Comparative Financial Statement Analysis.
Rationale for Assignment:
To supplement Chapter 16 of the course you will research and obtain necessary financial information from annual reports and prepare a financial analysis comparing two publicly traded firms within the same industry
The objective is for you to gain experience in using financial statements. Applying financial and accounting tools and theory to assess the performance of a firm.
After identifying 2 competing public companies you will do research to obtain the necessary financial statements (2 years) on each firm.
Most important is your “personal assessment” of what you found / learned about the two companies.
Required preparation and analysis:
A. Common Size Statements and Analysis – Vertical and Horizontal Analysis
For both firms you need to identify the significant changes, similarities or differences and what may or not be significant and why. Be sure to use the Notes to the Financial Statements they have the details behind the numbers in the Financial Statements
B. Ratio Analysis and Analysis – Commentary based upon Liquidity, Solvency, Efficiency, Profitability, Market, Financial Leverage, and Coverage.
Your written analysis of the two firms from your work above.
C. A DuPont analysis that compares the 3 DuPont identities (ratios) as a trend or as a comparison to your competitor – industry. This will be reviewed in class.
D. Which firm do you believe is in stronger financial condition and why Submit a final copy of your spreadsheets and Analysis.
