergent INTELLECT

Mergent INTELLECT

Yahoo Finance – Stock Market Live, Quotes, Business & Finance News

Yahoo Finance – Stock Market Live, Quotes, Business & Finance News

Enter stock ticker symbol – Click Financials – Click Balance Sheet – Bottom line is Ordinary Shares Outstanding

Enter stock ticker symbol – Search – Historical Data – Chart – 5 Years – Use Calendar Year or Fiscal Year End Date

Enter stock ticker symbol – Click Financials – Click Balance Sheet – Bottom line is Ordinary Shares Outstanding

Enter stock ticker symbol – Search – Historical Data – Chart – 5 Years – Use Calendar Year or Fiscal Year End Date

Enter stock ticker symbol – Click Financials – Click Balance Sheet – Bottom line is Ordinary Shares Outstanding

Enter stock ticker symbol – Search – Historical Data – Chart – 5 Years – Use Calendar Year or Fiscal Year End Date

Enter stock ticker symbol – Click Financials – Click Balance Sheet – Bottom line is Ordinary Shares Outstanding

Enter stock ticker symbol – Search – Historical Data – Chart – 5 Years – Use Calendar Year or Fiscal Year End Date

Enter stock ticker symbol – Click Financials – Click Balance Sheet – Bottom line is Ordinary Shares Outstanding

Enter stock ticker symbol – Search – Historical Data – Chart – 5 Years – Use Calendar Year or Fiscal Year End Date

Enter stock ticker symbol – Click Financials – Click Balance Sheet – Bottom line is Ordinary Shares Outstanding

Enter stock ticker symbol – Search – Historical Data – Chart – 5 Years – Use Calendar Year or Fiscal Year End Date

Enter stock ticker symbol – Click Financials – Click Balance Sheet – Bottom line is Ordinary Shares Outstanding

Enter stock ticker symbol – Search – Historical Data – Chart – 5 Years – Use Calendar Year or Fiscal Year End Date

Enter stock ticker symbol – Click Financials – Click Balance Sheet – Bottom line is Ordinary Shares Outstanding

Enter stock ticker symbol – Search – Historical Data – Chart – 5 Years – Use Calendar Year or Fiscal Year End Date

Insert Selected Company Name Here

Using the links to each company’s financial data as your source, fill in all the yellow highlighted cells.

Use most recent three years’ annual calendar or fiscal year-end financial data of your selected company.

Now you are ready to go to work!

ed Company Name Here

ghlighted cells.

selected company.

Milestone One: Time Value of Money

(please fill in YELLOW cells)

* Dollar amounts are in millions $

Question 1.

Interest Rate

FCF – Years

FCF in dollars*

5%

$

–

$

–

$

–

Pv*

$

–

$

–

$

–

Total Pv*

*In millions

$

–

FCF in dollars*

$

–

$

–

$

–

Pv*

$

–

$

–

$

–

Total Pv*

$

–

Question 2. Interest Rate

5%

FCF – Years

*In millions

Question 3.

Interest Rate

7%

Required Rate of Return for Risk

Associated With Projected Future Three

Year’s Free Cash Flows.

5%

Required Rate of Return for Risk

Associated With Projected Future Three

Year’s Free Cash Flows.

FCF – Years

FCF in dollars*

$

–

$

–

$

–

$

–

Pv*

$

–

$

–

$

–

$

–

*In millions

Total Pv*

$

–

Instructions and Explanations

Free cash flows (FCF), for this exercise is difference between cash generated from

operating income minus capital expenses at the end of your company’s fiscal or calendar

year. The present value of free cash flows is one method of determining a company’s value

to a potential buyer.

Note: For Milestone One, please use the adjusted free cash flows calculated for your

selected company on Tab 2 (Selected Co. for Project) of this Excel workbook. Use 5% as

the interest rate for these questions.

For the purpose of this exercise, what will happen to the total PV if your selected

company’s free cash flows for each year reported in Question 1 were reduced by 10%?

