Assignment
In this assignment, we want to develop abilities to analyze financial statements, stock and bond valuation, and WACC. In order to handle this assignment, youand your team members are supposed to select a public firm and its major competitor and then collect relevant information fromyahoofinance or other source (e.g. website of MorningStar) for your analyses.
Using collected information, you need to do:
1. Financial statement analysis
1) Balance sheet and income statement during the last three years.
2) Ratio analysis during the last three years.
3) Free cash flow of your firm and its competitor during the last two years.
4) Does your firm look good?
2. Bond valuation (Morningstar.com)
1) Find and summarize your firm's and its competitor's bond information - YTM, Maturity, Yield Curve, etc.
2) How do you think financial status of your firm?
3. Stock valuation
1) After downloading daily stock prices of your firm, its competitor, and S&P 500 during the last one year, then estimate correlations among them.
2) Calculate betasof your firm and its competitor.
3) Calculate an expected return of your firm and its competitor, using CAPM (Capital Asset Pricing Model).
4) How do you think about current stock prices of your firm and its competitor? Are they undervalued or overvalued?