Outline for paper

Notes:

·  noabstract is needed for this paper

·  doublespacing is required.  The outline ispresented in single space for presentation purposes.

Important point: in the appendices you present financialdata and your ratio analysis calculations. Within the narrative sections, you are to analyze the data and describewhat the data is indicating.  What do thenumbers mean?  What are the trends andhow, based on the analysis, is the firm performing for its owners(stockholders) and within its industry. Use the data to prepare financial analysis.

Simply regurgitating the financial numbers in your narrativeis not analysis and is not sufficient to receive a passing grade for thisproject.   

Outline of paper

1.  Page 2:Description of corporation, major products, industries, markets served, and anysignificant developments over the past three years.

a.  Preparea concise summary of your company using declarative sentences.  The purpose of this section is to provide thereader with basic information on the company. Distilling your company down to one page of essential information shouldnot be easy.  Eliminate any extraneous“fluff” and avoid providing any interpretations or analysis.  Numerical analysis is not part of thissection.  It is the only part of thepaper that numerical analysis should not be included.  This is a factual section.  Assume the reader is a businessprofessional. 

2.  Page 3:Overall descriptive analysis of the financials for the last three years

a.  In thissection you can now present key financial highlights of your company.  At a minimum you should discuss sales and netincome performance and any significant financial factors related to yourcompany over the last three years.  Useconcise $ figures.  For example, use$7.8m or $7.8b instead of $7,800,000 or writing $7.8 million.  There is more key financial information than onecan easily fit into one page so you must determine what is most important forthe reader to understand the financial picture of the corporation as of themost recent financials.

b.  If yourfirm has two or more published quarterly statements since the last annualreport, be sure to prepare your analysis using the most recent quarterly data.

3.  Pages4-6: Descriptive analysis of the firms financials and ratio analysis

a.  In thissection the writer now gets into the financial details of the firm.  The narrative in this section is based on thefinancials of the firm (Appendix A) and the ratio analysis (Appendix B).

b.  Whatare the trends in your ratio analysis? What are the trends for the company as a whole and in comparison to keycompetitors and industry as a whole? 

c.  Ratios toinclude are Debt/Equity, ROI, ROE, ROA, current, and asset turnover.  Cash coverage ratio is suggested to help preparethe cash flow analysis section. 

Note:  P/E ratio and EPS are to beanalyzed in the stock price section.  Includethis as a separate analysis in Appendix C, not in Appendix B. 

4.  Page 7:evaluation of firm’s stock price history, earnings, and dividend policy for thelast three years

a.  A yearto year comparison of a firm’s stock price does not provide enough data tosufficiently analyze trends and changes in the firm’s stock price andsubsequently P/E ratio and EPS.

b.  Preparea 3-year quarterly analysis of the firm’s stock price and P/E ratio.  Present this data in Appendix C.

c.  Use asimilar format as your ratio analysis presented in Appendix B. 

d.  Moststock charts that you find online will show the stock price at any givendate.  You will need to compare the stockprice to quarterly earnings to determine the quarterly P/E needed for thissection.

5.  Page 8:Capital structure analysis and WACC

a.  Analyzethe firm’s ratio of debt to equity financing including trends in each. 

b.  Usingthe examples on the cost of capital, calculate your firm’s current WACC.

c.  Includeany additional supporting financial analysis for this section in AppendixC. 

6.  Page 9:Analysis of the firm’s cash flows for the last year (minimum) or up to three years.

a.  In thissection use the firm’s accounting statement of cash flows to calculate thefinancial cash flow from assets or freecash flow for the firm.

b.  Use theinformation in chapter 2 on cash flow to guide your analysis.

c.  Calculationspresented in Appendix C. 

d.  A1-year analysis for this section is sufficient.

7.  Page10: Descriptive summary

a.  In thissection use the analysis in all of the previous sections to write a 1-pagesummary of your company with respect to its financial health and performance.

b.  A briefmention of performance specific to its industry and the current economy is tobe included.

c.  Predictedfuture performance is to be informed by the past analysis. 

d.  This isnot meant to be a “buy, sell, or hold” decision analysis. 

e.  Whileyour opinion as a ‘business analyst’ is necessary, it should be validated andsupported by the financial analysis.  Inother words, use the numbers to tell the financial story.

8.  Page 11:Reference page (use a second page if needed and number accordingly)

9.  Pages12 and up: Appendices of supporting financial data and analysis

Heading structure:

In the body of your paper, between the cover page and thereference page, the following is the correct APA style format forheadings.  You should not need more than2 levels for this paper. 

Level  Format

Centered, Boldface, Uppercase and LowercaseHeading

Flush Left, Boldface, Uppercase andLowercase Heading

References

Correct APA references required.  Use this site to ensure you are using correctAPA format:

Purdue OWL (Online Writing Lab)

http://owl.english.purdue.edu/owl/resource/560/01/

AppendixA

In Appendix A, you should include either spreadsheets ofselected company financials from income statement, balance sheet, and statementof cash flows.  In this format, youdistill the income statement down to key accounts such as sales, cost of goodssold, gross margin, operating expenses, depreciation expenses, EBIT, interestexpense, taxes, net income, earnings and dividends per share.  In this format be sure to include any and allaccount values needed to calculate any and all of your selected financialratios.

 OR

Full financial statements inserted from pdfs or spreadsheetsfor the last three years. 

Depending on formatting, this may take multiple pages.  However, be cautious of ‘cutting and pasting’pages upon pages of financial statements. 

Regardless of your approach, the information in this appendixshould be consistent in format with the rest of this report.  Haphazard ‘cutting and pasting’ will reducethe overall professional appearance report scores. 

AppendixB

Using the financial data in Appendix A, prepare a financialstatement ratio analysis spreadsheet. 

The minimum is a three year analysis but a four or five yearanalysis is preferred and provides a more accurate trend analysis. 

Below is a sample format that you may use.  You may find other formats in your searchthat you may use.  Regardless, be sureyour format is concise, easy to understand, and includes the % change in eachratio year to year.  In the 4 yearanalysis below, the % change column for 2009 will use 2008 data to calculate.

At a minimum, choose three ratios for each of the fivecategories including the indicated ratios in section #3 above.  You may choose more, or have unequal numbersof ratios between the categories depending upon what you feel is important toanalyze and communicate. 

Sample ratio analysis template:

 

AppendixC

In this appendix include any additional financial data andcalculations that are needed to support your analysis but cannot fit into thepage limit restrictions. 

Include your stock P/E and EPS analysis in this section.

Leave a Reply

Your email address will not be published. Required fields are marked *