Steps in preparation of financial analysis report:
Select a publicly held company
Select a benchmark firm to compare your company against. The benchmark firm is typically the largest competitor.
Obtain the firm's balance sheet, income statement, and statement of cash flows for the past 5 years. Download or read the firm's annual report.
Go to: https://www.sec.gov/edgar/searchedgar/webusers.htm
Research EDGAR's database for additional SEC report filings: 8-k, 10-Q.
The following table is the type of Excel or Word table that should be used to gather and report your ratio and financial performance data. Note the 5 financial diagnostic categories that should be used in your analysis.
Use 2-3 ratios per diagnostic category. Place your ratio calculations in the table for your selected companies-primary company and benchmark competitor. Using 5 diagnostic categories, and 3 ratios to assess each category, results in 15 ratio measures per company that will be compared side by side.
To validate your research, 5 years of data are required.
Financial analysis report template follows.
Financial diagnostic categories Chosen company vs. Benchmark competitor
_ _ _
1.) Liquidity of short-term assets
_ _ _
2.) Long-term debt-paying ability
_ _ _
3.) Profitability
_ _ _
4.) Asset utilization/ management efficiency
_ _ _
5.) Market measures
_ _ _
Financial Analysis Summary. Based on your research and ratio analyses and calculations, comment on the following questions:
-How well has management added value?
-Is the company's financial performance improving?
-Would you invest your financial capital in the selected firm as a shareholder? Why or why not?
-Would you invest your human and intellectual capital in the firm as an employee? Why or why not?