50 Points – 6.25% of Final Grade
Project Summary:
You receive $10,000 from winning the lottery and decide to invest it into a public company on the stock exchange. You select one company you are interested in and do a ratio analysis to determine if you should actually invest in the stock. You will complete 8 financial ratios (show your work) and write a brief two-page double spaced paper describing why/why not you would invest in the company due to the ratio analysis.
Steps to Complete the Project-
- Selecting a Company
- Each student will select a different public company. Send Professor and she will let you know which company you will use for your project. Most large companies are public and financial statements will be available. You can search on this website https://www.sec.gov/edgar/searchedgar/companysearch.html to determine if a company is public. You will also use this website to find the company’s financial statements.
- Accessing Financial Statements and Completing Financial Ratios
- You will use the website listed above to find your company’s financial statements. Type your company name into the search bar. Several links to financial documents should appear on your screen. You should select a document labeled either 10-Q (quarterly financial statement) or 10-K (annual financial statement). Click on the word Document next to the financial statement you are selecting. Then click on the hyperlink for the financial statement. This opens the financial statements where you will find the numbers needed for your financial ratios. There are screenshots below showing all of these steps as well.
- Ratios to be completed: Profit Margin, Return on Total Assets, Return on Common Stockholders’ Equity, Debt to Equity Ratio, Current Ratio, Basic Earnings Per Share, Price-Earnings Ratio and Dividend Yield. You must show your work for all of the ratios. You can complete the ratios by hand or in Microsoft Excel/Word. You need to show what numbers you are using to calculate the ratio and the ending amount for the ratio. You can find the ratios in Chapter 17 in your textbook.
- Writing Your Decision Based on Your Financial Analysis
- You should write a two-page double-spaced paper outlining the results of your ratio analysis and whether you would choose to invest in the company after what you have learned. You do not need to copy in any of the calculations or formulas from your calculation page. Instead, you should talk generally about what the results mean and how that affects your decision to invest or not.
Grading Information
The entire project is worth 50 points. Each ratio calculation will be worth 3 points for a total of 24 points. The remaining 26 points of the assignment will be on your financial analysis decision. You will not be graded on your actual decision to invest or not since, we all have different risk tolerances. Your grade will be based upon your ratio analysis and how that affected your decision. You will not be graded directly on grammar, but this assignment should be completed in full sentences and paragraphs. Your finished assignment should be approximately two pages double space not counting any pages for the financial ratio calculations.
Screenshots for Finding Financial Statements
Click on the most recent 10-k or 10-q report. See left middle of screenshot below.
