1.

) Research Paper (220 points) (Course Final Assessment)

The research paper assignment is worth 220 points or 22% of the course grade. A
grade of C or better is required as per MBA policy as this is the Final Assessment for the
course.
The objectives/purpose of the research paper project are to enable you to do a
comprehensive financial analysis of a publicly traded corporation; and provide you with
substantial information for you to make recommendations regarding investing in this
corporation.
Your financial analysis report will be driven by a rigorous ratio analysis, and
aggressively supplemented with your written analysis, interpretation, and evaluation of
the data.
Your research should be strategically driven by two probing questions:
-Would you invest your financial capital in the selected firm as a shareholder?
-Would you invest your human and intellectual capital in the firm as an employee?
Steps in preparation of financial analysis report:
1.)

Select a publicly held company

2.)

Select a benchmark firm to compare your company against. The benchmark firm is
typically the largest competitor.

3.)

Obtain the firms balance sheet, income statement, and statement of cash flows for
the past 5 years. Download or read the firms annual report.

4.) Go to: http://www.sec.gov/edgar/searchedgar/webusers.htm

Research EDGARs database for additional SEC report filings: 8-k, 10-Q.
4.)

The following table is the type of Excel or Word table that should be used to gather
and report your ratio and financial performance data. Note the 5 financial
diagnostic categories that should be used in your analysis.

Financial diagnostic
categories

Chosen company
vs.

Benchmark
competitor

1.) Liquidity of shortterm assets

-Current ratio

-Current ratio

-Cash ratio

-Cash ratio

-Quick ratio

-Quick ratio

-Debt ratio

-Debt ratio

-Debt-equity ratio

-Debt-equity ratio

-Times interest earned

-Times interest earned

-Net income/sales (profit

margin)

-Net income/sales (profit

margin)

-Net income/assets
(ROA)

-Net income/assets
(ROA)

-Net income/shareholder
equity (ROE)

-Net income/shareholder
equity (ROE)

-Total asset turnover

-Total asset turnover

2.) Long-term debtpaying ability

3.) Profitability

4.) Asset utilization/

management efficiency

5.) Market measures

-Inventory turnover
measures

-Inventory turnover
measures

-Accounts receivable
turnover

-Accounts receivable
turnover

-Price/earnings ratio

-Price/earnings ratio

-Earnings per common

share

-Earnings per common

share

-Dividend payout

-Dividend payout

Use 2-3 ratios per diagnostic category. Place your ratio calculations in the table for your
selected companiesprimary company and benchmark competitor. Using 5 diagnostic
categories, and 3 ratios to assess each category, results in 15 ratio measures per
company that will be compared side by side.
6.) To validate your research, 5 years of data should be analyzed.
7.) The financial analysis report must be written properly. They must include a title page,
a table of contents, and a reference page. For both midterm and final report, information
sources from the web, etc. must be cited properly, using APA style.
This means that every table that you cut and pasted or typed from the web must have a
source at the bottom of the table AND that citing must also be included in a reference
page at the end of the report.
The parts of the research paper are discussed below. The completed report (parts a
through h) is due day 7 of week 6. Your project should include:
a. An overview of the corporation.
i. Provide general information regarding the type of business,
products and/or services, location of headquarters, name of
CEO, number of employees, and countries of operation, etc.
b. The latest financial statements

i. Get the income statement, balance sheet, cash flow statement,

and the statement of owners equity for the past fiscal year.
Create Turnitin-friendly versions of the financial statements; do
not just cut and paste them in your report. Do not forget to cite
the source under each statement.
ii. If you cannot cut and paste them, you may have to type in the
information in a table in your report.
c. A summary of each financial statement
i. Take each statement and state the key parts in words. Tell a
story from each of the financial statements. For example, for
the income statement, the story starts like, Total Revenues in
2010 were $10 billion, while Cost of Goods Sold were $8 billion,
leaving a gross profit margin of $2 billion, or 20 percent of total
revenues.After taking out interest and taxes from EBIT, the
net income was $0.5 billion, or 5 percent of total revenues.
d. Ratio calculation (include 5 major types of ratios. Refer to chapter 3,
Analysis of Financial Statements)
i. Organization of this section is based on the FIVE types of ratios
listed in the text book. Calculate the ratios from the financial
statements in part c above using Excel or your calculator and
present them in a table.
ii. Find industry financial ratios online (eg. Yahoo.com) and
compare your corporations ratios to these industry ratios.
iii. Present your results following the five types of ratios discussed
in part d.
iv. A table with both corporation and industry ratios is required;
v.
e. Discussion of key statistics provided by sources like Yahoo finance.
i. There are many different other statistics available for your
corporation. These include market value, beta, and diluted EPS,
etc. Discuss some of the key statistics that you think can assist
you to determine if this corporation is a good buy or sell.
f. For you to decide if a corporations stock is a good buy or sell, you
must forecast several key variables, including the stock price.
i. Use historical prices (5 years of monthly data recommended)
and forecast the stock price for the next year. Use regression
analysis, and/or moving average, etc. to create your forecast.
ii. Create a graph from the historical data and show your forecast
on the same graph. You can add a trend line to the graph to
help you with a forecast. Include the graph in your report.

iii. You need to say specifically what the forecasted value of the
stock price is.
iv. You must address the question, Is this forecast reasonable?
Must you amend your analysis to get a more reasonable
forecast?
g. Other information pertinent to the corporation that could affect its future
performance and stock price.
i. This could include dividend policy, capital structure, bond
ratings, expert opinions on TV, new projects, litigation,
regulation, etc. Search for information on the web regarding this
corporation. Look at company complaint blogs, etc.
h. Recommendation regarding the future of this corporation.
i. Is the stock a good buy, average buy, or a poor buy (implying a
good sell)?
ii. Include a justification of your recommendation based on your
analysis and research.