The objective of the assignment is to integrate your knowledge of financial analysis and valuation concepts, and your ability to access relevant information about a specific industry and company on the internet. You will choose a publicly-traded company (Tesla) in which you have interest as an investor. Pending more specific details and resources, here are some of the questions you might address in your report:
- To which industry/sector does this company belong? What are the major issues facing this industry? Is your company a dominant player in the industry?
- What are the significant events, trends, and risk factors affecting the firm? Be sure to consider the Environmental, Social, and Governance (“ESG”) and sustainability issues demonstrated by this company.
- Examine the company’s financial ratios for the two most recent years, using the ratios introduced in Chapter 3, and addressing the company’s liquidity, operating efficiency, debt, and profitability. Are there any significant trends or changes in any of the ratios? To what do you attribute these trends or changes?
- Look at the comparative ratios for your company. How do your company’s financials measure up against their main competitors or industry group?
- Review your company’s statement of cash flows for the past two years. Compare the cash flow from operating activities to the income from continuing operations. By how much do they differ, and why do they differ?
- What is the credit rating on the company’s debt? Does the company pay dividends on its shares and/or return capital to investors through a share repurchase program?
- Compare your company’s required return based on the Security Market Line with the expected return based on the analysts’ mean target price and expected dividends. Do you expect the company to deliver value for an investor over the next year? Longer-term?