Ratio Analysis Project

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Question Description

hi

This project is an exercise in the fundamental analysis of a firm using ratio analysis. You are expected to complete calculations, answer questions addressing the outcomes of your calculations, and give a written analysis of your assessment of the assigned company’s performance across several areas where information is based on data found in the firm’s financial statements. Your written report will be submitted as the Project Report for this ratio analysis project.

Each student will have three companies: your main assigned company (i.e., the main co.), the secondary company (i.e., the peer co.), and a third internationally headquartered peer company (i.e., the intl co.). The primary focus of your report is your main company. This may differ from student to student. There will be penalties for analyses that do not match your assignment.

Thank you.

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Ratio Analysis Project This project is an exercise in the fundamental analysis of a firm using ratio analysis. You are expected to complete calculations, answer questions addressing the outcomes of your calculations, and give a written analysis of your assessment of the assigned company’s performance across several areas where information is based on data found in the firm’s financial statements. Your written report will be submitted as the Project Report for this ratio analysis project. Each student will have three companies: your main assigned company (i.e., the main co.), the secondary company (i.e., the peer co.), and a third internationally headquartered peer company (i.e., the intl co.). The primary focus of your report is your main company. This may differ from student to student. There will be penalties for analyses that do not match your assignment. Required: I am requiring you to use Bloomberg terminals for specific data items (noted in specific instructions). For the financial statements, you may use either Yahoo! Finance or Bloomberg terminals, but must specify in your written report which you used. Optional: You may use additional sources as you see fit to make your report more unique, interesting, or relevant. These must be clearly included in a Sources list at the end of your project report. Assignment Specifics: Do not answer these as if they are homework questions. They are only numbered to show you the points available and to give you guidance to meet expected analysis requirements. Information relevant to the questions should be incorporated within the written report. 1 1. (150 pts) Using the 2017 financial statements and the 2015 financial statements for your main company, investigate the financial condition of the firm in terms of the five common financial ratio areas (see Table 3.5 in text). Include a table or graph that shows how the company has performed in these areas over this period. In which ratio area(s), if any, is the firm doing well? Explain. (Trend analysis) 2. (150 pts) Using the 2017 financial statements for your main company, your peer company, and your international company. Compare the financial condition of these firms. Clearly indicate any areas where your main company has outperformed its peers. What considerations, if any, would you make in comparing the US-headquartered main company with the international peer? (Peer analysis) 3. (200 pts) Using the 2017 and 2015 financial statements for your main company, compute the three components of the Du Pont Identity (as shown in equation 3.23 in section 3.3 of the text). Based on your computations, discuss the impact of each component on the company’s 2017 return on equity. For example, which factor do you see as having the greatest influence in the change in return on equity over this two-year period? Using the Bloomberg terminals, examine operating margin, asset turnover, and the leverage ratio. Without doing any calculations (just looking over the patterns in these items), what patterns do you observe in these three over the longer period displayed in Bloomberg? Is it consistent with what your earlier Du Pont analysis showed? Discuss. (Du Pont analysis) 4. (100 pts) While financial statement information is commonly used to compute ratios that allow us to assess performance, this information is also used in modeling the probability of bankruptcy or financial distress. One common model that includes financial statement data is the Altman Z score. Publicly traded companies with a value less than 2.675 are considered in financial distress and, if less than 1.81, considered to be facing an increased likelihood of bankruptcy within one year. Using the Bloomberg terminals, find the Altman Z score for your main company. What is the Altman Z score for the company? Is the company in financial distress or facing a high probability of bankruptcy based on the score? (Bankruptcy/distress analysis) 5. (200 pts) Upon completion of all the above analyses, write up a project report that includes your answers to the above questions as well as any other information that you believe is interesting or helpful in providing your assessment of the main’s company’s financial 2 