Assignment -
1. Go to the Yahoo! Finance Web site.
2. Review the overview/main pages for the four public companies whose names are: Exxon Mobil Corp. (XOM)
Merck & Co. Inc. (MRK)
Target (TGT)
Verizon Communications Inc. (VZ)
3. Research the four firms using either Key Statistics or Financials from the overview/main pages for the stocks on Yahoo! Finance Web site. Compute and compare the following financial ratios for the four firms for their most recent fiscal years:
Note: In Key Statistics under the heading "Valuation Measures" there are numbers for both Trailing P/E ratios and Forward P/E ratios. Most commonly, in calculating both ratios the corporation's current stock price is divided by its earnings per share (EPS). The difference is that Trailing P/E ratios use reported EPS for the past year, specifically the past/trailing 12 months (ttm), and Forward P/E ratios use estimated EPS for the upcoming 4 quarters. Also, in interpreting some of the other statistics provided, please note that "yoy" is an acronym for "year-on-year" and "mrq" is an acronym for "most recent quarter."
- Current Ratio (X)
- Sales/Total Assets (percent) or Total asset turnover
- Times interest earned (X)
- Total Debt/Equity (percent)
- Net Income / Net Sales (percent) or Return on Sales (ROS)
- Net Income / Total Assets (percent) or Return on Assets (ROA)
- Net Income / Common Equity (percent) or Return on Equity (ROE)
- P/E or P/E Ratio (X)
4. Write a 1-2 page paper responding to the following questions based on your research:
1. Compare the 8 financial ratios listed above for the four companies. It is recommended that you use a spreadsheet to demonstrate your comparison. Insert the table into your Word document and respond to the following questions:
- How would you rank the four firms in terms of financial performance?
- Why might their financial performances differ?
- What economic or market factors might account for big differences in P/E ratios?
2. Select ONE of the companies and examine the trend in the ratios* for the past three years. Respond to the following question:
Is the firm's performance improving, declining, stable, or is something strange going on? (Please note that you should use these ratios and their trends to assist you in responding to the action items below.) *An alternative data source is available via Franklin's online library and its Standard & Poor's database as follows:
1. Access Mergent Online
2. Under the "Find It" tab, select Databases from the drop-down menu.
3. Click Database by Name, then search for Standard & Poor's.
4. Click the Standard & Poor's database.
5. Under "Simple Search" select "Company Profile" under "Resources" and then under "Search By " choose "Ticker," and then enter the company's ticker symbol.
6. After you have made all your selections, click the orange-right-headed arrow button.
7. As the result of your search, the "Business Summary" page for the firm should open.
8. More financial data and ratios are available on the left:
1. Select a .pdf of "Stock Reports"
2. Select "Compustat Excel Analytics" and on the page that opens select "Annual Ratio Report" under "Reports"
Continue your research on the company you selected in the previous action item.
At the Yahoo! Finance main page for your company select Competitors under the heading "Company." In the table entitled "Direct Competitor Comparison" you'll see several key financial line items for the firm along with those for select competitors and the industry as a whole.
Click on the ticker symbol at the top of each column to see more data on each public competitor and the industry as a whole.
Write a 1-2 page analysis of the performance of the company you selected above. Your analysis is to include the information you gained from your research (above) and your responses to the following:
1. Who are the firm's competitors? Does the selection of competitors make sense to you?
How is your selected company performing against its competition? (Don't just say better or worse on particular ratios - try to think of and offer reasons why).