Financial Statements & Ratio Analysis

Report Format: double-spaced, one-inch margins, 12-point Times New Roman font.
1) Write a summary of your company and include:a) A link to the firm’s annual report/financial statements for the latest fiscal year from the firms’ website.b) a brief historical summary of the companyc) recent developments within the company and the industryd) the company’s position within the industrye) the company’s recent stock chartf) a list of competitorsg) other items of significance to the company, including any trends in operations or capital resources
Insert the following building blocks for your analysis for the firm. Complete this in an Excel workbook, with each part in a separate tab. You must upload the Excel file.
2) Insert the ratio analysis (see further below for the specific ratios) for the last four years for each firm. Round to 4 decimal places. If a ratio does not apply, write N/A.
3) Insert the horizontal analysis (see further below for the specifics) using dollar and percent change for the following items for the last four years: (use the following columns: two years ago (A), last year (B), current year (C), $ change (C-B), $ change (B-A), $ change (C-A), % change (C-B), % change (B-A), and % change (C-A).a) Cashb) Total Current Assetsc) Total Assetsd) Total Current Liabilitiese) Total Liabilitiesf) Retained Earningsg) Total Stockholders’ Equityh) Number of Shares Outstandingi) Net Sales/Revenuesj) Cost of Goods Soldk) Gross Marginl) Operating Expensesm) Operating Marginn) Interest Expenseo) Net Incomep) Earnings Per Shareq) Executive Compensation
4) Insert the trend analysis for items in #3 for the last four years using the earliest year as the base.
5) Insert the vertical analysis for the last four years’ balance sheets and income statements.
For the next part, integrate your conclusions from the analyses above. The analysis, however, is not to be your only source of information. You may use news articles or financial analyst reports about the company to support your viewpoints. Provide a citation list for any sources used.
6) Complete a financial statement analysis of the firm. Evaluate the horizontal, vertical, and trend results. Discuss the ratios, addressing the profitability and total asset management, liquidity, solvency and financial risk, efficiency and operating asset management, and market strength. Highlight any significant changes, including whether the company’s situation has deteriorated or improved for the various categories. Comment on the company’s relative performance to other companies in the industry. To conduct the broader industry analysis, use the industry statistics reported on http://financials.morningstar.com/ratios/r.html?t=JPM (search for the ticker of your firm). Use the ratios to answer the following questions with explanations. Integrate them into a written piece rather than answering each question in a list.
a) Is the company paying its accounts payable more or less rapidly over time? Is the company’s use of accounts payable decreasing or increasing?b) Is the company collecting its accounts receivable more or less rapidly over time? Is the company’s investment in accounts receivable decreasing or increasing?c) Is the company converting its inventory more or less rapidly over time? Is the company’s investment in inventory decreasing or increasing?d) Is the company converting its resource inputs into cash flows more or less rapidly over time? Is the company’s cash position decreasing or increasing?e) Is the company’s investment in fixed assets increasing or decreasing?f) Is the company managing its assets efficiently? Is it managing them more or less efficiently?g) Is the company’s use of long-term debt increasing or decreasing?h) Is the company utilizing its debt efficiently? Is it utilizing it more or less efficiently?i) Is the stockholder’s investment becoming more or less profitable?j) Did the dollar amount/percentage of operating revenues increase or decrease over time?k) Did the dollar amount/percentage of operating expenses increase or decrease over time?l) Did the market capitalization increase or decrease significantly over time?m) Did the times interest earned increase or decrease over time?n) Did the dividend yield and dividend payout increase or decrease over time?o) Did the effective tax rate increase or decrease over time?p) Did the estimated interest rate increase or decrease over time?q) Did the free cash flow increase or decrease over time?r) Did the earnings per share increase or decrease over time?s) Did the book value per share increase or decrease over time?t) Did the price-earnings ratio increase or decrease over time?u) What are the trends in the various ratios of firm profitability?v) What are the trends in the various ratios of firm liquidity?w) What are the trends in the various ratios of firm efficiency (activity)?x) What are the trends in the various ratios of firm solvency (coverage)?y) What are the trends in the various market ratios?z) Are there differences in accounting to consider when comparing the firm to the industry?
7) Short-Term Credit Decision: In no more than two typed pages, provide a statement of your decision to lend or not lend to the firm based on your interpretation of their short-term prospects. Analyze this as you would if you were considering lending $1 billion of your own money to the firm to be repaid in 90 days. Essentially, you are answering whether you believe the firm can meet current obligations and use current assets efficiently to produce profits. Comment on their success in employing operating leverage. Make sure to address the following: short-term viability, short-term growth, cash flow, working capital, efficiency, and liquidity.
8) Long Term Credit Decision: In no more than two typed pages, provide a statement of your decision to lend or not lend to the firm based on your interpretation of their long-term prospects. Analyze this as you would if you were considering lending $10 billion of your own money to the firm to be repaid in 10 years. Essentially, you are answering whether you believe the firm can meet long-term liabilities, use long-term debt and stockholder’s equity effectively without jeopardizing the firm’s future, and manage long-term assets in a way that will maximize revenues. Comment on their success in employing financial leverage. Make sure to address the following: long-term viability, long-term growth, the need for future financing, the sources for payment of interest and principal, the cushion the firm has in earnings and cash flows to pay interest and principal, the volatility (unpredictability) in the firm’s earnings and cash flows, the likelihood the company will file for bankruptcy, and the financial strength to pay debts in a period of poor profitability.
9) Investment Decision: In no more than two typed pages, provide a statement of your decision to invest in the firm’s stock based on your interpretation of its long-term prospects. Analyze this as you would if you were considering investing $500 million of your own money in the stock. Address the following: the company’s future business prospects, the company’s future market prospects, the company’s competitive strengths and weaknesses, the company’s strategic initiatives in response to business opportunities and threats, the company’s current earnings performance, the company’s future earnings potential and the sustainability of its current earnings, the company’s current financial condition, the risks and rewards of the company’s financing structure, the company’s vulnerability to earnings variability, and the company’s financial strength to overcome a period of poor profitability.
10) Consulting Decision: In no more than two typed pages, provide a statement as if you were a hired consultant presenting to the CEO of your future strategies, goals, and objectives for this company and how would you reflect these through the preparation of the annual operating budget? (Scope: 2 years )