Term Project Finance 406 The purpose of this project is to give students practic

Term Project
Finance 406
The purpose of this project is to give students practice in applying the financial statement analysis tools presented in this course. You will complete the project in groups NOT TO EXCEED 5 students (four students per group might be ideal). If you know of any fellow students you wish to work with (AND they likewise wish to work with you!!), please let me know by Monday, July 24 and I will be sure that you are placed in the same group. All other students not choosing their groupmates will be randomly/arbitrarily placed into a group by July 26!
Our class this term is rather large so I have decided that we will all work on different companies within the same industry sector so that all of the groups can share financials with the other groups for the purposes of determining “industry average ratios”. We will select the industry sector together on July 26th and then each group will need to select a company within the sector by no later than August 2nd. Regarding the company each group selects, be sure that the company is based here in the United States, has been publicly traded for at least five years, and is a company that ideally has both inventory and receivables (that will make it more fun to study and analyze). I would also like to see a company that is profitable and has been for the entire study period (5 years).

Each group will turn in ONE term paper that addresses the items identified in the Project Outline section of this assignment (see below). The final product will be a paper that will likely range from 20 to 30 pages including tables, graphs, charts and figures. Line spacing must be double-spaced. I usually use Times New Roman, Calibri or Ariel font but whatever you use just be sure that you use 12-point sizing or larger print (my eyes are not getting any younger!). YOU WILL TURN IN THE REPORT IN TWO FORMS – A PDF copy of the entire report and the written portion of the report (without tables and figures) sent to me as a Word document so that the College can review it for plagiarism. There is no minimum number of pages but any report submitted that is not at least 15 pages in length will be read with the greatest of skepticism. Your report must include a detailed bibliography and a list of references that clearly cite the sources of information used in preparing your report (I am not concerned with method of citation – this is an analysis class not a communications class). If you need guidance on how to reference documents in your reports, please contact our library professionals – they have guidance documents for those things. As a last resort, contact me (but trust me – the library staff is your best bet). If you make a valiant effort at identifying your sources of information, I am usually good with things from a citation perspective.
Project Outline
A detailed project outline follows. Refer to this outline frequently to get a sense of what specifically it is that I am looking for. All submitted projects are to follow this outline without exception. Please read it carefully and frequently to ensure that all key elements requested are submitted. The number of pages appearing next to each key element is a suggestion, not a requirement. As the outline shows, the analysis section (the final section of the report) will focus on as-yet-to-be-assigned analytical requests/scenarios that will be developed by me. I will assign these specific analysis scenarios/requests during Week 7. Section 5 of the report ends up usually taking on the look and feel of a conclusion section!!
Each group will prepare their own figures, graphs and tables to be submitted into the report. These should be developed using Excel which is why I was curious to know everyone’s Excel skills in our Discussion Board. You may add any figures that you wish (such as bar charts, pie charts, etc.) that you feel enhance the project submittal or assist with addressing the key elements requested – such extra effort is generally favorably received so long as it truly adds something to your report. Use Word for preparing your written elements of the report as identified above. I DO NOT need your Excel tables submitted to me other than to be included in the PDF form of your report.
Instructor Recommendations
Having been on the opposite side of similar assignments way back when I was a student here at Walsh College, I offer to you the following recommendations.
• Start on this project as quickly as you can (once your company is selected, get working on the project as soon as you can). There will be no extensions!!
• Assemble all of your research together before you start writing, identifying all of your reference sources. Once you have all your research completed, you may find that your general feelings and conclusions about the strengths or weaknesses of the company have changed.
• Find a proof-reader. Don’t distract me with poor grammar, punctuation mistakes and spelling errors. If I don’t understand something that you have written, I will ignore it and that could/will be bad.
• Brainstorm with your group – rely on each other’s skills and knowledge and abilities. As a group, decide what should be included in each and every section even if the secs are written individually. You will find this approach makes things easier regarding completion of the project. You will also learn the most from this type of exercise! TRUST ME – it may not seem like a time-saver but it is!!