Numbers from Q1

$

–

$

–

$

–

$

–

Your selected company is projecting that free cash flows for the next three (3) years

will increase by 3% annually. Using the free cash flows from Question 1 above,

increase each of the future free cash flows by 3% and enter these numbers in the

yellow highlighted areas. As there is a chance that these increases may not occur as

projected, a buyer who may be willing to purchase the company before the increases

occur, will account for this risk by using a required rate of return of 7%. What price

would the potential buyer be willing to pay based upon the known free cash flows and

the future projected free cash flows?

Once you have completed these calculations, proceed to write your written analysis.

xplanations

ence between cash generated from

end of your company’s fiscal or calendar

method of determining a company’s value

free cash flows calculated for your

ect) of this Excel workbook. Use 5% as

n to the total PV if your selected

in Question 1 were reduced by 10%?

ash flows for the next three (3) years

ash flows from Question 1 above,

% and enter these numbers in the

hat these increases may not occur as

hase the company before the increases

ired rate of return of 7%. What price

ed upon the known free cash flows and

oceed to write your written analysis.

Milestone Two: Stock Valuation and Bond Issuance (fill in the YELLOW cells)

PART I: STOCK VALUATION

Read the explanations to the right of the calculation cells for specific information on the data.

Question 1: Initial Stock Valuation

Year

Cash Div/Share ($) Dividend Yield

$

$

$

–

Stockholder’s

Stock Price

Equity (in millions)

0% $

0% $

0% $

–

$

$

$

Total Shares

Outstanding

(millions of

shares)

–

0

0

0

Question 2. Stock Valuation—The New Dividend Yield if the Company Increased Its Dividend Per Share by 1.75

Use the numbers from Question 1 as your basis to calculate these questions.

Year

Cash Div/Share ($)

Stockholder’s

Dividend Yield

Stock Price

+1.75

Equity (in millions)

$

$

$

–

#DIV/0!

#DIV/0!

#DIV/0!

0 $

0 $

0 $

Total Shares

Outstanding

(millions of

shares)

–

0

0

0

Question 3. The Dividend Yield, Cash Dividend Per Share, Stock Price, and Total Shares Outstanding After the Stock Split

Use the numbers from Question 1 to calculate these questions.

Year

Cash Div/Share ($) Dividend Yield

Stockholder’s

Stock Price

Equity (in millions)

Total Shares

Outstanding

(millions of

shares)

$

$

$

–

0,00%

0,00%

0,00%

0 $

0 $

0 $

–

0

0

0

Question 4. The Rate of Return on Investment Based on the Cash Div/Share ($) and Stock Price You Used in Question 1

Use the numbers from Question 1 to calculate these questions.

Year

Cash Div/Share ($)

$

$

$

–

Stock Price

$

$

$

–

Return on

Investment

CALCULATE ROI

#DIV/0!

#DIV/0!

ROI cell is formulated

ROI cell is formulated

PART II: BOND ISSUANCE

Newly issued 10-year bond. Calculate the present value in the four scenarios below.

