Strategic Corporate Finance

10/3/2016 SLP FIN501 Strategic Corporate Fin" rel="nofollow">inance (OCT2016FT1) https://tlc.trident.edu/d2l/le/content/79164/viewContent/1882544/View?ou=79164 1/2 Module 1 SLP THE TIME VALUE OF MONEY AND FINANCIAL STATEMENT ANALYSIS Conductin" rel="nofollow">ing Fin" rel="nofollow">inancial Ratio Analysis Select a publicly traded U.S. company that has paid a dividend for at least the last three years, and conduct a fin" rel="nofollow">inancial ratio analysis. You will be usin" rel="nofollow">ing this company for other assignments in" rel="nofollow">in this course; thus, please spend adequate time locatin" rel="nofollow">ing a company. Please consider reviewin" rel="nofollow">ing http://fin" rel="nofollow">inance.yahoo.com to locate a company. The company must have data available for you to conduct a fin" rel="nofollow">inancial ratio analysis. It’s important to select a company in" rel="nofollow">in an in" rel="nofollow">industry that has in" rel="nofollow">industry ratio numbers. You cannot select a privately held company. Calculate all the followin" rel="nofollow">ing ratios for the company for the past three years and compare them to the appropriate in" rel="nofollow">industry benchmarks: Liquidity ratios: Current Quick Asset Management ratios: Inventory turnover Total assets turnover Fixed assets turnover Days sales outstandin" rel="nofollow">ing Debt Management ratios: EBITDA coverage Timesin" rel="nofollow">interestearned Total debt to total assets Profitability ratios: Return on common equity Return on total assets Listen 10/3/2016 SLP FIN501 Strategic Corporate Fin" rel="nofollow">inance (OCT2016FT1) https://tlc.trident.edu/d2l/le/content/79164/viewContent/1882544/View?ou=79164 2/2 Privacy Policy | Contact Basic earnin" rel="nofollow">ing power Profit margin" rel="nofollow">in on sales Market Value ratios: Market/book Price/earnin" rel="nofollow">ings Price/cash flow Create a table that contain" rel="nofollow">ins the ratios for the various years. Then analyze the in" rel="nofollow">information. Look at the trends in" rel="nofollow">in the ratios and comment on how they compare to the in" rel="nofollow">industry benchmarks. Which ratios are strong? Which ratios need improvement? If you were a stock in" rel="nofollow">investor, would you buy the company’s common stock? Why or why not? If you were a bond in" rel="nofollow">investor, would you buy the company’s bonds? Why or why not? SLP Assignment Expectations You are expected to: Describe the purpose of the report and provide a conclusion. An in" rel="nofollow">introduction and a conclusion are important because many busy in" rel="nofollow">individuals in" rel="nofollow">in the busin" rel="nofollow">iness environment may only read the first and the last paragraph. If those paragraphs are not in" rel="nofollow">interestin" rel="nofollow">ing, they never read the body of the paper. Answer the SLP Assignment question(s) clearly and provide necessary details. Write clearly and correctly—that is, no poor sentence structure, no spellin" rel="nofollow">ing and grammar mistakes, and no runon sentences. Provide citations to support your argument and references on a separate page. (All the sources that you listed in" rel="nofollow">in the references section must be cited in" rel="nofollow">in the paper.) Use APA format to provide citations and references. Type and doublespace the paper. Whenever appropriate, please use Excel to show supportin" rel="nofollow">ing computations in" rel="nofollow">in an appendix, present fin" rel="nofollow">inancial in" rel="nofollow">information in" rel="nofollow">in tables, and use the data computed to answer followup questions. In fin" rel="nofollow">inance, in" rel="nofollow">in addition to bein" rel="nofollow">ing able to write well, it’s important to present in" rel="nofollow">information in" rel="nofollow">in a professional manner and to analyze fin" rel="nofollow">inancial in" rel="nofollow">information. This is part of the assignment expectations and will be considered for gradin" rel="nofollow">ing purposes. 