The objective of this project is to conduct a financial ratio analysis for a publicly traded
company. You will conduct both trend analysis and comparable analysis, similar to the
comprehensive example we go over in Chapter 4. You can work on it individually or as a
group of two students. The instructor does not involve in the group formation process. If
you work as a two-person team, please let me know your team member by March 12.
Each student (group) will be assigned a company (posted on Canvas).
The followings are the specific instructions:
● To retrieve financial statements for your company:
Go to www.csimarket.com, Input your company’s ticker symbol in the “Company Name
or Ticker Symbol” box. Click on “Income Statement” (“Balance Sheet”) under
“Financials” Retrieve balance sheet and income statement (select annual report).
● Calculate all the financial ratios (except EV/EBITDA) as listed in Table 4-2 (p. 129)
for the three most recent years 2020-2022 or 2021-2023. Show your calculations.
● Besides trend analysis, you need to compare your company’s performance to the
industry. For this part, you don’t need to calculate the ratios, just report the company
ratios for the trailing twelve months (TTM) and the industry average that are
available in www.csimarket.com (see FAQ#6).
Tabulate ratios as follows if you use 2021-2023 data (see an example for 2015-2017 at
the end of this handout)
Company’s
2021 2022 2023 TTM ratio Industry
Current Ratio CA21/CL21 CA22/CL22 CA23/CL23 directly retrieves from
= CR21 = CR22 = CR23 www.csimarket.com
Quick Ratio .. .. .. ..
DSO .. .. .. ..
● Analyze the company’s performance based on the three-year trend of financial ratios
you calculate and compare the company’s performance to the industry using the trailing
twelve months (TTM) data (except for the price-to-book value ratio; use most recent
quarter (MRQ) data for this ratio). Don’t compare ratios of 2021-2023 or 2020-2022 to
the industry average. Identify the strengths and weaknesses of the company and make
recommendations to improve the performance of the company.
● The project should be 5-6 pages, double-spacing, not including tables, references,
calculations and graphs. The project’s grade is based on the accuracy of calculations,
organization of materials, and the quality of analysis. Make sure you discuss the
strengths and weaknesses of your company and provide argument to support your
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conclusion. At the end, provide your opinion on whether the company’s stock is a good
investment and substantiate your answer. Beware of Plagiarism! Don’t plagiarize
paragraphs from the textbook or other sources. Use your own words to discuss the results
Frequently Asked Questions:
- I cannot find Sales from the balance sheet
Use “Total Revenue” as “Sales” - How to calculate total debt to capital ratio
Debt-to-capital ratio = (short-term debt + long term debt)/(short-term debt + long
term debt + total shareholder’s equity)
For short-term debt, use either “Shortterm Debt” or “Debt, Current LI” or “Longterm Debt + Capital Lease Obligations, Current DE” or “Long-term Debt, Current
Maturity LO” (If you have problem to identify short-term debt let me know) - How to find net fixed assets?
Use the item “Equipment/Property/Plant Net” form the balance sheet
4, How to find tax rate? You need tax rate to find return on invested capital (ROIC).
Tax rate = (income taxes expenses/-benefit)/(income/-loss before income taxes) - How to get inputs for the market value ratios, i.e., price (market value), EPS, and
Book Value (BV) per share?
a) To compute price-earnings ratio (P/E) and market-to-book value ratio
(MV/BV), you need to have stock price. If your company’s fiscal year ends on
Dec. 31, use the closing price of the last trading day of the year as the numerator
of P/E and MV/BV ratio. Go to finance@yahoo.com, input your company’s
ticker symbol, click on “historical data”, you can get the closing price (use
“Close”, not “Adj. Close”) of the last trading day of the 2021-2023 or 2020- - Set the date in “Time Period” and then click “Done” and then “Apply.” If
your company’s fiscal year is not ended on December, use the closing price of the
last trading day of the month on which your company’s fiscal year is ended. For
example, the fiscal year of Walgreens Boots Alliance (WBA) ends on August 31.
In this case, you use the closing price of the last trading day of August rather than
the last trading day of December.
b) Use “Basic Net EPS”, not “Diluted Net EPS”, from the income statement.
c) Book value per shares equals to total shareholder equity divided by the number
of shares outstanding. If you use the financial statements from
www.csimarket.com the number of total shares outstanding (Basic shares
outstanding) is available from the income statement (you can find the number
right under BASIC NET EPS)
3 - How to get information on industry average using www.csimarket.com?
Once you enter the ticker symbol, you will see five tables showing the current value of
different groups of ratios: Valuation, Financial Strength, Efficiency, Profitability Ratio,
and Management Effectiveness. Click on the title of these tables you will see the trailing
twelve months (TTM) ratio for the company, industry, sector, and S&P500. Retrieve the
company ratio and industry average for the following ratios:
Valuation
PE Ratio (Q3 TTM)
Price to Book (Q3 MRQ)*
Financial Strength
Working Capital Ratio (= current ratio) (Q3 TTM)
Quick Ratio (Q3 TTM)
Interest Coverage (= times-interest earned ratio) (Q3 TTM)
Efficiency
Inventory Turnover Ratio (Q3 TTM)
Asset Turnover Ratio (= total asset turnover ratio) (Q3 TTM)
Receivable Turnover Ratio (Q3 TTM)1
Profitability
Operating Margin (Q3 TTM)
Net Margin (Q3 TTM)
Management Effectiveness
Return on Assets (Q3 TTM)
Return on Equity (Q3 TTM)
*If Q3 data is not available, use Q2 data. Only the most recent quarter (MRQ) data is
available for the Price-to- Book Value ratio. www.csimarket.com does not provide
industry average for fixed asset turnover, debt-to capital ratio, basic earning power,
and return on invested capital, so you don’t need to compare to the industry for these
ratios. Just put “N.A.” (not available) in your table.
Notes:
1 The textbook uses Days Sales Outstanding (DSO), not receivable turnover. You can
convert receivable turnover into DSO using this formula: DSO = 365/receivable
turnover. For example, if the industry average receivable turnover = 12; the industry
average DSO = 365/12 = 30.42 days.
DUE DATE: April 23rd, 2024 at 11:59 p.m. Remark: Don’t wait until the end of the
semester, retrieve the balance sheet, income statement, and other related data including
industry averages as soon as possible.
Grading Guideline: Calculations (60%) Trend Analysis (12%) ; Industry Comparison
(12%) Recommendations for improvement and assessment of investment viability (10%)
Overall quality & other considerations (6 points):