1. The present value of the bond at issuance

Present Value PV

Periods

N

$

0 Number of semi-annual payments made over 10 years

Interest

Payments

Future Value

I

PMT

FV

$

$

% Annual interest rate at issuance paid semi-annually (Annual Interes

This bond makes regular semi-annual payments of interest (in doll

Future value in 10 years—enter as a positive number (Always the

2. The present value of the bond if overall rates in the market increased by 2% annually

Present Value

Periods

Interest

Payments

Future Value

PV

N

I

PMT

FV

$

–

$

$

0 Number of semi-annual payments made over 10 years

% New annual market interest rate paid semi-annually (New Annual R

This bond makes regular semi-annual payments of interest (in dolla

Future value in 10 years—enter as a positive number (Always the F

3. The present value of the bond if overall rates in the market decreased by 2% annually

Present Value

Periods

Interest

Payments

Future Value

PV

N

I

PMT

FV

$

–

$

$

0 Number of semi-annual payments made over 10 years

% New annual market interest rate paid semi-annually (New Annual R

This bond makes regular semi-annual payments of interest (in dolla

Future value in 10 years—enter as a positive number ( Always the

4. The present value of the bond if overall rates in the market remained the same as at issuance

Present Value

Periods

Interest

Payments

Future Value

PV

N

I

PMT

FV

$

–

$

$

0 Number of semi-annual payments made over 10 years

% Annual market interest rate remains the same as Question 1, paid se

This bond makes regular semi-annual payments of interest (in dolla

Future value in 10 years—enter as a positive number (Always the F

Instructions and Explanation

PART I: STOCK VALUATION

d in Question 1

(10 X 2)

ally (Annual Interest Rate / 2)

of interest (in dollars). Annual Interest Payment / 2).

mber (Always the Future or Face Value of the Bond)

(10 X 2)

ally (New Annual Rate divided by 2)

of interest (in dollars) (Dollars Paid Annually divided by 2)

mber (Always the Future or Face Value of the Bond and Never Changes)

(10 X 2)

ally (New Annual Rate divided by 2)

of interest (in dollars) (Dollars Paid Annually divided by 2 and Never Changes)

mber ( Always the Future or Face Value of the Bond and Never Changes)

(10 X 2)

Question 1, paid semi-annually (Annual Rate divided by 2)

of interest (in dollars) (Dollars Paid Annually divided by 2 and Never Changes)

mber (Always the Future or Face Value of the Bond and Never Changes)

Instructions and Explanations

PART I: STOCK VALUATION

Note: Use and enter the fiscal or year-end financial data that you calculated or found for your

selected company and enter the appropriate data into each yellow highlighted cell.

Note: Stock price for your selected company is found in your selected company’s spreadsheet.

Stockholder’s Equity = Assets – Liabilities. This represents the ownership of a corporations.

Owners are called “stockholders” because they hold stocks or shares of the company. The main

goal of every corporate manager is to generate shareholder value. This number will be found on

your selected company’s final project Excel workbook spreadsheet.

Stockholder’s Equity = Assets – Liabilities. This represents the ownership of a corporations.

Owners are called “stockholders” because they hold stocks or shares of the company. The main

goal of every corporate manager is to generate shareholder value. This number will be found on

your selected company’s final project Excel workbook spreadsheet.

Return on Investment (ROI) :

Using the formula: ROI = ((Dividend ) + (New Price – Old Price) / Old Price))

PART II: BOND ISSUANCE

Bonds are a long-term debt for corporations. By buying a bond, the bond-purchaser lends

money to the corporation. The borrower promises to pay a specified interest rate during

the bond’s lifetime and at maturity, payback the entire future value of the bond. In case of

bankruptcy, bondholders have priority over stockholders for any payment distributions.

For purposes of this exercise, certain assumptions are being made. Assume that your

selected company issued a new 10-year bond for $300,000 on October 1, 2021, that will

mature on October 1, 2031. The future value of this bond is therefore $300,000. The bond

was issued at the current market rate of 5.0% fixed for 10 years, with interest payments

made semi-annually. What is the present value of this bond using the three scenarios in

Part II: Bond Issuance?

Bonds = Debt………………..Bondholders = Lenders

NOTE: A simple rule to follow: When market rates change, nothing in the original bond’s

terms change, except you will enter the new market interest rate in place of the interest

rate stated at the bond’s issuance date. In other words, the future value remains the same,

payments remain the same, periods remain the same. When you change the interest rate

to reflect the new market rate, the present value of the bond will either increase or

decrease.

For the purposes of this exercise, assume that the new market rates occur one (1) day

after the initial bond is issued.

To calculate PV, you can use the Excel formula or the financial calculator provided.

