The completed report should include for LockheedMartin: An introduction to the company, including background information. A financial statement...
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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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