10/3/2016 Background FIN501 Strategic Corporate Fin" rel="nofollow">inance (OCT2016FT1) https://tlc.trident.edu/d2l/le/content/79164/viewContent/1882541/View?ou=79164 1/2 Module 1 Background THE TIME VALUE OF MONEY AND FINANCIAL STATEMENT ANALYSIS The time value of money is an important, fundamental concept in" rel="nofollow">in fin" rel="nofollow">inance. Time value of money refers to present value and future value. It is used in" rel="nofollow">in various areas of fin" rel="nofollow">inance, in" rel="nofollow">includin" rel="nofollow">ing capital budgetin" rel="nofollow">ing, bond valuation, and stock valuation. It is very important that you understand the time value of money so that you are prepared to study more advanced topics in" rel="nofollow">in the future. Time lin" rel="nofollow">ines are important to understand future value and present value problems. If you are havin" rel="nofollow">ing difficulty understandin" rel="nofollow">ing a time value of money problem, start with a time lin" rel="nofollow">ine. With an annuity due, the cash flows at the begin" rel="nofollow">innin" rel="nofollow">ing of the period. With an ordin" rel="nofollow">inary annuity, the cash flows occur at the end of the period. If an annuity problem doesn’t state if the cash flows occur at the begin" rel="nofollow">innin" rel="nofollow">ing or the end of the period, by default the cash flows occur at the end of the period. When cash flows contin" rel="nofollow">inue on forever, they are known as perpetuities. To fin" rel="nofollow">ind the present value of a perpetuity, you simply divide the cash flow by the discount rate in" rel="nofollow">in decimal notation. Review these videos that focus on the time value of money: Valuation of Money Podcast. (n.d.). Pearson Learnin" rel="nofollow">ing Solutions, New York, NY. Valuation of Money Interactive Video. (n.d.). Pearson Learnin" rel="nofollow">ing Solutions, New York, NY. JohnFin" rel="nofollow">inance (2014). Compound Annual Growth Rate. Retrieved from http://www.youtube.com/watch?v=Vp7HqfRifXo JohnFin" rel="nofollow">inance (2014). Present Value of a Perpetuity. Retrieved from http://www.youtube.com/watch?v=o2FvRiRJ6zM JohnFin" rel="nofollow">inance (2014). Present Value of a Growin" rel="nofollow">ing Perpetuity. Retrieved from http://www.youtube.com/watch?v=ikRczqxal4 JohnFin" rel="nofollow">inance (2014). The Time Period in" rel="nofollow">in a Future Value of a Lump Sum. Retrieved from http://www.youtube.com/watch?v=_TwPBazoywg Review these website lin" rel="nofollow">inks that focus on the time value of money: McCracken, M., (n.d.). The time value of money. Retrieved from http://www.teachmefin" rel="nofollow">inance.com/timevalueofmoney.html Getobjects.com (2002). Future value. Retrieved from http://www.getobjects.com/Components/Fin" rel="nofollow">inance/TVM/fv.html Listen 10/3/2016 Background FIN501 Strategic Corporate Fin" rel="nofollow">inance (OCT2016FT1) https://tlc.trident.edu/d2l/le/content/79164/viewContent/1882541/View?ou=79164 2/2 Privacy Policy | Contact Fin" rel="nofollow">inancial statement analysis is very important for securities analysts. Securities analysts recommend to portfolio managers what stocks should be bought and sold. Fin" rel="nofollow">inancial statement analysis in" rel="nofollow">involves analyzin" rel="nofollow">ing various fin" rel="nofollow">inancial ratios for a company over time and comparin" rel="nofollow">ing those to the appropriate in" rel="nofollow">industry average. For example, it is important for a company’s ROE to be in" rel="nofollow">increasin" rel="nofollow">ing over time and greater than the in" rel="nofollow">industry average. Although it’s very important for a firm to have strong liquidity, it’s a negative sign if a firm’s quick or current ratios are excessively high. There are five main" rel="nofollow">in categories of ratios: liquidity, asset management, debt management, profitability, and market value. Review these videos that focus on some fin" rel="nofollow">inancial ratios: JohnFin" rel="nofollow">inance (2014). DebttoEquity Ratio. Retrieved from http://www.youtube.com/watch?v=0GkYIUfpmQ JohnFin" rel="nofollow">inance (2014). Times Interest Earned Ratio. Retrieved from http://www.youtube.com/watch?v=UYua0yHGadY Review this website lin" rel="nofollow">ink which focuses on fin" rel="nofollow">inancial ratios: NetMBA (n.d.). Fin" rel="nofollow">inancial ratios. Retrieved from http://www.netmba.com/fin" rel="nofollow">inance/fin" rel="nofollow">inancial/ratios/ Optional Resources Bookboon.com. (2008). Corporate Fin" rel="nofollow">inance. Retrieved from http://bookboon.com/en/economicsandfin" rel="nofollow">inanceebooks Welch, Ivo. (2014). Corporate Fin" rel="nofollow">inance (3rd Ed.). Chpts 2 and 13. Retrieved from http://book.ivowelch. in" rel="nofollow">info/ed3/toc.html 