Link is provided below.

https://www.arachnoid.com/finance

Once you have completed these calculations, proceed to write your written analysis.

ver Changes)

Milestone Three: Capital Budgeting Data (fill in YELLOW cells)

WACC

Initial Outlay CF1

$0

Cash Flows (Sales)

$

– Operating Costs (excluding Depreciation)

$

– Depreciation Rate of 20% (5-Years)

$

Operating Income (EBIT)

$

– Income Tax (Rate XX%)

$

After-Tax EBIT

$

+ Depreciation

$

Cash Flows

$0 $

CF2

–

$

$

$

$

$

$

$

$

CF3

–

Select from dropdown:

NPV

IRR

$0

#NUM!

$

$

$

$

$

$

$

$

CF4

–

$

$

$

$

$

$

$

$

–

Instructions and Explanations

For this milestone, you will assume that your selected company is

considering a potential capital investment for new equipment.

Choose one of the three investment options listed below and solve. You will either ACCEPT or REJECT

CF5

$

$

$

$

$

$

$

$

–

1. Capital Budgeting Example Setup

Initial investment $17,000,000

Straight-line depreciation of 20%

Income tax rate = 20%

WACC: use 5%

Cash Flows (sales revenue based upon this

purchase of new equipment, are projected

to be as follows):

CF1: $4,000,000

CF2: $4,200,000

2. Capital Budgeting Example Setup

Initial investment $65,000,000

Straight-line depreciation of 20%

Income tax rate = 20%

WACC: use 9%

Cash Flows (sales revenue based upon this

purchase of new equipment, are projected

to be as follows):

CF1: $15,000,000

CF2: $17,000,000

CF3: $4,500,000

CF4: $5,000,000

CF5: $4,700,000

Operating Costs

CF1: $400,000

CF2: $200,000

CF3: $225,000

CF4: $350,000

CF5: $400,000

CF3: $18,000,000

CF4: $19,000,000

CF5: $18,000,000

Operating Costs

CF1: $500,000

CF2: $500,000

CF3: $600,000

CF4: $500,000

CF5: $500,000

Initial Investment—always negative. Companies have to invest money (“payout”

funds) in order to gain the future benefit.

WACC—why do we use WACC rate for new projects? If the project’s IRR doesn’t

earn a return equal to or higher than WACC, the corporation should abandon the

project and invest money elsewhere.

Once you have completed these calculations, proceed to write your written analysis.

ll either ACCEPT or REJECT the proposal.

3. Capital Budgeting Example Setup

Initial investment $85,000,000

Straight-line depreciation of 20%

Income tax rate = 20%

WACC: use 9%

Cash Flows (sales revenue based upon this

purchase of new equipment, are projected

to be as follows):

CF1: $50,000,000

CF2: $45,000,000

CF3: $35,000,000

CF4: $30,000,000

CF5: $30,000,000

Operating Costs

CF1: $15,000,000

CF2: $12,000,000

CF3: $11,000,000

CF4: $13,000,000

CF5: $130000,000

analysis.

Milestone Four: Interest Rate Implication (fill in YELLOW cells)

1. Original Scenario From Milestone 1—Time Value of Money Using 8%

Current Market Interest Rate at 8%

Interest Rate

8,00%

Years

Amounts*

$

–

$

–

$

–

Pv*

$

–

$

–

$

–

Total Pv*

*In millions

$

–

$

–

$

–

2. Change in Interest Rate and Its Implications

Lower Current Market Interest Rate to 4%

Interest Rate

4,00%

Years

Amounts*

$

–

$

–

$

–

Pv*

$

–

$

–

$

–

Total Pv*

$

–

*In millions

3. Change in Interest Rate and Its Implications

3. Increase Current market Interest Rate to 12%

Interest Rate

12,00%

Years

Amounts*

$

–

$

–

$

–

Pv*

$

–

$

–

$

–

Total Pv*

*In millions

$

–

Instructions and Explanations

We will use your selected company’s free cash flows for Milestone Four analysis.

(Note that the interest rate changes for this milestone are different than those used in Milestone One.)

