Profile a Company to Invest and Comparison Company This is a graded project and you will be graded based on a self-evaluation, feedback from your fellow classmates and instructor evaluation.
This project is worth 75 points (7.5% of your overall course grade).
To get started, decide on a company to invest in and a company in the same industry to compare against your investment company. For instance, if you were to invest in Home Depot, Lowes would be a good comparison company.
Profile a Company to Invest and Comparison Company Step by Step Guidelines
Step 1: Create your company thread in this discussion area. List your primary company and comparison company in the subject link (Example: Home Depot vs. Lowes). You will reply to this thread for all future posts. The first person who records the companies on the board is the individual that can use the companies for their project. No two students can use the same companies for this project.
Step 2: In the text box record your first and last name.
Step 3: You are investing $100,000.00 into your primary company stock. Go to http://finance.yahoo.com/ (Links to an external site.)Links to an external site.. In the Quote Lookup, enter your proposed company. You will find the current trading market price in bold print under the company name on the next screen. Now calculate how many whole shares of stock you can buy with this $100,000.00 based on the current market price per share today. You can’t buy partial shares, so round down, not up. For instance, if your price per share is $45.25 per share, you would take the $100,000 initial investment / $45.25 per share = 2209.944751381215. Note you can’t by the partial shares and you can’t spend over $100,000, so the number of shares you will purchase is 2209. You will be spending just a little less than the $100,000 you were given to invest. Note, you will only be buying shares in your primary investment company. You will not buy shares in the comparison company.
Step 4: Then complete Questions 1-10 for each of your companies. Use the company’s Annual Report from their website or the company’s Annual 10-K found on the company’s website or EDGAR from the NC library.
Profile a Company to Invest and Comparison Company Essay Paper Reference Sources
DO NOT USE ANY OTHER GOOGLED RESOURCE OR YAHOO FINANCE. This information is similar to using Wikipedia. The information may or may not be accurate. You MUST use the consolidated financial statements, not the financial highlights. Use the Table of Contents or search features in the document to find these statements. Be sure to identify your primary company information from your comparison company information.
1) Name of the corporation.
2) State of incorporation (Hint: This is located on the front page of the 10-K Annual Report).
3) Nature of its operations (Manufacturing, Merchandising, or Service). What is the company’s primary focus. Some companies may have more than one area of focus. You need to decide their primary focus.
4) Total assets for the most recently posted balance sheet. *Be sure to identify the Annual Report year. You must use the same year for both companies. List if the reported number is in millions (MIL) or thousands. DO NOT add zeros to your number. This will complicate calculations later.
5) Total revenues for the most recently posted income statement. *Be sure to identify the Annual Report year. You must use the same year for both companies. List if the reported number is in millions (MIL) or thousands. DO NOT add zeros to your number. This will complicate calculations later.
6) Net income for the most recently posted income statement.*Be sure to identify the Annual Report year. You must use the same year for both companies. List if the reported number is in millions (MIL) or thousands. DO NOT add zeros to your number. This will complicate calculations later.
7) Classes of stock outstanding. (Common Stock, Preferred Stock or both?) If there is only one type of stock listed, it is common stock.
8) Market price of the stock outstanding (What is the amount that the current stock is trading for?). This is the amount you found on Yahoo Finance or you can find it on the company’s website. Note, the price will be changing during class as the stock market will be open.
9) High and low price of the stock for the past year. (This information can be found on Yahoo Finance.)
10) Dividends paid for each share of stock during the past year. (Hint: Review the Statement of Cash Flows Financing Section.)
PART II – FINANCIAL STATEMENT ANALYSIS (Refer to Chapter 14, Page 688)
For both your primary and comparison company – calculate and/or analyze 3 profitability ratios and 3 solvency/liquidity ratios. Discuss why you chose the ratios you used.
Part III – Wrap Up
Sell your primary company and determine the profit you made off of your investement. Record your profit or loss in your wrap up post. Then write a brief summary about your investment. Address the following: Would you have invested in your primary company again? Why or why not? Would you have invested in your comparison company instead? Why or why not?