EI financial Statement Analysis

Financial Statement Analysis Project
Part 1: Firm Overview
1. Describe the firm. In doing so, you should address the following topics.
a. Major products, or sources of revenue. Which standard-setting bodies do they follow in
preparation for their reports?
b. Target market(s) and major customers (individuals, business, government)
c. Major competitors, important information related to their industry, economic factors, or
anything that has affected their report significantly.
d. You need to pick at least two important facts from the company’s notes (from either of
the last 5 years’ reports) that are related to the major firm’s disclosure (follow exhibit 2 from
Chapter 2 for more details)
2. Discussion topics:
i. What are the drivers of sales?
ii. What are the drivers of operating income?
iii. Are sales and income increasing/decreasing and why?
iv. Most profitable segment/product
v. Fastest growing segment
vi. How has the pandemic affected the firm?
If applicable, provide a table of operating income by product.
Part 2: Common-sized Statements and Ratio Analysis
1. Create a common-sized vertical and horizontal balance sheet and income statements using the
firm’s financial statements.
2. Provide 5 years of ratios broken down by activity, liquidity, solvency, profitability, and valuation.
3. Report on the Dupont decomposition of ROE for the prior five years.
i. What are the drivers of your firm’s ROE (or ROA)? Is it operational (profitability, activity),
financial (leverage), or some combination?
4. Discussion topics:
i. How has the firm changed over the prior 5 years? Use different graphs to show the
changes for each of these 5 categories on a cross-section (compare to other firms in each
group) and time-series basis (compare to itself/and other firms throughout the last 5 years).
ii. Do you see any external shock in your analyses that affect the firm’s measures (e.g., Covid)
* The final submission should be in a PDF format, using a Times New Roman size 12’ font. The
paragraphs need to be double-spaced.
**These instructions might be updated before the final submission, and they will be available on
Canvas upon any update.