Three scenarios will be analyzed:

1. Current Market Interest Rate at 8%

2. Lower Current Market Interest Rate to 4%

3. Increase Current market Interest Rate to 12%

Once you have completed these calculations, proceed to write your written analysis.

ilestone One.)

ACCEPT

REJECT

RATIO ANALYSIS

Note: change the column names to your industry and selected companies

RATIOS CONSTRUCTION AND MINING MACHINERY INDUSTRY

CATERPILLAR Inc.

Profitability Ratios (%)

Gross Margin

29.40%

31.96%

EBITDA Margin

18.07%

21.05%

Operating Margin

13.56%

16.17%

Pre-Tax Margin

Effective Tax Rate

13.93%

16.27%

20.10%

24.00%

0.21

Financial Strength

Quick Ratio

Current Ratio

LT Debt to Equity

Total Debt to Equity

Interest Coverage

0.59

0.08

18.58

0.61

25.97

Price/Earnings Ratio

27.42

17.2

Price to Sales P/S

1.71

2.21

Price to Book P/B

5.21

7.99

Free Cash Flow per Share

17.01

-0.35

Return On Assets

5.24%

10.58%

Return On Investment

12.61%

14.13%

Return On Equity

20.95%

45.36%

Valuation Ratios

Management Effectiveness (%)

Efficiency

Receivable Turnover

7.55

6.63

Inventory Turnover

3.2

2.57

0.8

38,023

0.81

7,370

Total Asset Turnover

Free Cash Flow/Net Income

What is Ratio Analysis? Briefly explain and cite your resources: Ratio analysis is a mathematical technique for analyzing a com

about its liquidity, operational effectiveness, and profitability. Ratio analysis allows you to compare one firm to another withi

Based on the ratio analysis above, in which company would you be willing to invest and why? Caterpillar Inc is the better opti

have better revenue incoming and also higher profitability and a chance for growth (Team, 2022). CAT also has a higher retur

TEREX is easily liquid compared to CAT and can manage its assets and liabilities well and effectively. CAT has a higher income

Bloomenthal, A. (2022, September 8). Financial Ratio Analysis: Definition, types, examples, and how to use. Investopedia. Ret

Team, T. (2022, January 11). Should you buy Caterpillar stock over this industrial company? Forbes. Retrieved November 14, 2

TEREX CORPORATION

21.16%

8.49%

10.78%

7.34%

20.48%

0.35

0.72

0.73

7.37

13.22

0.76

3.01

-4.62

8.12%

11.84

22.33%

7.91

3.85

1.39

241

s a mathematical technique for analyzing a company’s financial documents, such as the balance sheet and income statement, to gather kn

ows you to compare one firm to another within the same industry or sector and track how one company has changed over time (Bloome

vest and why? Caterpillar Inc is the better option for investing. This is because, looking at the profitability ratios, specifically the EBITDA, C

owth (Team, 2022). CAT also has a higher return on investments compared to TEREX and therefore is worth the risk of investment. Anothe

well and effectively. CAT has a higher income than TEREX hence making it another reason why I would be willing to invest in it.

s, examples, and how to use. Investopedia. Retrieved November 14, 2022, from https://www.investopedia.com/terms/r/ratioanalysis.asp

al company? Forbes. Retrieved November 14, 2022, from https://www.forbes.com/sites/greatspeculations/2022/01/10/should-you-buy-

ANALYSIS

CAT Inc. is doing better than TEREX in terms of managing and paying for the direct costs of the company and

generating revenue.

CAT has a greater EBITDA margin meaning the company is able to make its profitability consistent. A low EBITDA

margin shows that TEREX is unable to balance between cashflow and maintaining profits.

Cat’s operating margin is higher compared to TEREX meaning it has more earnings from its products over the

year, excluding taxes and discounts.

This tells us the sales percentage that has been turned into profits for a company. CAT has a higher pre-tax profit

margin compared to TEREX hence making it more profitable.

