Fin 3316 Assignment #6 – Spring 2013 – Due 4/25? 9am
You should work in pairs on this project with the classmate who also has a firm in your firm’s industry.
Excel workbooks must be submitted to the class’ TRACS site by the due date and time. Files should be named according to the following convention: NameAssignment#.xls. For example, if Kurt Cobain and Dave Grohl are submitting Assignment #2, it should be titled “CobainGrohlAssignment2.xlsx.” ONLY SUBMIT FOR BOTH PEOPLE.
Part I. Create a common size income statement and a common size balance sheet for your firms.
Part II. For the company you chose, calculate all ratios in the five categories we discussed in class for each of the last five years. * If you have been following in class, you have already done this, so only some cleanup of presentation may be required. * Your company may not have some ratios – ie, no inventory turnover if no inventory * You should also calculate both the internal and sustainable growth rates. * In the market value ratios section, also use the most relevant growth rate to calculate your company’s PEG ratio.
Part III. Repeat Parts I and II for three of the company’s closest competitors. You are allowed to get this info from the classmates who chose those companies.
For each ratio, compute the “industry average” by calculating the average of that ratio for the three competitors. It should look something like this:
Part IV. In Microsoft Word, set up a report of what you have found and what your conclusions are concerning your company. * In what ways do your firm’s common size balance sheet and income statement differ significantly from its competitors? Are these differences favorable or unfavorable? Why? * This report should contain your company’s ratios juxtaposed with the industry average ratios you calculated. For each of the five categories (liquidity, debt, etc), explain whether your firm’s ratios look favorable or not compared to the industry average. You don’t have to