- The basic requirement is to undertake a general financial analysis, comparing financial position and performance over the two most recent financial years, of an ASX listed company.
Please Note. The company I have chosen to analyse is NIKE company. I have also attached a copy of the most recent annual report.
Assignment Guidelines: Steps to do.
Executive Summary: In an executive summary of not more than 300 words (not counted in word limit) – state
Why you are doing what you are doing?
What are the things you did?
How did you do it? and
What are your main findings?
By the time you answer these four questions sequentially, your executive summary will be complete.
Introduction: 200 words: Company of choice, what will this report tell the audience? And what are the sections in the report – like section 2 does this, section 3 does that etc.
Financial Analysis 1200 words – do a horizontal analysis, a vertical analysis and a ratio analysis – all of this in tables (so not included in word count). Write a 600 word summary of the financial analysis.
Vertical analysis for 2018: Income statement and balance sheet
Horizontal analysis of 2018, compared to 2017: Income statement and balance sheet
Ratio Analysis:
Liquidity (current and quick),
efficiency (days receivables, days inventory, days payable),
profitability (ROA, ROE, GP margin, NP margin),
leverage (debt equity, times interest earned, debt to assets)
performance ratios (EPS, PE ratio – for market price take 2018 closing price)
External Environment analysis: Talk (say 400 words) about news regarding the company, I mean things/events that can affect the share price in your view. Can these happen again in?
Recommendations and Conclusions: in 400 words, say what you set about doing, what did you do and mainly what you found under financial analysis, and external environment analysis. Put all the individual section conclusions together and paint a picture about the company. State why someone should or should not invest in company.
References: Not in word count, 10 – 12 references. Annual report for data and text books for definitions of ratios etc. Remainder references for external analysis etc.
Please note:
- The detailed calculation of relevant ratios and other useful calculations should be included, as one appendix, prepared using Excel. A template is attached for this. Please calculate everything in the template. The different ratios are at the bottom of the template.
The written report should:
- Explain what is revealed by the ratios and other calculations, in the context of the
company’s profitability, asset efficiency, liquidity, capital structure, and market
performance.
- In particular, any important changes over the two financial years should be
identified, discussed and, where possible, explained.
- Provide an overall assessment of whether the company, over the recent financial
year, has been better than the previous financial year, in the perspective of existing equity investors (shareholders).
In preparing this report, you should:
- analyse the financial statements of the business;
- identify key ratios and apply ratio analysis;
- argue the case of why the organisation may or may not succeed in the future and
what the business should be doing to help it succeed;
- consider the impact of the political and competitive environment on the business;
- provide a recommendation, that is, would you invest in this company after your own
analysis or under what circumstances would you buy/save the business?
Points to consider
You are encouraged to seek and use additional public information about the company from sources, other than the annual report (for example, the internet, journal articles, newspapers, and business magazines).
However, it is NOT envisaged that you will be engaged in extensive research of this nature and it is expected that the annual report will be the primary resource relied upon, in completing the assignment.
You are asked NOT to try and make direct personal contact with the company or its officers (for example by telephone, fax, letter or email), in an attempt to gather further information.
It is important to note that you must NOT reproduce company promotional material from the annual report or company website and represent it as critical analysis.
You will be provided relevant share price data by your facilitator for the company so that investment ratios (such as a price earnings ratio) can be calculated.
You may find it useful to consult accounting references, in addition to the prescribed text, which deals with the analysis and interpretation of company financial reports.
It is essential that you use the appropriate APA 6th referencing style, for citing and referencing research.