condition. This paper should be written with grammatical quality expected of at least a second-year undergraduate student. The points here may also include organization and completeness of the assignment including a list of sources used. (Written project report) 6. (200 points) Relative rating of your project report will place you in one of four buckets: top, middle1, middle2, or bottom. Top bucket papers get from 151 to 200 points. Middle1 papers get from 101 to 150 points. Middle2 papers get from 51 to 100 points. Bottom papers get from 0 to 50 points. (Relative valuation) Bloomberg pointers: 1. Mr. Micheni is available (at his convenience, not yours) and has been granted permission to help you very liberally in guiding you to finding the right data in all financial sources or in giving advice. However, he does not work for you so please be courteous of his time and efforts to guide you. He may recommend workshops that can help you with tables or charts, rather than give individual tutorials. 2. Companies can be found by typing the name of the company in the Bloomberg browser line and selecting the appropriate name from the list. For international companies, select the company name with US Equity indicated after it’s ticker symbol. 3. Financial statements can be found in Bloomberg using the FA function and going to the tabs marked B/S (for balance sheet) and I/S (for income statement). The DuPont Analysis in Bloomberg is also under this same function. Go to the tab for Ratios where you will see an additional tab for DuPont Analysis. 4. The Altman Z score can be found in Bloomberg by using the AZS function. Additional Instructions: • Consistent with the university academic integrity policy, your submission MUST be your original work. If any evidence of plagiarism is found, the project grade will be zero. • There is no page limit for the Project Report. The length of the report depends on the work needed in completing each of the components of the project. The written information must be complete enough to demonstrate that the assignment specifics have been met. • Show your works/calculation where the task is to compute. You can do all the calculations in Excel if you want. If you use Excel, you must attach the excel file with the main project word/pdf document. • One additional purpose of this project is to introduce you to additional financial resources and to train you on finding and analyzing data. This means I am here to help. Do not wait until the last minute to get started. I am available to answer questions, but not major questions on the day of the submission deadline. Although I will not review (i.e., grade) your paper before the submission, you can get guidance on the quality during office hours or if there is additional time at the end of class. 3 Grading rubric: See assignment specifics for the grading of Item 6 on the assignment. Items 1 – 4 Analysis Items Item 5 Writing Criteria Grammar & reading quality; Originality; Organization & Completeness (not Unacceptable to low quality Questions to ask (Earns less than 60% of yourself points available) Have I answered all the Most of the calculations are questions? incorrect or missing; Most Have I addressed any of the analysis (i.e., bolded content? discussion or interpretation) is incorrect or missing; Most of the information is provided in an unclear, disorganized manner; No obvious personal insight to purpose of the analysis. Did I use the grammar and spell check functions of the software? Did I mechanically answer questions, or have I thought about why this analysis, ratio, or evidence is important? Have I read the paper aloud? Obvious grammatical errors that spellcheck or a reading would have eliminated; Only exactly what has been asked for (or even less) given; Unreasonable or missing introduction; Unreasonable or missing conclusion/summary; Additional sources referred to, but all citations missing or incomplete 4 Acceptable (Earns 60 – 79% of points available) Many calculations are correct and included; A good deal of the analysis (i.e., discussion or interpretation) is correct and complete; Most of the information is provided in a very clear and organized manner; Limited personal insight has been included regarding the purpose of the analysis. Limited grammatical errors; Limited originality; Introduction present, but incomplete or other problem; Conclusion/summary present, but incomplete or other problem; Additional sources referred to, but some citations missing or incomplete Very good to high quality (earns 80 – 100% of points available) All calculations are correct and included; The analysis (i.e., discussion or interpretation) is correct and complete; The information is provided in a very clear and organized manner; Personal insight has been included regarding the purpose of the analysis. Fewer than 3 grammatical errors; Some insightful comments or evaluations of outcomes; Clear introduction; Well thought out summary; All additional sources cited elsewhere considered) Do I have a reasonable introduction (indicating purpose/type of report)? Do I have a reasonable conclusion (indicating an overall summary of assessment of main company)? ‘Reasonable’ indicates evidence has been or will be presented within the project paper to support my conclusion or meet my introduction. Have I made optimal use of any section titles? 