This assignment is the third part of the course project. In this assignment, you will utilize the two stocks within the same industry that were selected in Module 03.
For the two firms, locate and download their latest annual report. Annual reports are typically found within the ‘Investor Relations’ section of a firm’s website.
Utilizing the data from each of the firm’s annual reports, calculate the following ratios:
- Liquidity Ratios – Current Ratio and Quick Ratio
- Activity Ratios – Inventory Turnover, Receivables Turnover, Days Sales Outstanding, Fixed Asset Turnover, and Total Asset Turnover
- Profitability Ratios – Gross Profit Margin, Operating Profit Margin, Net Profit Margin, Return on Assets, and Return on Equity
- Leverage Ratios – Debt/Net Worth and Debt Ratio
- Coverage Ratios – Times-Interest-Earned
You may utilize a Microsoft Excel document to calculate the ratios for each firm.
After calculating the ratios for each of the firms, present the results and provide a brief analysis on the financial health of each firm.
Your assignment should be a minimum of 3 written pages in addition to the ratio calculations and utilize APA formatting. In-text citations and a reference page should also be included.
If a firm offers both preferred stock and common stock, which would you rather own? Explain your reasoning.
Refer to the financial statements and notes of Tootsie Roll Industries Inc. Research and answer the following questions about Tootsie Roll Industries Inc. Present your findings using complete sentences and paragraph format.
- Which method of reporting cash flows from operations does the company use?
- Compare the net cash provided/used from operations to the net income amount on the income statement for all of the years presented in the annual report. Are these two numbers trending in the same direction? What is the largest adjustment item in the cash flows from operations?
- What has created the largest inflow and outflow of cash for investing activities? Did investing activities provide or use cash for each of the years presented?
- Did the financing activities provide or use cash in each of the years presented? What are the stock repurchase and dividend trends of your chosen company?
- Does the cash provided by operations cover the investing activities? Financing activities?
In this module, you will complete and submit your final project. You will perform a vertical and horizontal analysis and a ratio analysis. Then you will interpret these analyses for your audience, as well as researching competitor information. Lastly, you will use the information from your analysis and research this week as well as the information you gathered during the weekly Financial Accounting Projects to come to a decision about whether you would recommend investment in the company or not.
This week’s submission will include the following:
1. Workbook Spreadsheet from Module 02:
Page 1 – Complete the vertical and horizontal analysis calculations for the figures you collected in the Module 02 Financial Accounting Project.
Page 2 – Complete the financial ratios on the second page of the workbook you started in Module 02.
2. Research Paper:
Introduce your company to your audience. Share company history, values, goals, product lines, industry challenges, and any other interesting facts you find. Share what industry or industries your company operates in. Who are their major competitors?
Analyze the horizontal and vertical analysis you completed in the workbook. Choose three items from each analysis that you feel are important to highlight, positive or negative. Share what these items mean in terms of the company’s performance and your recommendation to invest or not to invest based on these figures.
Analyze the ratio analysis you completed in the workbook. Address each area of ratio analysis: liquidity, solvency, profitability, and market analysis. Interpret these ratios, and explain what they mean for your company, supporting your explanation with your calculations.
Locate or calculate at least 5 key ratios from your company’s main competitors. Compare your company to the competition and explain which company is performing better. Support your explanation with your calculations or research of the competition.
Advise your audience as to whether to invest in Tootsie Roll Industries Inc. Remember to support your recommendation with the figures calculated in your analysis. Your work should support your recommendation. Prepare a clear and concise professional business report. Use proper APA formatting, including a cover page, in-text citations, and a reference page. Your finished research paper should be 4-6 pages long.
Submit two files to the drop box:
- Research paper in Word.
- Company analysis in your Excel Workbook.
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