1. select a company from those highlighted in the “SIC Portfolio Nov2017.pdf” fi
ID: 2789823 • Letter: 1
Question
1. select a company from those highlighted in the “SIC Portfolio Nov2017.pdf” file posted on Canvas. (I choose FEDEX)
2. Go to http://finance.yahoo.com/.
3. Enter your company’s ticker symbol in the search box and click Search.
4. Locate your company’s most recent stock price at the top of the screen.
5. Under Financials, click on Income Statement and then Annual.
6. Print the annual income statements for the last three years.
7. Under Financials, click on Balance Sheet and then Annual.
8. Print the fiscal year end balance sheets for the last three years. You are going to Attach the printed Annual Income Statement and Annual Balance Sheet pages to the analysis report and submit the package to the instructor at the beginning of the class when it is due.
Based on the financial statements collected, you are going to conduct a simple ratioanalysis by comparing this company’s key financial ratios with industry benchmarks. Industry benchmark financial ratios can be found at the FACTIVA database, which is accessible through SU’s Smith Library. We will focus on the most recent fiscal year available (i.e., year 2016 or 2017).
The analysis involves two steps.
1. Complete the worksheet attached to this document on the next page. To find industry benchmark ratios, please access the Factiva database via Smith Library website, hover your cursor over “Companies/Markets,” then click on “Industry.” Select the industry that applies. Find industry benchmark ratios from the “Industry Averages and Ratios” section. All the financial ratios for the company you’ve picked need to be calculated.
2. Based on the comparison of financial ratios, briefly evaluate the company’s performance/financial health in the latest fiscal year from the five perspectives of liquidity, financial leverage, asset management, profitability, and market value. Use Du Pont analysis in your interpretation of the company’s ROE. You may also comment on the company’s stock performance in 2016/2017, too. Please attach the worksheet and the company’s financial statements to your analysis. Your analysis itself (excluding the worksheet and other attachments) should not exceed two pages.
Comparison of FedExs Financial Ratios with Industry Benchmark Company Industry Ratio Additional Comments Year 2016/2017 Formula Benchmark |Evaluation Liquidity Current Ratio Financial Leverage Asset Management Inventory Turnover Total Asset Turnover Profitability Net Profit Margin ROA ROE Market Value P/E ratioExplanation / Answer
Figures taken from 10-K report 2017 as follows :
*Since, FGedex is a service industry COGS is not directly available, hence Purchased Transportatio, Fuel & Maintainnace and repairs is taken as COGS.
Ratio Formula Company Year 2016/2017 Industry Benchmark Overall Evaluation Additional Comment Liquidity Current ratio Total Current Assets/Total Current Liabilities 1.59x No Access to factiva Good - Company is able to cover all its current obligations Financial Leverage Debt/Equity Total Debt/Equity 92.89% No Access to factiva Debt financing is very high Asset Management Inventory Turnover COGS/Average Accounts Recievables 2.53x No Access to factiva Good - Company replaces its inventory 2.53 times in a year. However, it can do much better Total Asset Turnover Sales/Total Assets 124% No Access to factiva Good - High the ratio good it is Profitability Net Profit Margin Net Profit/Sales 4.97% No Access to factiva Company is able to convert only 5% of its revenue into sales, it should focus on cutting down its costs ROA Net Profit/Total Assets 6.17% No Access to factiva Good - But can do better ROE Net Profit/Total Equity 18.65% No Access to factiva Good Market Value P/E Ratio Market price per share/Earnings per share 0.68x No Access to factivaRelated Questions
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