FINANCIAL RESEARCH PROJECT Worth 25% of the course grade

FINANCIAL RESEARCH PROJECT

Worth 25% of the course grade.

Due date is at the end of Week 7.  See the course schedule for specific dates.  The project is designed to be completed individually.  You will work by yourself on this project.

Objective

The specific objective of this graded written research exercise is to prepare an "executive level financial report" to the Chief Financial Officer (CFO) of a mythical company in which you are employed as a financial analyst.  This report will pertain to the financial evaluation of a real, publicly-traded, company. It will require independent research (web-based or library), careful financial analysis, and the proper application of key financial theories and formulas.

The company that is to be analyzed for this project is Verizon.

Situation

You are a financial analyst with the mythical High Technology Corporation ("HTC"). HTC is an established manufacturer of a line of electronic components, which services an international market. HTC is currently a new fully-integrated wireless communication service for world-wide use.  A competitive technical and economic product evaluation has determined that Verizon (a real publicly-traded company) is the best potential candidate for a long-term commitment.  Verizon is offering a competitively favorable deal.  However, based on some serious general concerns about the fallout of companies in the industry in general, the CEO has asked your CFO to conduct a financial analysis of Verizon to determine if it is prudent to commit to this company's communication system.  The cost of cutting over to the new communications system is significant and any interruption in support during the next few years would adversely affect HTC's performance and profit. Specifically, the question is: will Verizon be financially viable over the next two to three years?

Your Specific Assignment    

Your specific assignment is to research, analyze, and prepare a report for the CFO on the actual financial performance of Verizon.  In addition to reviewing the traditional financial performance indicators, you are also to review the company’s past and current stock performance. Your report includes three parts:

 (1)        An evaluation of Verizon's financial performance for the last year. DuPont analysis and analysis of significant financial performance results are required for the last three years. (See detailed description below) 

(2)        An evaluation of Verizon's stock performance for the last one year.

(3)        Finally, a specific recommendation, with supporting rationale, as to whether or not Verizon's recent trend in financial and stock performance is of sufficient financial strength to warrant entering into a long-term commitment.

To assist you in your task, the CFO has provided the following general guidance. Since it is recognized that the industry is undergoing a major contraction, it is very important to comparatively evaluate Verizon's financial and stock performance trends against its Industry.

Some Resources for your research:

Company Information:

• Company Website – look under Investor relations for the Annual reports and the SEC filings
• Yahoo Finance
• MSN Money

Industry Information

• Morningstar
• Valueline
• BizStats

You may wish to include all necessary and relevant financial performance and stock information, trends, and projections in supporting your recommendation. These factors may include, financial ratio trends and industry comparatives, capital spending, stock growth, Beta values, credit rating service valuations, bond rating valuations, and management and investment reports - when these documents are available.

REPORT REQUIREMENTS (This portion is worth 85% of the total assignment grade) 

Using the following information, you must develop an evaluation of Verizon's financial performance.

• Annual Balance Sheets for the last three years.
• The Income Statements for the last three years.
• Annual reports, 10K or 10Q
• Industry norms
• Analysts’ reports on performance
• Management reports or press releases                                 

Report layout and expectations

1. Background and Industry (one short paragraph). 
2. Select of most significant financial performance results for the company: Compare Revenue, net income, working capital, total assets for the last three years and other results of your choice of the company against the industry or main competitor. Present the table with this information in your report. Write about 1 page of the analysis of these financial performance results. (15% of the project grade)
3. Find several financial ratios for the company and its major competitor in the Internet. Write about 1-2 pages of analysis of the ratio results you received. (15% of the project grade). Compare the ratio results against the industry or main competitor.
4. Evaluate Return on Equity for the company and a major competitor: Using the information from the Income statements and the Balance sheets, calculate the company’s return on equity using the DuPont technique for the company for the most recent three years. Show your calculations! Write about 1 page of analysis of your results and compare them with a competitor. In your analysis be sure to address how this ratio could be improved. (10% of the project grade).
5. Evaluate other areas of financial analysis: capital spending, stock growth, Beta values, credit rating service valuations (if possible), bond rating valuations (if possible), etc. Make an overall conclusion about financial performance of the company during the last years. Compare the results that you received against the industry or main competitor.  Summarize the results that you received in 1 page. What are the firm’s financial strengths and weaknesses? (10% of the project grade)
6. Collect and evaluate the data about stock performance of the assigned company's for the last one year. Compare the results that you received against the industry or main competitor.   Write about 1-2 pages of analysis of the ratio results you received. (20% of the project grade).
7. Develop a specific recommendation, with supporting rationale, as to whether or not the assigned company's recent trend in financial and stock performance is of sufficient financial strength to warrant entering into a long-term commitment (about 1 page) (15% of the project grade)

Presentation and Written Communication (15%) of the project grade):

The paper should be written in APA style Research Paper format. Your final report is to be an executive-level financial report, directed to the CFO. This report should be about 8 double-spaced typewritten pages (without tables and graphs). Include suitable comparative, quantitative and qualitative analyses and conclude with a specific and supported recommendation on the projected financial viability of Verizon for the next several years.

Organization, Format and Presentation of Paper including the Title page, Introduction, Body, and Summary (4% of the project grade)

Use of Tables, Figures and Other Graphics to Summarize and Support Analysis Presented in the Paper (3% of the project grade)

Logical and Smooth Flowing Transitions and Relationships Among Sections of the Written Report (3% of the project grade)

Research Sources and Significance of Research Information and Data, Use of APA Citation Methodology (5% of the project grade)

Essential research data, financial calculations and other documentation as necessary to support your recommendation should be referred to in summary form in your report and attached in detail as enclosures.  All major sources should be referenced.  There is no set limit to the size of the enclosures, but it is recommended that only essential enclosures be attached. You should use references and bibliography to identify any remaining supporting documents you wish to include.

In accordance with the UMUC Academic Policy, notes taken for papers and research projects should accurately record sources of material to be cited, appropriately quoted, paraphrased or summarized, and papers and research projects should acknowledge these sources in the appropriate places in the text of the paper as well as in a reference list at the end of the paper, in accordance with accepted citation practices. No more than 30% of the text of the project should be made up of quotes.

Submission

The project must be posted to the LEO Student Assignments as an Attachments. You are limited to a maximum of two files in doc, docx., xls. xlsx., or rtf. formats. OTHER FORMATS ARE NOT ACCEPTABLE, will not be reviewed or graded. Please note that hand-written and scanned works, pdf. files, jpg. files, as well as files posted in google drive, will not be accepted or graded.