- Final Project: Financial Analysis Paper
The course project will require each student to complete a thorough financial analysis of an assigned publicly traded corporation. My assigned corporation is Boeing Company. The project deliverables will be:
- Structured Word Document (not a PDF) in proper APA Format. Refer to the following links for APA guidance.
- Supporting Excel spreadsheets including formulas and calculations.
Project requirements must include the following analysis:
- Description of the corporation: its products, markets, subsidiaries (if any), risks, public highlights, and financial highlights.
- Overall trend assessment of the company’s balance sheet and income statement for the last three to five years. Including graphs and/or charts receives preferred grading.
- Provide ratios fully calculated using Boeing’s actual balance sheet and income statement data within formulas in excel. Also provide an analysis discussion of the same ratio trends (3 page “text” minimum) included in a word document. Ratio categories must include
- Short Term Solvency aka Liquidity
- Long Term Solvency aka Financial Leverage
- Asset Management aka Turnover
- Market Value
Select and analyze at least three ratios from each category, 15 ratios minimum. A three-year ratio analysis is the minimum expectation. A five-year analysis receives preferred grading.
- Trend analysis of the company’s stock price, PE ratio, and EPS trends for the last three to five years with comparisons of each to competitors.
- Evaluation of the firm’s posted Beta (do not calculate Beta, it will be posted in financial websites such as money.msn.com online) in relation to competitors.
- Assessment of the firm’s capital structure (D/E Ratio) including any significant changes in the firm’s capital structure over the last three to five years. (Continued on next page)
- Excel calculation of the WACC (weighted average cost of capital) including independent calculations of each of the following variables. Cost of Equity using both the SML (aka CAPM) Approach and the Dividend Growth Model Approach with a discussion explaining which approach you prefer for WACC and why (Section 14.2 of the text provides advantages and disadvantages for each approach). All of these variables are defined in Chapter 14. There is an Eastman Chemical WACC calculation example on pages 468 – 471 in the text.
WACC = (E/V)*Re + (P/V)*Rp + (D/V)*Rd * (1-Tc)
- Assessment of the firm’s statement of cash flows and determination of the firm’s free cash flow over the last three to five years. (Week 6 Discussion Board).
- Closing summary of the firm’s financial health in relation to the overall economy and within its industry. In your own words explain why or why not someone should invest in this firm. Also show current analyst recommendations as a guide with a discussion of supporting facts and financial data.
A Draft Financial Analysis Report worth 30 Points will be submitted in Week 4. For full credit, the draft must indicate significant progress on the following items:
- 10 Points – Draft Ratio Analysis calculations in Excel with at least five of the ratio trends calculated (not just input) using formulas in Excel. (related to c pg 7 above).
- 5 Points – Draft of the written ratio trend analysis (related to c pg 7 above) provided in Word.
- 5 Points – Draft of the Stock Price, PE, and EPS trend analysis compared to competitors, with current beta comparison to competitors. A trend is not required for beta. Excel calculations are not required for this particular draft. (related to d and e pg 7 above).
- 10 Points – Draft WACC Calculations in excel with at least one method of RE and the Bond Table for RD. (related to g above).
These Week 4 drafts are not a substitute for a COMPLETE paper in Week 7. A complete paper incorporating the above key components is still required to be submitted in week 7.
Project deliverable details:
- Financial analysis Word file is to be a minimum 10 pages in length as outlined in the rubric below. The cover page and supporting reference appendices are not included in the 10 page minimum. Page minimums are written text not including charts, graphs, tables, or other images.
- APA Paper Format: including but not limited to proper APA headers, proper APA page numbers, and APA references with hanging indent.
- Supporting financial data will be prepared using Excel, including mathematical formulas within the cells. The Excel data must be clearly referenced as appendices in the related written discussion in the Word file.
- Additional materials such as graphs, charts, maps, etc. add clarity and will earn preferred grading. Small items are to be nested within the discussion. Large reference materials will be included as properly referenced APA appendices. Appendix A contains the income statement, balance sheet, and statement of cash flows. Appendix B contains the ratio analysis. Appendix C has the full WACC calculation with Cost of Equity using both the CAPM and the Dividend Growth Model. Additional appendices are OK.
- Reference page includes all references cited within the paper using APA format including hanging indent for references. Safe Assign will be used to ensure proper citing of academic references.