Outline for paper
Notes:
· no
abstract is needed for this paper
· double
spacing is required. The outline is
presented in single space for presentation purposes.
Important point: in the appendices you present financial
data and your ratio analysis calculations.
Within the narrative sections, you are to analyze the data and describe
what the data is indicating. What do the
numbers mean? What are the trends and
how, based on the analysis, is the firm performing for its owners
(stockholders) and within its industry.
Use the data to prepare financial analysis.
Simply regurgitating the financial numbers in your narrative
is not analysis and is not sufficient to receive a passing grade for this
project.
Outline of paper
1. Page 2:
Description of corporation, major products, industries, markets served, and any
significant developments over the past three years.
a. Prepare
a concise summary of your company using declarative sentences. The purpose of this section is to provide the
reader with basic information on the company.
Distilling your company down to one page of essential information should
not be easy. Eliminate any extraneous
“fluff” and avoid providing any interpretations or analysis. Numerical analysis is not part of this
section. It is the only part of the
paper that numerical analysis should not be included. This is a factual section. Assume the reader is a business
professional.
2. Page 3:
Overall descriptive analysis of the financials for the last three years
a. In this
section you can now present key financial highlights of your company. At a minimum you should discuss sales and net
income performance and any significant financial factors related to your
company over the last three years. Use
concise $ figures. For example, use
$7.8m or $7.8b instead of $7,800,000 or writing $7.8 million. There is more key financial information than one
can easily fit into one page so you must determine what is most important for
the reader to understand the financial picture of the corporation as of the
most recent financials.
b. If your
firm has two or more published quarterly statements since the last annual
report, be sure to prepare your analysis using the most recent quarterly data.
3. Pages
4-6: Descriptive analysis of the firms financials and ratio analysis
a. In this
section the writer now gets into the financial details of the firm. The narrative in this section is based on the
financials of the firm (Appendix A) and the ratio analysis (Appendix B).
b. What
are the trends in your ratio analysis?
What are the trends for the company as a whole and in comparison to key
competitors and industry as a whole?
c. Ratios to
include are Debt/Equity, ROI, ROE, ROA, current, and asset turnover. Cash coverage ratio is suggested to help prepare
the cash flow analysis section.
Note: P/E ratio and EPS are to be
analyzed in the stock price section. Include
this as a separate analysis in Appendix C, not in Appendix B.
4. Page 7:
evaluation of firm’s stock price history, earnings, and dividend policy for the
last three years
a. A year
to year comparison of a firm’s stock price does not provide enough data to
sufficiently analyze trends and changes in the firm’s stock price and
subsequently P/E ratio and EPS.
b. Prepare
a 3-year quarterly analysis of the firm’s stock price and P/E ratio. Present this data in Appendix C.
c. Use a
similar format as your ratio analysis presented in Appendix B.
d. Most
stock charts that you find online will show the stock price at any given
date. You will need to compare the stock
price to quarterly earnings to determine the quarterly P/E needed for this
section.
5. Page 8:
Capital structure analysis and WACC
a. Analyze
the firm’s ratio of debt to equity financing including trends in each.
b. Using
the examples on the cost of capital, calculate your firm’s current WACC.
c. Include
any additional supporting financial analysis for this section in Appendix
C.
6. Page 9:
Analysis of the firm’s cash flows for the last year (minimum) or up to three years.
a. In this
section use the firm’s accounting statement of cash flows to calculate the
financial cash flow from assets or free
cash flow for the firm.
b. Use the
information in chapter 2 on cash flow to guide your analysis.
c. Calculations
presented in Appendix C.
d. A
1-year analysis for this section is sufficient.
7. Page
10: Descriptive summary
a. In this
section use the analysis in all of the previous sections to write a 1-page
summary of your company with respect to its financial health and performance.
b. A brief
mention of performance specific to its industry and the current economy is to
be included.
c. Predicted
future performance is to be informed by the past analysis.
d. This is
not meant to be a “buy, sell, or hold” decision analysis.
e. While
your opinion as a ‘business analyst’ is necessary, it should be validated and
supported by the financial analysis. In
other words, use the numbers to tell the financial story.
8. Page 11:
Reference page (use a second page if needed and number accordingly)
9. Pages
12 and up: Appendices of supporting financial data and analysis
Heading structure:
In the body of your paper, between the cover page and the
reference page, the following is the correct APA style format for
headings. You should not need more than
2 levels for this paper.
Level Format
1 Centered, Boldface, Uppercase and Lowercase
Heading
2 Flush Left, Boldface, Uppercase and
Lowercase Heading
References
Correct APA references required. Use this site to ensure you are using correct
APA format:
Purdue OWL (Online Writing Lab)
http://owl.english.purdue.edu/owl/resource/560/01/
Appendix
A
In Appendix A, you should include either spreadsheets of
selected company financials from income statement, balance sheet, and statement
of cash flows. In this format, you
distill the income statement down to key accounts such as sales, cost of goods
sold, gross margin, operating expenses, depreciation expenses, EBIT, interest
expense, taxes, net income, earnings and dividends per share. In this format be sure to include any and all
account values needed to calculate any and all of your selected financial
ratios.
OR
Full financial statements inserted from pdfs or spreadsheets
for the last three years.
Depending on formatting, this may take multiple pages. However, be cautious of ‘cutting and pasting’
pages upon pages of financial statements.
Regardless of your approach, the information in this appendix
should be consistent in format with the rest of this report. Haphazard ‘cutting and pasting’ will reduce
the overall professional appearance report scores.
Appendix
B
Using the financial data in Appendix A, prepare a financial
statement ratio analysis spreadsheet.
The minimum is a three year analysis but a four or five year
analysis is preferred and provides a more accurate trend analysis.
Below is a sample format that you may use. You may find other formats in your search
that you may use. Regardless, be sure
your format is concise, easy to understand, and includes the % change in each
ratio year to year. In the 4 year
analysis below, the % change column for 2009 will use 2008 data to calculate.
At a minimum, choose three ratios for each of the five
categories including the indicated ratios in section #3 above. You may choose more, or have unequal numbers
of ratios between the categories depending upon what you feel is important to
analyze and communicate.
Sample ratio analysis template:
![]()
Appendix
C
In this appendix include any additional financial data and
calculations that are needed to support your analysis but cannot fit into the
page limit restrictions.
Include your stock P/E and EPS analysis in this section.
