Introduction to the Finance Company Project

Introduction to the Finance Comp some(prenominal) Project Your team is required to curb the future melodic line and economic prospects of a major, publicly traded corporation using fiscal concepts and techniques as healthful as the concepts and techniques from other business beas. Make sure any statements you make in your analysis atomic number 18 consistent with the knowledge base of finance. Also please include your calculations (including spreadsheets), data sources (be specific, including date and scalawag number(s)), and assumptions (explain your rationale) in the appendices.While your analysis should be geared toward finance, nobody, of course, can make business decisions using solely finance techniques and concepts, so where applicable, incorporate techniques and analysis from other business fields. The following is a list of the minimum requirements for your project. extra credit will be given for creativity and analysis beyond the minimum requirement. If you have any questions, please e-mail them to your instructor. (1) EXECUTIVE SUMMARYProvide a one (1) page executive abbreviation which summarizes your findings and set ups a recommendation whether to buy or not to buy the stock and the debt securities of the community (two separate decisions). (2) gild INTRODUCTION Provide a one page (1) introduction to your fraternity including company history, outline, main products & services, unproblematic markets & customers, major competitors, industry overview, and other relevant information. (3) FINANCIAL ANALYSIS Conduct a two-year financial analysis of your company using financial ratios. Include a Du Pont analysis. You can refer to your Essentials of Business I Corporate Annual Report project for the appropriate ratios. ) explanation on the financial health of the company. disport look at ratio trends and compare to industry average. (4) WEIGHTED AVERAGE COST OF CAPTIAL (WACC) Estimate the components of the comprise of capital for your com pany using market data. a) For the cost of coarse stock, analyze using the dividend growth get and CAPM. To determine Beta, first use published sources. Next, calculate your own beta estimate using lapsing analysis with 52 weeks of daily data.See the textbooks website to download the regression tool rig from Chapter 6. If the published estimates and the results of your regression analysis differ, justify your final choice of Beta for the WACC determinations. b) Calculate the cost of prefer stock c) Calculate the cost of debt. Recall that you do NOT use the coupon rate, but kinda use the YTM for each bond issue. d) Determine the appropriate weights for each of the categories using market values. e) Calculate the companys WACC. f) In your opinion, has the company minimized its WACC?What could it differently? Recall that more than debt increases the risk of bankruptcy and more justness means the flotation costs of issuing stock. g) Provide reasons why or why not the current WAC C is appropriate for future use by the company. If not, explain which WACC should be used for future business decisions. (5) FUTURE CASH FLOWS Prepare a three (3) year forecast of estimated future funds flows for you company and give valid economic/business reasons for your projections. This means you will have a statement of additive cash flows.One year in the future, develop a future market value of equity and an estimated future price per share for the companys common stock. Write a 1 page analysis, which incorporates marketing, accounting, sales, production, management, technology, etc. information into your estimates of future cash flows. Please cite 2-3 media sources for this analysis. a) Perform a what-if analysis for your cash flows using at least one of the following sensitivity analysis, scenario analysis, or simulation analysis. Also, provide a written summation of your what-if analysis. ) Collect and evaluate information on inflation estimates and incorporate those est imates, as you see fit, into your cash flow estimates. c) Comment on how future cash flows maybe be affected by information contained in the footnotes to the financial statements. Footnotes are often more interesting than the rest of the financial statements and provide valuable information. d) Do a brief analysis of your competitors, the prospects of their future cash flows, and how that affects your companys cash flows. e) Conduct a post-audit of one (or more) of your companys major past projects and ncorporate this qualitatively into your estimates of future cash flows. (6) HISTORICAL STOCK PRICE reappraisal briefly the historical performance of the companys stock price. Explain if this affected your analysis. (7) SECURITY ANALYSTS REPORTS respect what securities analysts are saying about your company, and explain if you agree or disagree with their recommendations. What is the sentiment for your stock are there a lot of buy recommendations or are there a lot of tick off/sell recommendations? (8) DIVIDEND and CAPITAL STRUCTURE ) Analyze the current dividend policy of your company. If it doesnt pay a dividend, should it? b) Analyze the target capital complex body part of your company including bank loans, leases, and other financial securities issued in addition to preferred stock, common stock, and debt. Why do you look it maintains the capital structure it does? Do you think it is an optimal capital structure? If not, what do you think would be? Justify your answer. c) Does your company have a substantial degree of informational instability (assets which are hard for outsiders to value)?Do you think this affects the capital structure of your company? (9) CORPORATE GOVERNANCE Comment on the corporate governance of your company. Is management doing a good job? Does management hold shares in the company? What is their percentage of equity ownership? How much stock do institutions own? Do you think these factors affect your companys performance? (10) ME RGER and INTERNATIONAL STRATEGY Describe and evaluate the merger and acquisition strategy and the international expansion strategy for your company.