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Company Description

I.  Company description, summary and analysis of MD&A

Brief description of the company and its place in the competitive landscape.  Identify the key issues for the company’s future prospects which are discussed by management in MD&A in a brief summary of management’s outlook.  What is your assessment of the firm’s future prospects?  Do you concur or disagree, at this point, with management?

II.  Prepare common size Balance Sheets and Income Statements for the past three years.

III.  Provide a DuPont analysis of Return on Equity for the past three years.

IV.  Calculate three years of financial ratios. 

These should be accurately calculated as well as clearly presented and labeled.  If a ratio is not relevant, it should be excluded (for example, if the company has no or immaterial A/R, do not include A/R turnover).  Note that the EPS numbers are the only ratio provided by the firm which you may (and should) use directly. 

V.  Identify relevant trends and articulate specific assumptions needed to project future financial statements.

In order to project financial statement into the future, you need to make assumptions about growth in revenues and expenses as well as about relationships between balance sheet accounts.  These should be presented in an exhibit as well as discussed in the text.  Relevant trends which you have observed in the three years of ratio analysis should be identified and your specific assumptions should be clearly supported.

VI.  Based on your assumptions, provide projected common size and pro forma Balance Sheet and Income Statement for the next fiscal year.

It should go without saying that the pro forma financial statements should tie together as well as tie out to the previous year’s balance sheet.  You may combine smaller items on the income statement or balance sheet to make it easier to focus on the material elements of each statement.

VII.  Briefly discuss your projections, most importantly whether or not they (1) are consistent with your initial assessment of the firm and (2) validate the MD&A provided by Management.

In addition to presenting key elements of your forecast, this section provides on opportunity to look back at your initial assessment of the company’s prospects.  To what extent do your financial forecasts support your initial assessment?  To what extent do they alter it?  Are your forecasts in line with MD&A?   As you progressed through your analysis, how were your perceptions of the company’s financial picture altered and/or supported?

Sections II, III, and IV are developmental analysis which provide essential support for Section V, which in turn supports Section VI.  Sections V and VI should be presented as an exhibit as well as discussed in the text as appropriate.  Your report should flow smoothly from introduction to conclusion, starting with Section I and continuing through Section VII.  Sections II – VI should be presented as Exhibits, with discussion of critical information in the text. 

The final product should be approximately 5 to 8 pages of double spaced text, excluding exhibits.  Do not reduce font below the equivalent in clarity of Arial 11 point type.  The normal standards for business communication apply to this report.  Exhibits should be clearly tied to the text.  The final submission should be in hard copy and also include a copy of the company’s financial statements (only, not the full annual report).  Please do not put the report in any sort of binder, just attach with a clip, please.

Any references should be correctly cited.  You may make reference to the annual report for all numerical data from the financial statements in one citation.  Failure to follow proper citation requirements will be considered an academic integrity issue and will be referred to the Honor Board for adjudication.

Sections I – III are worth 10 points each, Sections IV – VII are worth 15 points each, with 10 points for the project as a whole (professionalism and presentation).

Your report is due by 5:00 PM on December 6th.  Any report submitted after the deadline will be penalized one full letter grade if it is received within 24 hours of the deadline;  two full letter grades thereafter.


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