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Has the company and/or industry been affected by the current state of the economy?

by | Nov 11, 2022 | Finance, Accounting and Banking | 0 comments

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Prepare a comprehensive financial analysis of a public company using the topics covered during the course. The analysis is based on the latest Securities and Exchange Commission (the “SEC”) Annual Report on Form 10-K.

Company: Macys https://www.macysinc.com/investors/sec-filings/annual-reports/content/0001564590-22-011726/0001564590-22-011726.pdf

Project Requirements:

Title Page (APA Format)

Summary (2-3 pages)

The ability to present a concise review of the issues is essential in business. Consequently, this section is a key component of your project. Complete all the other sections of the report prior to the summary. Include the key issues from each of the sections listed below.

Make sure to include the following in your summary:

(1) Indicate whether you would invest in your company, identifying three to five significant points that justify your conclusion.
(2) Indicate whether you would loan money to your company, identifying three to five significant points that justify your conclusion.

Business Overview (1-2 pages)

Prepare a summary of the company and its business environment, including its industry, its products, and its competitors. Discuss any government regulatory issues pertaining to the company.

You can use various resources for this section including the company website and the annual report.

Economic Analysis (1/2 – 1 page)

Prepare a summary of the economic climate current facing the company and its industry. Discuss how the climate affects the financial stability of the company. Has the company and/or industry been affected by the current state of the economy? How has it affected their current and projected economic developments?

Financial Statement Analysis (4 – 5 pages in addition to spreadsheets)

(1) Prepare common-size balance sheets and common–size income statements for the past three years. The statements should be prepared in an Excel spreadsheet and included as an exhibit.

(2) Calculate the following ratios for the past two years:

Liquidity:
Current
Quick

Activity:
Accounts receivable turnover
Inventory turnover
Payables turnover
Fixed asset turnover
Total asset turnover

Leverage:
Debt to equity
Times interest earned

Profitability:
Gross profit margin
Operating profit margin
Net profit margin
Return on total assets
Return on equity

Market:
Price to earnings.

You may not be able to calculate all of the ratios listed above depending on your company. You may also choose to include other ratios to aid in your analysis.

Please compute the ratios in an Excel spreadsheet (showing your calculations) and include it as an exhibit.

(3) Obtain industry average information and include this data on your ratio spreadsheet.

(4) Use the data above to prepare a financial statement analysis.

Balance Sheet – comment on trends in the growth of assets, liabilities, and stockholders’ equity and overall financial risk.

Income Statement – comment on trends in the growth of revenues, expenses, and net income, and overall profitability.

Statement of Cash Flows – comment on the trends in the growth of operating, investing, and financial activities, and the overall cash position.

Ratios – discuss what the ratios tell you about your company with regard to profitability, efficiency, liquidity, and solvency.

Review of Auditors’ Opinion (1 – 2 paragraphs)
Review and summarize the nature and implication of the audit opinion.

Stock Market Activity (1/2 – 1 page)
Review and discuss the trading price ranges of your stock for the prior two years, the exchange the stock is traded on, and the dividend policy and history.
Analysis Paper:
The completed paper should be approximately 8 pages and must include all sections described in the order listed above. It must be prepared using APA Format. Suggested lengths have been listed next to the title of the section.

The goal of the project is the development of a financial analysis and you will need to reference parts of the annual report. However, copying large sections of the annual report or just retyping the disclosures or sections of the company website is not considered an appropriate analysis. You will receive zero points for any section that has just been copied from another source. Your assignment must be prepared using both Word and Excel.

 

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