• Do not commit plagiarism. If you incorporate someone else’s work into your paper, simply footnote/reference the work. Please see the library staff for insight on proper footnoting techniques. Papers exhibiting evidence of plagiarism and uncited sources of information will be given a failing grade. I will also report you to the disciplinary board here at the college for potential expulsion. KEEP IN MIND – the college does random plagiarism checks so it may not just be me who is reviewing your report.
Project Outline
I – Introduction to Company and its Industry (no more than 3 written pages)
A. General History of the company including major acquisitions
B. Overview of growth, acquisitions, and potential for future growth
C. Markets served and customers targeted
D. Identification of competition and your company’s position relative to its industry
E. Threats the company faces (Competitive? Political? Economic?)
F. Information on the management team including key individuals, experience, and general market perception/opinion of the management team’s ability to lead the company
G. Other items you discovered about the company that you wish to share
II – Presentation of Financial Reports (3 to 6 pages of financial tables/statements). Do not simply copy the financial statements as presented by the company in its 10-K submittals. Make modifications to the statements as you see fit in order to make them more readable, easier to analyze and professional looking. Try to keep the presentation of each financial statement on one page, if possible. Multi-step formatting of the income statement is required (this will be discussed during Week 4). 5 years of financials must be presented (covering the periods from FY 2018 through FY 2022).
A. Presentation of Balance Sheets
B. Presentation of Income Statements
C. Presentation of Cash Flow Statements
III – Common Sized Presentations and Financial Statement write-up (up to 4 pages of financial tables/statements AND 2 to 3 pages of write-up for each of the financial statements and what they reveal to your group – this section should be around 10 to 12 pages in total)
A. Horizontal common-sizing of the Balance Sheet and Income Statement
B. Vertical common-sizing of the Balance Sheet and Income Statement
C. Written summary of observations for all three statements based on what you present in both Sections II and III of the report
Common-sizing of the Cash Flow Statement is not being requested and is not required but you MUST still do a write-up on the Cash Flow Statement.
IV – 5 years of Ratio Calculations for the company with WRITTEN comparisons to representative Industry Ratios and/or Primary Competitor Ratios (this section should be up to 5 pages total (1 to 2 pages of calculated ratios and up to 3 pages of written ratio analysis))
A. Liquidity/Short-term Activity Ratios
B. Long-term Debt Paying Ability Ratios
C. Profitability/Long-term Activity
D. Investor Ratios
Ratio calculations must be completed for every year of financials you present for the company. Competitor/industry representative ratios only need to be presented for the most recent available year (2022). We will use the financials of the other groups in this section for our competitor ratios so it is REQUIRED that you complete your financials for your company (Section 2) by no later than Week 7. This section is to include a write-up that highlights your observations with an emphasis on how well or how poorly the subject company compares to its competitors and industry group. THIS IS THE ONLY SECTION OF THE REPORT WHERE YOU SHOULD FOCUS ON COMPARING YOUR COMPANY TO ITS COMPETITORS!!
NOTE – Regarding ratios, I strongly suggest that you create a single table on which all of the ratio calculations are presented along with a side-by-side comparison to the latest year of competitor/industry ratios. We will discuss this in greater detail in the weeks to come.
V – Specific Analysis Requests/Scenarios (2 to 3 pages per scenario – presented individually). During Week 7, I will present specific analysis scenarios that I want all groups to work on as Section 5 of the report. There will likely be three unique analysis items presented to you to work on as a group!
VI – Bibliography/References (submit as many pages as necessary to show me just how well-researched your project was – this does not count toward the number of pages submitted). Be sure to include ALL sources reviewed – even if not specifically cited or used in your report – this helps to show me how much research your group did on the project and company.
This project is due at the start of Week 10 – please see the syllabus for the exact date. We will discuss bonuses for turning in the project early as the term progresses. Because grades are due soon after your projects are submitted, no reports will be accepted after the due date. The grading matrix I will use to grade our reports is presented as a separate item.