Financial Valuation Project Milestone 1 Economic Characteristics, Industry & Firm Analysis
The final project for this course is the creation of a Financial Statement Valuation. The project is divided into three milestones, which will be submitted at
various points throughout the course to scaffold learning and ensure quality final submissions. These milestones will be submitted in Week Four, Five, and
Seven.
In this project, you will be analyzing the financial statements (contained in the Form 10-K) of a company. You will be calculating a time series analysis on one
company completing forecasted financial statements and the valuation of the organization. You are required to use the FASP template.
Your financial valuation report (financial analysis paper and FSAP spreadsheet) must be written in APA format. Use double spacing, 12-point Times New
Roman font, and one-inch margins. Include at least four references cited in APA format. Headings for each section is acceptable, but sentences as headings
should not be used. Submit using appropriate APA style.
Company Selection
Select a company to study. The company selected must meet all of the following criteria:
Must be a publicly-held corporation traded on the NYSE or NASDAQ.
Must have receivables (trade receivables, accounts receivable, etc.) on the balance sheet.
Must have inventory on the balance sheet.
Headquartered in the United States.
Form 10-K must be available for 2017 (or 2016 if 2017 is not yet filed).
Must not be in bankruptcy.
Be sure to obtain the Form 10-K for the company selected and make sure each criterion is met prior to making your company selections. The official name
and ticker symbols of your chosen company must be used throughout the valuation report.
Instructions for finding a Form 10-K
You will need to locate a company’s Form 10-K, which is the annual report that publicly-held companies file with the Securities & Exchange Commission
(SEC). The Form 10-K is usually quite long, exceeding 100 pages in most cases. The first thing you need to do is find a recent 10-K for a publicly-held
company in which you are interested. This company must meet the criteria prescribed.
To find a Form 10-K, go to http://www.sec.gov/edgar.shtml#.VOhw6vnF9mX. If you know what company you are interested in, you might also be able to go to
that company’s Investor Relations website and locate its Form 10-K there. You can also view a short video about how to locate a Form 10-K on the SEC
EDGAR site; you can view that video at http://youtu.be/MPgvGua9-RM.
Years of Data
You will be using three years of income statements and statements of cash flows and four years of balance sheets. The extra year of balance sheet data is
needed for computing certain ratios that requires average amounts for certain accounts on the balance sheet.
Milestone 1 Economic Characteristics, Industry & Firm Analysis (Week 4)This is the first of three milestones assignments that will lead to the completion of the Financial Valuation course project. In this assignment, you will
complete the economic characteristics of the chosen company.
The Form 10-K report the firm filed with the SEC (http://www.sec.gov) may be the best place to begin learning about the economics of an industry and the
particular strategy of the firm. The first section of Form 10-K is a descriiptive narrative entitled ‘‘Item 1. Business.’’ This section usually describes the firm’s
principal businesses and provides information about suppliers, competitors, regulation, and other items. Reading this section of Form 10-K for the firm
selected usually provides sufficient information. Reading the Business descriiption section of the Form 10-K report should provide you with information on
the strategy of the company. Search the disclosure notes to the financial statements to find the segment data by products or services and by geographical
location. A source for industry information is Hoovers. You may access “Mergent Hoovers” from the library. Hoovers describes the most important factors
affecting the industry, key firms in the industry, and key financial ratios.
Specifically, the following elements must be addressed:
Industry
Provide background information of the industry
Issues common to the industry
Trends that have been identified
Industry-wide concerns and strategies
Major competitors
Emerging technologies related to the industry
Company
Nature and History of the Company
recent major events that affected company operations
Stock Classes and Ownership
review of stock price trends in the past five years
provide explanations for significant changes whether high or low
Product and Service Information
Key Customers and Suppliers
Governmental or Regulatory Environment
Current Operations
Strategies, Mission, and Goals for the Company
Located in the MD&A and other parts of the annual report (10-K).
Press releases or company website is another possible source
Discuss the Marketing Strategy
Company Expectations
Business Risks
Market Data and Analysis including Competition
Porter’s Five Forces
Analyze the company using Porter’s five forces.
Guidelines for Submission:
Prepare your paper using Microsoft Word. Follow APA formatting guidelines using appropriate headings, double spacing, 12-point Times New Roman font,
and one-inch margins. Support your information with at least four scholarly sources cited in APA format.