Completing all of the financials will be too much you

Info icon This preview shows pages 3–5. Sign up to view the full content.

View Full Document Right Arrow Icon
the above listed. Completing all of the financials will be too much. You also need to have information on its competitors and future goals. When comparing your company with competitors or industry, various financial ratios should be used to help understand the strengths and weaknesses of the company such as: --- liquidity ratios --- asset management ratios --- leverage ratios --- profitability ratios --- market value ratios Please pick and choose at least one from each category for your company. This information should help you and the reader understand the company's competitive position. The company's annual report (10-K) is one source of this information. You can find the latest reports at Edgar Database Online or on various financial websites. The historical financial information should be integrated with the non- financial information about the company. This is important in understanding the company's business. You should attach a copy of the balance sheet and income statement for the recent four or five years to justify the later use of numbers. Additional sources of company information are the news media (websites such as Morningstar.com, money.msn.com, finance.yahoo.com). It is ok to use published values from these websites such as various ratios, beta risk and forecasted revenue or earnings growth rate directly in your analysis above as the information is readily available and most of the time reliable from these sources. The main body of the whole project report needs to be the valuation. In Part 1, only the first method (price/earnings multiple and/or price/sales multiple) is due. It is the simplest method of all three. Refer to the introduction on page 1 for specifics of this method. Project Part 2 The second valuation method is the dividend valuation model . You can assume a constant growth in the dividends or you can have a more complex setup (non-constant growth model) as in Chapter 7 as long as you can justify your assumptions . Very often the dividend growth rate estimated may be higher than the required return on equity so
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon