Prior to beginning work on this assignment, read The Art of Company Valuation and Financial Statement Analysis: A Value Investor’s Guide with Real-Life Case Studies, pages 95-172 and 217-219. Next, review the Intel Annual Report 2013. You will use the annual report to complete the steps listed below.
Part 1: Calculate Ratios
Using the Intel Annual Report, calculate the following financial ratios for all years presented:
- Liquidity Ratios (Current and Quick): measures ability to meet cash needs.
- Leverage Ratios (Debt to Equity, Debt Ratio): measures extent of financing with debt relative to equity and the ability to cover interest and other fixed charges.
- Profitability Ratios (Gross Profit Margin, Net Profit Margin): measures overall performance of organization and efficiency in measuring assets, liabilities and equity.
Part 2: Report Findings
Write a report to the management of Intel. Your report should include your findings from the ratios (liquidity, leverage, and profitability) and your evaluation of the financial health of Intel based on your evaluation. Your report should also include your identification of the strengths and weaknesses of the company and your evaluation of the financial strength of Intel.
In your report,
- Add your calculated ratios from Part 1 (i.e., liquidity ratio, leverage ratio, and profitability from the Intel annual report).
- Identify strengths and weaknesses of the company by reviewing the analysis of the financial statements and ratios evaluated.
- Analyze the financial health of the company based on the annual report.
- Compile a financial health report to present to Intel management.