Simple Valuation Using DDM - Strategy & Ratios - Financial Accounting Assignment Help

Assignment Task :

Tasks:
1. Download financial data for the company in question.
a. Download the annual income statements, balance sheets, and cash flow statements for the last three fiscal years (usually 2016-2018, but some companies finishing accounting year sometime during 2019, might have data for 2019 already available). To download data, you can use either:

• Morningstar. Enter each company’s stock symbol and then go to “financials” and for each financial statement click on its name followed by an arrow to see more data. Export the statements to Excel by clicking the Export button.
• Company’s website (each one is different so it’s your task to figure it out).

b. Bear in mind that Morningstar data is super easy to download but positions are also quite detailed (e.g., “Cash, Cash Equivalents and Short-Term Investments” has been broken down into multiple sub-positions). For simplicity of further calculations, use the aggregated positions (e.g., to calculate ROE, use the Total
Equity)
c. Find historical stock prices for each firm from Yahoo! Finance. Enter your stock symbol, click “Historical Prices” in the left column, and enter the proper date range to cover the last day of the month corresponding to the date of each financial statement. Use the closing stock prices (not the adjusted close). To calculate the firm’s market capitalization at each date, we multiply the number of shares outstanding (see “Basic Weighted Shares Outstanding” on the income statement) by the firm’s historical stock price.
2. Ratios: Assess company’s financial standing in a two-step analysis.
a. Individual ratios: Choose two ratios from each “group” of ratios (e.g. ROE from the operating return ratios), calculate it for the last 3 years and analyze/interpret each of them. Calculate at least the P/E and EV/EBITDA from the family of valuation ratios. Interpret the ratios you calculated.
b. Benchmarking: Choose a company that is comparable to your company (a direct competitor) and use their financial data to calculate the same financial ratios only for the most recent year (2018 or 2019). Compare all recent (2018 or 2019) ratios that you calculated for your company with the competitor & interpret. Are there red flags? etc.
3. Strategy & Financing: analyze three separate areas (do not copy information from the website etc, rather analyze, choose what is relevant for your report and draw
a. Strategy: provide a brief analysis of the company’s strategy (what it does— products, services, what it plans to do—grow current business, diversify its business, etc, how it intends to bring this strategy to life)
b. Current Financing: provide a brief analysis of the company’s recent sources of financing (your starting point is the recent balance sheet; more information can be obtained from the notes to financial statements). Hereto, check if the company is using corporate bonds and if so, how are they rated and what it means.
c. Financing the growth: Then, look for information or provide your own conclusions based on historical trends, how the company is likely to grow in the oncoming years and how it will finance its growth in the oncoming years.

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