Develop forecasted performance measures and list the assumptions associated with your forecast





This project consists of three major activities:

1.Conduct secondary research (i.e. library, internet, etc)

2.Write research paper computing the financial ratios yourself.

3.Make presentation to class.

Due Date and Time:

Papers and presentation are due at the beginning the final class meeting and are to be submitted via the Week 8 Drop Box.

The Project to be addressed by the Paper:

You have just graduated from MBA program and have secured a position as a fund manager for a well known investment banking house.  You have been given $300 million to manage/invest. The fund is a pension/retirement fund so its perspective is long term with moderate risk of loss of capital and a required return of 9% per annum. In order to reduce the investment risk you are instructed to make 12 investments of $25 million dollars each. Your first assignment is to determine if the fund you are managing should invest $25 million dollars in the stock of the company you have selected for your first analysis/investment decision. Do not select a bank or financial intermediary. Your decision to invest or not invest will be supported by the research paper and a 12 to15 minute presentation to the Executive Committee of the Fund (your hardnosed capitalist classmates)

Your analysis, based on the concepts covered in this course, will address each of the following:

1.Business Strategy Analysis:  Develop an understanding of the business and

competitive strategies of the company. Which of the three generic competitive

strategies does it utilize (low cost provider, differentiation, or focus)?  This

should be covered in not more than three paragraphs.  Do not spend time

writing a history of the company.  This is an analysis, not a history lesson.

2.Accounting Analysis:  Do the accounting practices adopted by the company

generally reflect an accurate picture of the economic performance of the

company? Did your research find any public announcements of restatement of earnings or other financial statements that would indicate that the financial statements may be of dubious value?  This can be done by reviewing the company’s 8K filings with the SEC (a mandatory requirement for this paper).  These filings can generally be found on the company’s website under Investor Relations – SEC filings.

3.Financial Analysis:  Analyze financial ratios and cash flow measures of the

company relative to its historical performance.  For purposes of this research paper  a 2 year look back is sufficient and required. You must use at least 10 of the ratios noted on page 112 of the text including all four of the profitability ratios.

4.Prospective Analysis:  Develop forecasted performance measures and list the

assumptions associated with your forecast.  List your assumptions and reasons for your forecast.  You may also cite the works of other analysts who have published forecasted earnings for the time frame you are addressing.  (Hint:  take a look at Yahoo/finance – analysts opinion

5.Conclusion: Will you or will you not invest $25 million in this particular

Company?  Support your conclusion?  Remember a negative conclusion is just as valid and valuable as a positive conclusion.

Conducting Library Research:

1.Participate in a research orientation offered by the graduate librarian.

2.Conduct a search for sources that offer accurate information on your company. A minimum of six legitimate and valid relevant resources are required.

Note:  An excellent place to start is in library LIRN database.  Enter LIRN, go to INFOTRAC, in INFOTRAC enter “Business and Company Resource with PROMT and Newsletters.  Enter the name of your company.  Under your company you will find items such as “Historical”, “Investment Reports”, “Financial” and other data. You can find Industry Analysis in Standard & Poor’s.  Individual company information may be found in Value Line and Morningstar.

Additional information can generally be found on the company’s website under “Investor Relations”.  Here you will find SEC 10-K, 10Q, 8K’s and other filings.

You may also wish to visit the website of the Securities and Exchange Commission (SEC) for filings by your company.

3.Avoid general Internet key word searches.  Wikipedia and other unauthorized

sources are inappropriate for graduate work.  Articles noting up to date information is such sources as The Wall Street Journal, Barron’s or Business Week may be useful in addressing the appropriateness of current strategies, resource pricing, etc.  given market conditions or the status of competitors.

Writing the Paper:

The following are general guidelines for format and organization.


a.Minimum of ten pages (including self prepared exhibits), with numbered

pages.  No binders please.

b.Typed, double spaced.

c.New Times Roman (i.e. business) font, 12 point.



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