Calculate and submit the required financial ratios related to the Fortune 500 company you selected in Week 1; this will be based on the past three years of your firm’s balance sheets and income statements
Go to Morningstar.com to download a set of bonds issued by your chosen firm (8–10; if there are fewer than 10 issued, then all of the outstanding bonds). Based on the bonds’ current YTM, calculate the average current yield.
Through the use of a reliable source such as YahooFinance.com or ValueLine.com, determine your company’s beta. Also, find the beta for a competitor (a firm in the same line of business). Which of these is a riskier company based on this information? Why do you think the market deems this firm as riskier?
Using Finance.Yahoo.com, draw a graph of your firm’s stock price movement in the past three years.
Has the stock appreciated or depreciated?
What is the stock’s highest and lowest price (adjusted for any stock splits) during the past three years?
Does your stock pay dividends? If so, how has it changed during that period?
You now have most of the elements you need to start work on writing the Financial Analysis Report for your firm. It should be four to six pages typed, not including any appendix, exhibits or the reference pages. Remember, the objective of the report – based on your analysis – is to either recommend investing in the common stock of the firm or to advise against it. Your decision should be based on these factors: the past three years’ financial ratio analysis; the riskiness of the firm as shown by the firm’s beta; the past three years of stock price movements; the current stock price relative to the past three years’ highest and lowest prices; and a comparison of the current performance of a competitor or the industry on average