10/3/2016 SLP FIN501 Strategic Corporate Fin" rel="nofollow">inance (OCT2016FT1) https://tlc.trident.edu/d2l/le/content/79164/viewContent/1882544/View?ou=79164 1/2 Module 1 SLP THE TIME VALUE OF MONEY AND FINANCIAL STATEMENT ANALYSIS Conductin" rel="nofollow">ing Fin" rel="nofollow">inancial Ratio Analysis Select a publicly traded U.S. company that has paid a dividend for at least the last three years, and conduct a fin" rel="nofollow">inancial ratio analysis. You will be usin" rel="nofollow">ing this company for other assignments in" rel="nofollow">in this course; thus, please spend adequate time locatin" rel="nofollow">ing a company. Please consider reviewin" rel="nofollow">ing http://fin" rel="nofollow">inance.yahoo.com to locate a company. The company must have data available for you to conduct a fin" rel="nofollow">inancial ratio analysis. It’s important to select a company in" rel="nofollow">in an in" rel="nofollow">industry that has in" rel="nofollow">industry ratio numbers. You cannot select a privately held company. Calculate all the followin" rel="nofollow">ing ratios for the company for the past three years and compare them to the appropriate in" rel="nofollow">industry benchmarks: Liquidity ratios: Current Quick Asset Management ratios: Inventory turnover Total assets turnover Fixed assets turnover Days sales outstandin" rel="nofollow">ing Debt Management ratios: EBITDA coverage Timesin" rel="nofollow">interestearned Total debt to total assets Profitability ratios: Return on common equity Return on total assets Listen 10/3/2016 SLP FIN501 Strategic Corporate Fin" rel="nofollow">inance (OCT2016FT1) https://tlc.trident.edu/d2l/le/content/79164/viewContent/1882544/View?ou=79164 2/2 Privacy Policy | Contact Basic earnin" rel="nofollow">ing power Profit margin" rel="nofollow">in on sales Market Value ratios: Market/book Price/earnin" rel="nofollow">ings Price/cash flow Create a table that contain" rel="nofollow">ins the ratios for the various years. Then analyze the in" rel="nofollow">information. Look at the trends in" rel="nofollow">in the ratios and comment on how they compare to the in" rel="nofollow">industry benchmarks. Which ratios are strong? Which ratios need improvement? If you were a stock in" rel="nofollow">investor, would you buy the company’s common stock? Why or why not? If you were a bond in" rel="nofollow">investor, would you buy the company’s bonds? Why or why not? SLP Assignment Expectations You are expected to: Describe the purpose of the report and provide a conclusion. An in" rel="nofollow">introduction and a conclusion are important because many busy in" rel="nofollow">individuals in" rel="nofollow">in the busin" rel="nofollow">iness environment may only read the first and the last paragraph. If those paragraphs are not in" rel="nofollow">interestin" rel="nofollow">ing, they never read the body of the paper. Answer the SLP Assignment question(s) clearly and provide necessary details. Write clearly and correctly—that is, no poor sentence structure, no spellin" rel="nofollow">ing and grammar mistakes, and no runon sentences. Provide citations to support your argument and references on a separate page. (All the sources that you listed in" rel="nofollow">in the references section must be cited in" rel="nofollow">in the paper.) Use APA format to provide citations and references. Type and doublespace the paper. Whenever appropriate, please use Excel to show supportin" rel="nofollow">ing computations in" rel="nofollow">in an appendix, present fin" rel="nofollow">inancial in" rel="nofollow">information in" rel="nofollow">in tables, and use the data computed to answer followup questions. In fin" rel="nofollow">inance, in" rel="nofollow">in addition to bein" rel="nofollow">ing able to write well, it’s important to present in" rel="nofollow">information in" rel="nofollow">in a professional manner and to analyze fin" rel="nofollow">inancial in" rel="nofollow">information. This is part of the assignment expectations and will be considered for gradin" rel="nofollow">ing purposes. 