Research Project Assignment: Verizon Communications
This project is closely aligned with the Course Outcomes and Finance Program Objectives. Completion of this project can be used as part of a portfolio to show potential employers the student is skilled at performing company valuations and financial statement analysis and can be included on the student's resume.
Ratio Analysis
OBJECTIVE
You are to assume you have been recently hired by The Company and have been assigned to a team that reports to the CEO of THE COMPANY (SELECTED BY INSTRUCTOR). The head of your team is the CFO who is concerned about THE COMPANY's current financial performance and comparison against major competitors in the industry and the impact that may have on the firm's stock price. The CFO would like your team to provide insights that will help them to project future financial performance. Specifically, the primary question to answer is: will THE COMPANY be financially viable over the next two to three years, and which steps should be done to improve its financial stability?
THE COMPANY that is to be analyzed for this project is to be a company selected by instructor.
Alternatively, you can request approval of another publicly traded company. This request must be submitted before the end of the first week of the course. The request must include
• identification of the company by ticker symbol and name
• a reasonable and appropriate explanation of why you want to examine the alternative company
• the source of the analyst's report that will be used in the analysis (which must be submitted to me)
• acknowledgement by you that all of the specific elements of the assignment (see below) will be prepared by you and included in the final research project report
Company's websites
YOUR SPECIFIC ASSIGNMENT
Using the information from the websites the students will develop evaluation of the financial performance for THE COMPANY (SELECTED BY INSTRUCTOR). (The evaluation portion will total 85% of the assignment grade)
-1- Background and Industry (one short paragraph).
-2- Common size analysis. You can find the common size financial statements for the company for the last 3-5 years on morningstar website.Type the stock symbol in the Quoteswindow to get into the company's page. Scroll down and click on All Financial Data. Switch View from "$" to "%".
Create a table that contains the most significant common size financial performance results for the last 3-5 years for THE COMPANY and for the last year for the major competitor. Present the table with this information in your report.
Write about 1-2 pages of the analysis of the financial conditions, its stability, and trends.
-3- Trend analysis
Analyze the financial trends over 5 years of Revenue, net income, and any other of the most significantfinancial performance results of your choice. To present your findings, you will use the table(s) and/or graphs. You can use the bar graphs provided by www.morningstar.com. Or create your own ones.
Write about 1-2 pages of the report of the results that you received. What important information does this analysis provide?
-4- Financial ratio analysis.
In this part of the project you will complete ratio analysis of THE COMPANY. Please remember that you are the financial analyst of THE COMPANY and should prepare the report to be read by the chairman (CEO) of THE COMPANY. The ratio analysis should be completed from the point of view of THE COMPANY's the management.
The chairman of THE COMPANY is especially concerned about the following groups of ratios:
• Liquidity (current ratio, quick ratio, and net working capital-to-sales ratio)
• Operating performance ratio (Days of Sales in Inventory, Days of Sales in Receivables), turnovers
• Profitability ratios (Gross Profit Margin, Operating Profit Margin, Net Profit Margin)
• Return on Investment ratios: (Basic Earning Power ratio, ROA, ROE)
You can find financial ratios for the company for the last 3-5 years in the Internet or calculate them. If you use published ratios you must indicate that and cite their source.
a) Present the ratios as the table(s) in your project. Create graphs for some ratios on your choice over three years to show trends.
b) Write 2 pages (or more) of analysis of the ratio results that you found. In your analysis you should answer the following questions:
• How liquid is the company?
• Is management generating a substantial profit on the company's assets?
• If the management of the company would like to improve the company's financial performance, what should the management of THE COMPANY do?
-5- Evaluate Return on Equity for the company for the last three years using the DuPont analysis.
1. Find ROE, Net profit margin (listed as net margin), asset turnover, financial leverage for the last three yearsfor your company. You also may use debt/equity ratio in your analysis. Present the ratios as the table(s) in your project.
2. Find ROE, Net profit margin (listed as net margin), asset turnover, financial leverage for the last year for its major peer competitor. You also may use debt/equity ratio of peer competitor in your analysis. Present the ratios as the table(s) in your project.
3. Has the company's ROE changed over the last three years? What was the main factor that influenced this change?
4. Compare the ratios of you company to the peer competitor. If the management of the company would like to improve their return on equity, what should the management of the company do?
Write about 1 page of analysis to answer the questions (c) and (d).
-6- Develop a specific recommendation, with supporting rationale, as to whether the assigned company's recent trends and results in financial performance is of sufficient financial strength, will THE COMPANY be financially sustainable over the next two to three years, and which steps should be done to improve its financial stability? (about 1 page).
-7- Reflection - the student should write a paragraph in their own words reflecting on specifically what they learned from the assignment and how they think they could apply what they learned in the workplace.
PRESENTATION OF PAPER AND WRITING:
-Organization, Format and Presentation of Paper including the Title page, Introduction, Body, and Summary. Each section of the paper must begin with sub-headings. Use the sub-headings included in the assignment.
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.