Essay Instructions: Financial Statements Analysis PAPER
Objective: Select a company that is in the US furniture retail industry to invest $1-million (you are adding to equity). You are helping the investment company which is currently a shareholder in the furniture retail company to make this important decision.
1) To do this you will review 25- furniture retailers from the following list and choose THREE to analyze:
http://www.apartmenttherapy.com/top-100-us-furniture-stores-by-137079
- Keep in mind, in order to invest, the company has to be a publicly traded on a US stock market exchange (i.e. NYSE, NASDAQ, etc).
- To make it easy on yourself, you may decide to avoid conglomerates. In other words, these are companies which sell products and services in several industries; not just furniture retailing.
- It might help to do a cursory review of the financial statements (http://finance.yahoo.com/, http://www.cnbc.com/ ); as well as a Google search on the operational and financial health of these companies. Find out what the companies missions and visions are, if you can. These statements along with industry and media write-ups will give some indication about the companies directions.
2) Once you have chosen three companies,
- you must do an in-depth financial analysis of each one only utilizing the materials we have covered thus far in the course. In other words you should review the financial statements, compute ratio analysis, analyze the three year trends (are the companies improving or worsening in their performances),
- analyze how each company is performing against one another in the industry.
3) Next you want to look at industry benchmark ratios to know if your three companies are performing within acceptable levels within the industry (ROA, ROE, liquidity levels, etc - look at all the ratios, including mixed-ratios from the homework, and decide which ratios are important in supporting your analysis and your decision). This information is available online at RMA, and Dun and Bradstreet. * I was told that, in addition to your own searches online, that you can find help in the library. Older data is acceptable.
- In class I shared listing references from RMA, to find the NAICS code for your industry "furniture retailer". I shared this in class.
https://ebiz.rmahq.org/eBusPPRO/OnlineStore/201213FRB/tabid/339/Default.aspx
For specific NAICS code you can use the tab "Individual NAICS download".
- Once you have the NAICS code you can go to the government website, and click on "business" to locate the benchmark data:
http://www.census.gov/econ/industry/
(NOTE: this is where matters can become tricky. The current message reads..
"Due to the lapse in government funding, census.gov sites, services, and all online survey collection requests will be unavailable until further notice.Updates regarding government operating status and resumption of normal operations can be found at ."
Obviously this is beyond yours and my control. I cannot get into the resources, just like you. You should check back with the website daily, and check with the library for past/historic data in case it is in a school database or file. If the Census website does not return before the day-before the due date of the exam, and the library does not have reference materials, current or historic, then your analysis will be limited to your research and the three-company analysis. Under these unfortunate circumstances and if they persist, the limited analysis will be acceptable for the exam.
- The researched information in part 1 will help to guide you in deciding which company can achieve its stated mission and or vision, this decision is backed up by the financial and ratio analysis, and industry analysis.
IMPORTANT FROM HERE
Graded content - the following information must show up in the above described paper.
#1- Written conceptual analysis, graded-
Use your companies and industry research. (Google and of all other forms of researching methods) to explain which company you chose to invest in; to describe the company's financial health; and how it is positioned in the industry and for the future.
You should state what the companies are trying to accomplish (the mission statement is one of purpose) and how they intend to accomplish their objectives (the vision statement explains how the objectives will be accomplished). These statements become the conditions that you use to justify your selection of furniture retailer.
Note:The financial analysis gives you the ammunition to rationalize "how" you chose to NOT select two companies and "how" you did select the one furniture retailer to invest in. Numbers do not lie, so make this part the "black-and-white, unarguable part" of your paper.
#2- Written financial statements analysis, graded
#3- Written ratios calculations and analysis, graded
#4- Written industry benchmarks and analysis, graded
#5- Create a visual image or diagram that compliments your analysis. Add a caption, just enough to help the viewer focus onto your point. It summarizes the story to the right-brain, what the left-brain produced in literal form in the report. It should make what you've written that's backed up by your calculations, very clear and easy to understand to the eye. (Imagine the charging bull in the center of Broadway in the Wall Street Section of lower Manhattan. Most people understand it to mean a strong, charging stock market, representing the ideals of a free capital based market, that is the choice of economic system for the USA.)