TEREX paid a slightly higher tax rate from its earned income compared to CAT.

both companies have weak quick ratios but CAT’s ratio is weaker hence its assets cannot be easily converted to

cash to pay for short-term liabilities.

Again, both have weak debt to equity ratio hence might be unable to cover their long term debts. TEREX

however, has a higher ratio hence have a higher capability of covering their long-term debts.

Both have weak debt to equity ratio hence might be unable to cover term debts. TEREX however, has a higher

ratio hence have a higher capability of covering debts.

CAT has a higher interest coverage meaning compared to TEREX, it is more poised to pay its debts.

CAT has a higher P/E ratio meaning it has a higher worth compared to TEREX. It also shows that it has higher

growth chances and the investors expect higher earnings growth.

TEREX has a lower P/S ratio meaning investors are paying less for their stock than the market value. A higher P/S

ratio shows the company is strong and growing, as CAT’s is.

A P/B ratio shows the company’s market valuation compared to itsbook value. CAT has a higher book ratio which

could mean the company’s share prices depend heavily on intangible assets hence might not be good for the

company unless they are greatly confident in their stock and growth. The lower the P/B ratio, the better.

This shows a company’s financial flexibility and both companies have negative free cash flow per share and

hence are inflexible but TEREX has a lower number hence it is less flexible compared to CAT.

CAT has a higher ROA compared to TEREX. This means that it generates more profit from its assets compared to

TEREX

CAT has a higher ROI meaning that most of the investments it made were highly profitable compared to those

made by TEREX.

ROE shows how well the company manages capital invested by shareholders to make more revenue. CAT has a

higher ROE compared to TEREX meaning its capital was efficiently used.

This shows how the companies are managing the credit given to their customers. TEREX has a higher receivable

turnover meaning they manage their extended credit well during an accounting period, compared to CAT.

TEREX has a higher inventory turnover than CAT meaning they have more sales on their stock compared to CAT.

This shows the capability and efficiency of a company’s assets to generate profit. TEREX having a higher asset

turnover means that its assets can easily generate profit for it compared to the ones for CAT.

CAT has higher net income than TEREX meaning it is making more per year than TEREX.

e for analyzing a company’s financial documents, such as the balance sheet and income statement, to gather knowledge

irm to another within the same industry or sector and track how one company has changed over time (Bloomenthal, 2022).

Inc is the better option for investing. This is because, looking at the profitability ratios, specifically the EBITDA, CAT seems to

so has a higher return on investments compared to TEREX and therefore is worth the risk of investment. Another reason is

has a higher income than TEREX hence making it another reason why I would be willing to invest in it.

References

se. Investopedia. Retrieved November 14, 2022, from https://www.investopedia.com/terms/r/ratioanalysis.asp

eved November 14, 2022, from https://www.forbes.com/sites/greatspeculations/2022/01/10/should-you-buy-caterpillar-stock-over-this

erpillar-stock-over-this-industrial-company/?sh=77a2511669ad

FIN 550 Module One Activity Guidelines and Rubric

Overview

For this task, analyze the financial health of two competitors in the same industry based on their ratios, using the provided Excel spreadsheet template.

Use your selected company and another company of your choice in the same industry. Then, complete your analysis by writing a short synopsis of your

findings in the space provided with the analysis. Lastly, respond to the two questions listed below to complete the ratio analysis.

Prompt

Follow these steps to analyze the financial health of your selected company and one of its competitors. Use the Module One Activity Template to

complete this task. Complete the spreadsheet by providing the following:

●

●

●

●

Ratio Research: Use the Excel spreadsheet template to analyze the selected company ratios (profitability, financial strength, valuation,

management effectiveness, dividends, and efficiency) for both of the competitors. To complete this part, you can use the websites CIS Market or

Mergent INTELLECT to obtain the ratios. You can also use the SEC Edgar Company Filings resource to obtain the ratio from annual reports. Note:

The ratios have to be from the same time period, the same year for both competitors. For training on how to use Excel, visit the SNHU Atomic

Learning video training site or search YouTube to view appropriate Excel training videos.