5 Powered by Clearbit Chevron Corporation (NYS: CVX) Exchange rate used is that of the Year End reported date As Reported Annual Balance Sheet Report Date Currency Audit Status 12/31/201 7 USD Not Qualified 12/31/201 6 USD Not Qualified Consolidated Yes Yes Scale Millions Millions Cash & cash equivalents 4813 6988 Time deposits Marketable securities 9 13 Accounts & notes receivable, gross 15843 14465 Allowance for doubtful accounts 490 373 Accounts & notes receivable, net 15353 14092 Crude oil & petroleum products 3142 2720 Chemicals 476 455 Materials, supplies & other inventories 1967 2244 Total inventories 5585 5419 Prepaid expenses & other current assets 2800 3107 Total current assets 28560 29619 Long-term receivables, net 2849 2485 Investments & advances 32497 30250 Property, plant & equipment, at cost 344485 336077 Less accumulated depreciation, depletion166773 & amortization 153891 Property, plant & equipment, net 177712 182186 Deferred charges & other assets 7017 6838 Goodwill 4531 4581 Assets held for sale 640 4119 Total assets 253806 260078 Commercial paper 5379 10410 Notes payable to banks & others with originating -terms of one year or 50 less Current maturities of long-term debt 6720 6253 Current maturities of long-term capital lease 15 14 Redeemable long-term obligations - long-term 3078 debt 3113 Redeemable long-term obligations - capital leaseSubtotal short-term debt 15192 19840 Reclassified to long-term debt -10000 -9000 Short-term debt 5192 10840 Accounts payable 14565 13986 12/31/201 5 USD Not Qualified Yes Millions 11022 310 13173 313 12860 3535 490 2309 6334 4821 35347 2412 27110 340277 151881 188396 6801 4588 1449 266103 8252 20 1487 17 3152 12928 -8000 4928 13516 Accrued liabilities 5267 Federal & other taxes on income 1600 Other taxes payable 1113 Total current liabilities 27737 Notes 25500 Floating rate notes 4200 Debentures 424 Amortizing bank loans 72 Medium-term notes 38 Total including debt due within one year 30234 Less: debt due within one year 6722 Reclassified from short-term debt 10000 Less: unamortized debt discount -35 Total long-term debt, net of current portion 33477 Capital lease obligations 94 Deferred credits & other noncurrent obligations 21106 Noncurrent deferred income taxes 14652 Reserves for employee benefit plans 7421 Total liabilities 104487 Common stock 1832 Capital in excess of par value 16848 Retained earnings 174106 Currency translation adjustment -105 Unrealized net holding gain (loss) on securities -5 Derivatives Net derivatives gain (loss) on hedge transactions -2 Defined benefit plans -3477 Accumulated other comprehensive income -3589 (loss) Deferred compensation & benefit plan trust -240 Treasury stock, at cost 40833 Total Chevron Corporation stockholders' equity 148124 Noncontrolling interests 1195 Total equity 149319 4882 1050 1027 31785 26790 5100 384 178 38 32490 6256 9000 -41 35193 93 21553 17516 7216 113356 1832 16595 173046 -162 -2 -2 -3677 -3843 -240 41834 145556 1166 146722 4833 2069 1118 26464 21799 4700 424 110 38 27071 1487 8000 33584 80 23465 20689 7935 112217 1832 16330 181578 -140 -29 -2 -4120 -4291 -240 42493 152716 1170 153886 12/31/201 4 USD Not Qualified 12/31/201 3 USD Not Qualified Yes Millions 12785 8 422 16795 59 16736 3854 467 2184 6505 5776 42232 2817 26912 327289 144116 183173 6299 4593 266026 8506 104 22 3152 6 11790 -8000 3790 19000 Yes Millions 16245 8 263 21684 62 21622 3879 491 2010 6380 5732 50250 2833 25502 296433 131604 164829 5120 4639 580 253753 5130 49 34 3152 9 8374 -8000 374 22815 5328 2575 1233 31926 13350 2150 422 38 15960 8000 23960 68 23549 21920 8412 109835 1832 16041 184987 -96 -8 -2 -4753 -4859 -240 42733 155028 1163 156191 5402 3092 1335 33018 11500 422 38 11960 8000 19960 97 22982 21301 5968 103326 1832 15713 173677 -3579 -240 38290 149113 1314 150427 Powered by Clearbit Sasol Ltd. (NYS: SSL) Due to changes with International Financial Reporting Standards (IFRS), recent financials statement presentations have been adjusted to meet this standard. Please note the original historical presentations have remained in the original format Exchange rate used is that of the Year End reported date As Reported Annual Balance Sheet Report Date 06/30/201 8 ZAR Not Qualified 06/30/201 7 ZAR Not Qualified 06/30/201 6 ZAR Not Qualified Consolidated Yes Scale Millions Property, plant & equipment, cost 328336 Accumulated depreciation & impairment -160879 Property, plant & equipment 167457 Assets under construction 165361 Goodwill Other intangible assets Goodwill Software Patents & trademarks Emmission rights Other intangible assets Goodwill & other intangible assets, net 2687 Equity method investments 10991 Other long-term investments 951 Investments in securities Investments in equity accounted joint ventures Investments in associates Post-retirement benefit assets 1498 Long-term receivables & prepaid expenses 4646 Long-term financial assets 291 Deferred tax assets 4096 Total non-current assets 357978 Yes Millions 298758 -139985 158773 130734 2361 11813 987 622 2613 3082 310985 Yes Millions 291650 -136596 155054 104011 