Question

# The completed report should include for LockheedMartin:

· An introduction to the company,

including background information.

· A financial statement review.

· Pro Forma financial statements (Balance Sheet and Income Statement) for the next two fiscal years, assuming a 10% growth rate in sales and Cost of Goods Sold (COGS) for each of the next two years.

· A ratio analysis for the last fiscal year using at least two ratios from each of the following categories:

o Liquidity

o Financial leverage

o Asset management

o Profitability

o Market value

· Calculate Return on Equity (ROE) using the DuPont system.

· Assess management performance by calculating Economic Value Added (EVA).

· Evaluate the soundness of the company's financial policies (e.g. capital structure, debt, leverage, dividend policy, etc.) based on the material covered during class.

· A synopsis of your findings, including your recommendations and rationale for whether or not to purchase stock from this company.

Requirements:

· Financial Statements (notice the "s") review

· Proforma: (**add an extra column to justify your entry **(same, or 10% increase, or paid off, etc.) **- calculate using Excel)**

Do exactly like figure 5.10, and 5.12. (notice the extra column titled "Explanation")

· Ratio analysis 10 ratios - (**calculate using Excel, You must show your calculations.)**

· ROE analysis. (Excel to do the calculations (please show the calculation))

· EVA: calculate **WACC** to be able to calculate EVA)

**Steps to calculate EVA**:

Assume that the book depreciation and economic depreciation are the same.

· Calculate Net Operating Profits After Tax (NOPAT)

· Calculate Invested Capital

That is to calculate:

· Total debt

· Adjusted Equity = shareholders' equity + Net Deferred tax + Non-controlling interest + other accumulated comprehensive income (loss) {the last item is negative, but should be added in this equation}

· Calculate Invested capital =item a above + item b above

· Calculate market value of equity (be sure to add the date)

· Calculate CAPM (Make a valid assumption for the cost of debt using actual data)

· Calculate effective debt interest rate = Interest Expenses / total debt

· Calculate WACC

· Calculate EVA and explain its importance

· The final step I need help with is to analyze the result.

· Company evaluation (At least do capital structure, debt, leverage, and the dividend policy)

· Summary and rational to purchase the stock

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