Industry Ratios: In order to analyze ratios for the companies, you need to obtain the ratios for the industry the competitors operate in. Industry

values for the ratios can be found in the index column of the Morningstar Valuation page. If no index value is available, put the five-year

averages for both companies in the industry column and use these figures for the industry comparison of your ratio analysis.

Ratio Analysis: Compare the two companies based on their ratios. Use the last column in the template to detail how each company is doing in

relation to the ratios. Explain the significance of how the company ratios compare to the industry and each other.

Summary: Finish by answering the questions below the analysis section of your Excel spreadsheet.

o Briefly explain what a ratio analysis is in 1-2 paragraphs. Cite your resources.

o Based on the ratio analysis, in which company would you be willing to invest and why?

Note: This is a theoretical exercise. You should not be investing according to this analysis.

Rubric

Guidelines for Submission: Complete and submit the Excel Worksheet template provided.

Critical Elements

Ratio Research

Exemplary

Proficient

Provides accurate data for all the

required company ratios in the

categories of profitability, financial

strength, valuation, management

effectiveness, dividends, and

efficiency (100%)

Needs Improvement

Provides data for required company

ratios in the categories of profitability,

financial strength, valuation,

management effectiveness, dividends,

and efficiency, but some of the data is

missing or inaccurate (70%)

Not Evident

Does not provide data for

any of the required ratios in

the categories of

profitability, financial

strength, valuation,

management effectiveness,

dividends and efficiency (0%)

Value

10

Critical Elements

Industry Ratios

Exemplary

Proficient

Provides accurate data for all the

industry ratios in the categories of

profitability, financial strength,

valuation, management

effectiveness, dividends, and

efficiency (100%)

Needs Improvement

Provides data for the industry ratios in

the categories of profitability,

financial strength, valuation,

management effectiveness, dividends,

and efficiency, but some of the ratios

are missing or inaccurate (70%)

Not Evident

Does not provide data for

any of the industry ratios in

the categories of

profitability, financial

strength, valuation,

management effectiveness,

dividends and efficiency (0%)

Value

10

Ratio Analysis

Provides a detailed analysis for

each ratio that demonstrates a

complex grasp of each

company’s position when

compared to each other and

the industry (100%)

Provides a detailed analysis for

each ratio that provides an

accurate assessment of each

company’s position when

compared to each other and the

industry (90%)

Provides an analysis for each ratio,

but the analysis lacks detail, is

incomplete, or demonstrates an

inaccurate understanding of each

company’s position when compared

to each other and the industry (70%)

Does not provide a ratio

analysis (0%)

35

Summary

Provides an accurate and

complete definition of ratio

analysis as well as a thorough

and cogent, detailed

explanation of which company

they would invest in and why

that is supported by the

financial data (100%)

Provides an accurate and

complete definition of ratio

analysis as well as an appropriate

explanation of which company

they would invest in and why,

supported by the financial data

(90%)

Does not provide a definition

of financial analysis or a

selected investment and

explanation (0%)

35

Articulation of

Response

Submission is free of errors

related to citations, grammar,

spelling, syntax, and

organization and is presented

in a professional and easy to

read format (100%)

Submission has no major errors

related to citations, grammar,

spelling, syntax, or organization

(90%)

Provides a definition of ratio analysis

and an explanation of which

investment they would choose and

why, but the definition is inaccurate

or incomplete, or the explanation of

which investment they would choose

and why lacks detail, is incomplete or

inaccurate or not supported by the

financial data (70%)

Submission has major errors related

to citations, grammar, spelling,

syntax, or organization that negatively

impact readability and articulation of

main ideas (70%)

Submission has critical errors

related to citations,

grammar, spelling, syntax, or

organization that prevent

understanding of ideas (0%)

10

Total

100%

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