1. Choose a company whose financials you can acquire online or in print. I choose Starbucks
2. Spread 3 years of financials for the company using Excel. Do actual fiscal year ends, not estimated.
It should start off with an introduction or overview in which you provide a brief background of the company, the stock exchange on which it trades, and a timeline for completion. It should also include #4 and #5 below. Attach the balance sheet and income statement to the report.
3. Choose a company whose financials you can acquire online or in print.
4. Spread 3 years of financials for the company using Excel. Do actual fiscal year ends, not estimated.
5. In all calculations, use real numbers from the company’s financials, not reported ratios provided by online and other sources. Do all calculations for the most recent 3 years available.
6. Collect stock data—price, shares outstanding, insider ownership, insider transactions, stock repurchase program, options, etc.
7. Calculate financial ratios and compare to industry average. What can you conclude from the ratios? Any warning signs? Anything that stands out? Assume you have been given the directive to analyze the company you selected for possible acquisition or taking a minority position. Prepare the report for the Board of Directors and upper management. I don’t provide an example because coming up with an effective format is part of the challenge of the assignment. Be sure to do all calculations for 3 years, using Excel. Use real numbers from the financials, not reported ratios provided by online and other sources. Show the source of the numbers.
8. Perform common size analysis. What does this analysis tell you about your company? Are any trends apparent?
9. Use the extended DuPont equation to provide a summary and overview of your firm’s financial condition
10. Calculate the cost of each capital component, after-tax cost of debt, cost of preferred, and cost of equity with the DCF method and CAPM method.
11. Estimate the company’s WACC.
Prepare the report for the Board of Directors and upper management. This report should be 8-10 pages, double-spaced, plus a bibliography. Include the balance sheet and income statement as attachments and as many other exhibits/attachments as you wish.
12. What is your summary of this company’s financial condition?
13. What major factors should the company be aware of as it evaluates possible investment projects in the future?
14. Would you be interested in investing in this company? Why or why not? Are there additional factors that aren’t a part of this case that you would investigate before making a decision, & if so, what factors? Note: As with all assignments, the more closely I can follow your methodology and “see” where your numbers come from the better the outcome.
