Financial Statement Analysis (50 points)
Purpose of this Assignment is to analyze some important financial ratios for the company based on its past performance in order to make a reasonable assessment about its future prospect. Also this analysis sets a base on your investment decision in the future assignments.
A. You should comment on the major changes you observe over five (5) years of balance sheets, income statements, and cash-flow statements. If you have explanations to support these major changes, provide them.
B. Using the same five (5) year statements, you should provide a complete DuPont Analysis. (as enclosed in the Textbook) Out of DuPont model, you should comment on the following aspects of your company:
Operating efficiency (total assets
Operating profitability (profit margin, earning per share)
Financial risk (leverage ratio)
Growth potential (retention rate, return on equity, and sustainable growth)
All ratios should be analyzed regarding their trend over five (5) years as well as compared to the industry’s standard. You may use ratios of your competitor or the leading company in the industry as the proxy for the industry’s standard.
C. The conclusion should report what you expect the company to do for the next year in order to maintain its leading position, or improve some aspects that seem below the industry average.
D. Using financial statements, you should calculate following market ratios for your firm for last five years.
P/Cash Flow ratio
Do not forget to cite your sources where it is necessary.
Do not forget to provide in appendices:
• five (5) year of balance sheets, income statements neatly
• the values for all ratios and industry’s values for comparison (tables and graphs)