10/3/2016 Background FIN501 Strategic Corporate Fin" rel="nofollow">inance (OCT2016FT1) https://tlc.trident.edu/d2l/le/content/79164/viewContent/1882541/View?ou=79164 1/2 Module 1 Background THE TIME VALUE OF MONEY AND FINANCIAL STATEMENT ANALYSIS The time value of money is an important, fundamental concept in" rel="nofollow">in fin" rel="nofollow">inance. Time value of money refers to present value and future value. It is used in" rel="nofollow">in various areas of fin" rel="nofollow">inance, in" rel="nofollow">includin" rel="nofollow">ing capital budgetin" rel="nofollow">ing, bond valuation, and stock valuation. It is very important that you understand the time value of money so that you are prepared to study more advanced topics in" rel="nofollow">in the future. Time lin" rel="nofollow">ines are important to understand future value and present value problems. If you are havin" rel="nofollow">ing difficulty understandin" rel="nofollow">ing a time value of money problem, start with a time lin" rel="nofollow">ine. With an annuity due, the cash flows at the begin" rel="nofollow">innin" rel="nofollow">ing of the period. With an ordin" rel="nofollow">inary annuity, the cash flows occur at the end of the period. If an annuity problem doesn’t state if the cash flows occur at the begin" rel="nofollow">innin" rel="nofollow">ing or the end of the period, by default the cash flows occur at the end of the period. When cash flows contin" rel="nofollow">inue on forever, they are known as perpetuities. To fin" rel="nofollow">ind the present value of a perpetuity, you simply divide the cash flow by the discount rate in" rel="nofollow">in decimal notation. Review these videos that focus on the time value of money: Valuation of Money Podcast. (n.d.). Pearson Learnin" rel="nofollow">ing Solutions, New York, NY. Valuation of Money Interactive Video. (n.d.). Pearson Learnin" rel="nofollow">ing Solutions, New York, NY. JohnFin" rel="nofollow">inance (2014). Compound Annual Growth Rate. Retrieved from http://www.youtube.com/watch?v=Vp7HqfRifXo JohnFin" rel="nofollow">inance (2014). Present Value of a Perpetuity. Retrieved from http://www.youtube.com/watch?v=o2FvRiRJ6zM JohnFin" rel="nofollow">inance (2014). Present Value of a Growin" rel="nofollow">ing Perpetuity. Retrieved from http://www.youtube.com/watch?v=ikRczqxal4 JohnFin" rel="nofollow">inance (2014). The Time Period in" rel="nofollow">in a Future Value of a Lump Sum. Retrieved from http://www.youtube.com/watch?v=_TwPBazoywg Review these website lin" rel="nofollow">inks that focus on the time value of money: McCracken, M., (n.d.). The time value of money. Retrieved from http://www.teachmefin" rel="nofollow">inance.com/timevalueofmoney.html Getobjects.com (2002). Future value. Retrieved from http://www.getobjects.com/Components/Fin" rel="nofollow">inance/TVM/fv.html Listen 10/3/2016 Background FIN501 Strategic Corporate Fin" rel="nofollow">inance (OCT2016FT1) https://tlc.trident.edu/d2l/le/content/79164/viewContent/1882541/View?ou=79164 2/2 Privacy Policy | Contact Fin" rel="nofollow">inancial statement analysis is very important for securities analysts. Securities analysts recommend to portfolio managers what stocks should be bought and sold. Fin" rel="nofollow">inancial statement analysis in" rel="nofollow">involves analyzin" rel="nofollow">ing various fin" rel="nofollow">inancial ratios for a company over time and comparin" rel="nofollow">ing those to the appropriate in" rel="nofollow">industry average. For example, it is important for a company’s ROE to be in" rel="nofollow">increasin" rel="nofollow">ing over time and greater than the in" rel="nofollow">industry average. Although it’s very important for a firm to have strong liquidity, it’s a negative sign if a firm’s quick or current ratios are excessively high. There are five main" rel="nofollow">in categories of ratios: liquidity, asset management, debt management, profitability, and market value. Review these videos that focus on some fin" rel="nofollow">inancial ratios: JohnFin" rel="nofollow">inance (2014). DebttoEquity Ratio. Retrieved from http://www.youtube.com/watch?v=0GkYIUfpmQ JohnFin" rel="nofollow">inance (2014). Times Interest Earned Ratio. Retrieved from http://www.youtube.com/watch?v=UYua0yHGadY Review this website lin" rel="nofollow">ink which focuses on fin" rel="nofollow">inancial ratios: NetMBA (n.d.). Fin" rel="nofollow">inancial ratios. Retrieved from http://www.netmba.com/fin" rel="nofollow">inance/fin" rel="nofollow">inancial/ratios/ Optional Resources Bookboon.com. (2008). Corporate Fin" rel="nofollow">inance. Retrieved from http://bookboon.com/en/economicsandfin" rel="nofollow">inanceebooks Welch, Ivo. (2014). Corporate Fin" rel="nofollow">inance (3rd Ed.). Chpts 2 and 13. Retrieved from http://book.ivowelch. in" rel="nofollow">info/ed3/toc.html