469 1258 127 132 694 2680 13118 943 614 2772 3389 282581 Currency Audit Status Assets in disposal groups held for sale 113 Other short-term assets 85 Inventories 29364 Tax receivable 3302 Trade receivables, gross 23742 Other receivables 3003 Related party receivables Related party receivables - equity accounted investments 102 Impairment of trade receivables -199 Trade & other eceivables 26648 Duties recoverable from customers 600 Prepaid expenses 829 Value added tax 1652 Trade & other receivables 29729 Trade receivables Other receivables & prepaid expenses Short-term financial assets 1536 Cash restricted for use 1980 Cash 15148 Total current assets 81257 Total assets 439235 Share capital 15775 Share repurchase programme Share-based payment reserve -4021 Investment fair value reserve 43 Foreign currency translation reserve 28500 Cash flow hedge accounting reserve 180 Sasol Inzalo share transaction Remeasurements on post-retirement obligations -1844 Retained earnings 184352 Total shareholders' equity 222985 Non-controlling interests 5623 Total equity 228608 Long-term debt 89411 Finance leases 7280 Long-term provisions 15160 Post-employment benefit obligation 11900 Long-term deferred income 879 Long-term financial liabilities 133 Deferred tax liabilities 25908 Total non-current liabilities 150671 Liabilities in disposal groups held for sale 36 Short-term debt 14709 Short-term provisions 3508 Tax payable 2318 Trade payables 13510 Capital projects related payables 9780 Accrued expenses 3062 Related third parties payables 33 Equity accounted investments 133 Trade payables 26518 Other payables 6188 216 25374 2538 20982 3759 92 -158 24675 412 1133 1421 27641 2739 1803 27643 87954 398939 29282 -2641 -12525 33 23285 -647 -1790 176714 211711 5523 217234 74312 16648 11069 910 733 25860 129532 9718 3007 1903 11941 11883 2220 18 69 26131 6068 1064 23798 2487 20752 4262 1009 -183 25840 554 702 1330 28426 42 2331 49985 108133 390714 29282 -2641 -13582 26 33316 -1788 -2533 164917 206997 5421 212418 78015 18810 12703 631 2844 23691 136694 2000 4246 878 12178 9482 1899 51 82 23692 6054 Duties payable to revenue authorities Value added tax Trade payables & accrued expenses Trade & other payables Short-term of deferred income Short-term financial liabilities Other payables Bank overdraft Total current liabilities Total equity & liabilities 4267 177 37150 220 1926 89 59956 439235 4004 197 36400 282 740 123 52173 398939 3264 307 33317 170 855 136 41602 390714 06/30/201 5 ZAR Not Qualified 06/30/201 4 ZAR Not Qualified Yes Millions 243467 -107645 135822 61977 590 1703 826 10028 1842 590 1791 1752 216921 Yes Millions 209936 -98487 111449 51320 644 1882 876 8280 1877 487 2922 13 3143 182893 89 23141 1563 21672 469 -478 21663 372 1828 23863 4547 124 5022 48329 106678 323599 29228 -2641 9651 42 18289 -7 -22054 -1976 161078 191610 4873 196483 39269 13431 10071 425 8 22570 85774 15 3331 6322 905 12888 5344 1901 74 71 20278 - 1419 26758 550 22929 208 -500 22637 372 2214 25223 4601 420 1245 37155 97371 280264 29084 -2641 9150 28 14704 -7 -22054 -1413 144126 170977 3792 174769 23419 15232 9294 293 17 18246 66501 57 2637 6644 1097 14248 2883 1752 15 52 18950 - 3636 312 24226 397 198 5629 319 41342 323599 2679 698 22327 101 446 5306 379 38994 280264 Powered by Clearbit Exxon Mobil Corp (NYS: XOM) Exchange rate used is that of the Year End reported date As Reported Annual Balance Sheet Report Date Currency Audit Status Consolidated Scale 12/31/201 7 USD Not Qualified 12/31/201 6 USD Not Qualified Yes Yes Thousan Thousan ds ds Cash & cash equivalents 3177000 3657000 Cash & cash equivalents - restricted Trade notes & accounts receivable, gross 21346000 16108000 Less: reserves - trade notes & accounts receivable 72000 75000 Trade notes & accounts receivable, net21274000 16033000 Other notes & accounts receivable, gross4862000 5988000 Less: reserves - other notes & accounts receivable 539000 627000 Other notes & accounts receivable, net 4323000 5361000 Notes & accounts receivable, less estimated 25597000 doubtful amounts21394000 Crude oil, products & merchandise 12871000 10877000 Materials & supplies 4121000 4203000 Other current assets 1368000 1285000 Total current assets 47134000 41416000 Companies carried at equity in underlying 24354000 assets - investments20810000 Companies carried at equity in underlying9112000 assets - advances 9443000 Total equity company investments & advances 33466000 30253000 Companies carried at cost or less & stock174000 investments carried at 154000 fair value Long-term receivables & miscellaneous investments 5520000 at cost or less, 4695000 net of reserves Investments, advances & long-term receivables 39160000 35102000 Upstream 3.72E+08 3.55E+08 Downstream 50343000 47915000 Chemical 37966000 34098000 Other property, plant & equipment 16972000 16637000 Property, plant & equipment, at cost 4.77E+08 4.54E+08 Less: accumulated depreciation & depletion 2.25E+08 2.1E+08 Property, plant & equipment, net 2.53E+08 2.44E+08 Other assets, including intangibles, net 9767000 9572000 Total assets 3.49E+08 3.3E+08 Bank loans 115000 143000 Commercial paper 13049000 10727000 12/31/201 5 USD Not Qualified Yes Th ...
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