### Principles of finance

Final

Project Part II

Part II

Overview

For this

part of the final project

, you will be given a scenario in which you are asked to illust

rate your financial

computation

and analysis skills.

This

part of the

assessment addresses the following course outcomes:

Compute financial ratios, time value, variables, and returns using industry standard tools for optimizing financial success

Analyze corporate financial

data for multiple companies in evaluating past and future financial performances

Part II

Prompt

For this section of your employment exam, you will select two companies. The first company needs to come from your TDAU think

orswim portfolio.

The second

need

s to be a competitor of the first company from the same industry. You will be responsible for collecting, synthesizing, and m

aking decisions regarding both

companies. After evaluating these companies’ financial data, you will then decide which company’s st

ock is the better investment.

This section of your employment examination must be submitted in two parts. Part A will contain the workbooks that house all

of your quantitative data and

formulas, along with any of the information that is relevant for your

chosen companies. Part B will contain your answers to the questions asked below,

composed in a cohesive manner. If you are referring to data that is found within the workbooks in Part A, be sure to include

a citation

—

f

or example

,

“rate of

return is 3.570

USD

(E64, WB2),” where

E64 is the cell that the calculation took place in and WB2 is designating “workbook 2.” This ensures that your instructor

can quickly and accurately check data entry, formula use, and financial calculations.

Your

submission

must add

ress the following

critical elements

:

I.

Preparing

the Workbooks

A.

Download

the annual income statements, balance sheets, and cash flow statements for the

last three completed fiscal years for your chosen

companies. This information must be included in your final submission.

B.

Prepare a

worksheet

for each of the companies to display their financial data for the last three fiscal years. Ensure your data is acc

urate and

organized. Include these worksheets as a workbook in your final submission.

C.

Find historical

stock prices

for both companies and add this information to the respective spreadsheets. Consider the appropriate date range

you should use.

II.

Three

–

Y

ear

Returns

A.

What is the three

–

year return on the stock price of the

first company (Company A)

? How is the stock performing? Ensure that you use the

appropriate formula in your spreadsheets to calculate the three

–

year return on the given company’s stock price.

B.

What is the three

–

year return on the stock price of the

second company (Company B)

? How is this stock performing? Ensure that you use the

appropriate formula in your spreadsheets to calculate the three

–

year return on your chosen company’s sto

ck price.

C.

How

do these two stocks

compare

in terms of three

–

year returns? What does this indi

cate about these two companies?

III.

Financial

Calculations

A.

Using the appropriate spreadsheets, which are to be included in the workbooks, calculate the

price

–

to

–

earnings

ratio

for

the last three fiscal

years of the given and your chosen companies. Be sure that you are entering

and using the correct formula.

B.

Using the appropriate spreadsheets, which are to be included in the workbooks, calculate the

debt

–

to

–

equity ratios

for the last

three fiscal years

of the given and your chosen companies. Be sure that you are entering

and using the correct formula.

C.

Using the appropriate spreadsheets, which are to be included in the workbooks, calculate the

return

–

on

–

equity ratios

for the last three

fiscal

years of the given and your chosen companies. Be sure that you are entering

and using the correct formula.

D.

Using the appropriate spreadsheets, which are to be included in the workbooks, calculate the

earnings per share

for the last three fiscal yea

rs of

the given and your chosen companies. Be sure that you are entering

and using the correct formula.

E.

Using the appropriate spreadsheets, which are to be included in the workbooks, calculate the

profit margins

for the last three fiscal years of the

given and your chosen companies. Be sure that you are entering

and using the correct formula.

F.

Using the appropriate spreadsheets, which are to be included in the workbooks, calculate the

free cash flows

for the last

three fiscal years of the

given and your chosen companies. Be sure that you are entering

and using the correct formula.

IV.

Industry Averages

A.

Obtain current

industry averages

of three of the

financial calculations

above for both companies and add this

information to your spreadsheet

for comparison. Ensure the accuracy and organization of your data.

B.

In this context, how is each company’s

financial health

? How do these two companies compare to one another? Consider the appropr

iate date

range you should us

e.

V.

Performance

O

ver Time

A.

Analyze the performance of the

Company A

over time. What financial strengths and weaknesses does this company have? Consider addressing

the free cash flows and

ratios you calculated earlier.

B.

Analyze the performance of your

Company

B

over time. What financial strengths and weaknesses does this company have? Consider addressing

the free cash flows and

ratios you calculated earlier.

C.

Analyze how the data

differ

between these two companies. Why do you think this is? Consider addressing t

he free cash flows and ratios you

calculated earlier.

VI.

Investment

A.

Are the companies considered

growth or value

companies? Why?

B.

Which company’s

stock

is the better investment? Consider su

pporting your answer with data.