finance-The specific objective of this graded written research exercise

QUESTION

SITUATION:
OBJECTIVE
The specific objective
of this graded written research exercise is to prepare an “executive level
financial report” to the Chief Financial Officer (CFO) of a mythical
company in which you are employed as a financial analyst. This report
will pertain to the financial evaluation of a real, publicly-traded, company.
It will require independent research (web-based or library), careful financial
analysis, and the proper application of key financial theories and formulas.
The company that is to
be analyzed for this project is Sprint.
SITUATION
You are a financial
analyst with the mythical High Technology Corporation (“HTC”). HTC is
an established manufacturer of a line of electronic components, which services
an international market. HTC is currently a new fully-integrated wireless
communication service for world-wide use. A competitive technical and
economic product evaluation has determined Sprint is the best potential
candidate for a long-term commitment. Sprint is offering a competitively
favorable deal. However, based on some serious general concerns about the
fallout of companies in the industry in general, the CEO has asked your CFO to
conduct a financial analysis Sprint to determine if it is prudent to commit to
this company’s communication system. The cost of cutting over to the new
communications system is significant and any interruption in support during the
next few years would adversely affect HTC’s performance and profit.
Specifically, the question is: will THE COMPANY be financially viable over the
next two to three years?
YOUR SPECIFIC
ASSIGNMENT
Your specific
assignment is to research, analyze, and prepare a report for the CFO on the
actual financial performance of Sprint. In addition to reviewing the traditional
financial performance indicators, you are also to review Sprint’s past and
current stock performance.. Your report includes three parts:
(1)
An evaluation of Sprint’s financial performance for the last year. DuPont
analysis and analysis of significant financial performance results are required
for the last three years. (See detailed description below).
(2)
An evaluation of Sprint’s stock performance for the last one year.
(3)
Finally, a specific recommendation, with supporting rationale, as to whether or
not Sprint’s recent trend in financial and stock performance is of sufficient
financial strength to warrant entering into a long-term commitment.
To assist you in your
task, the CFO has provided the following general guidance. Since it is
recognized that the industry is undergoing a major contraction, it is very
important to comparatively evaluate THE COMPANY’S financial and stock
performance trends against its Industry.
You may wish to
include all necessary and relevant financial performance and stock information,
trends, and projections in supporting your recommendation. These factors may
include, financial ratio trends and industry comparatives, capital spending,
stock growth, Beta values, credit rating service valuations, bond rating
valuations, and management and investment reports – when these documents are
available.
REPORT REQUIREMENTS
YOUR SPECIFIC
ASSIGNMENT
Research and analyze
the following information for Sprint.
–Annual Balance
Sheets for Sprint for the last three years (2012-14).
–The Income
Statements for Sprint the last three years (2012-14).
— Annual reports, 10K
or 10Q——
–Industry norms
———–
—Analysts’ reports
on performance
— Management reports
or press
releases
Using this information
the students have to develop evaluation of the financial performance for
Sprint.)
-1—Background and
Industry (one short paragraph).
-2—Select of most
significant financial performance results for the company: Compare Revenue, net
income, working capital, total assets for the last three years and other
results of your choice of the company against the industry or main competitor.
Present the table with this information in your report. Write about 1 page of
the analysis of these financial performance results.
-3—Find financial
ratios for the company and its major competitor in the Internet. Write about
1-2 pages of analysis of the ratio results you received. Compare the ratio
results against the industry or main competitor.
-4- Evaluate Return on
Equity for the company for the last three years using the DuPont analysis.
Compare the company’s results to a major competitor.
Taking the information
from the Income statements and the Balance sheets, calculate the company’s
return on equity using the DuPont technique for the company for three years.
Show your calculation!
Write about 1 page of
analysis of the results that you received. Compare the results to main
competitor. If the management of the company would like to improve their return
on equity, what should the management of these companies do?
-5- Evaluate other
areas of financial analysis: capital spending, stock growth, Beta values,
credit rating service valuations (if possible), bond rating valuations (if
possible), etc. Make an overall conclusion about financial performance of the
company during the last years. Compare the results that you received against
the industry or main competitor. Summarize the results that you received
in 1 page. What are the firm’s financial strengths and weaknesses
-6- Collect and
evaluate the data about stock performance of the assigned company’s for the
last one year. Compare the results that you received against the industry or
main competitor.
Write about 1 page of
analysis of the ratio results you received. (20% of the project grade).
-7- Develop a specific
recommendation, with supporting rationale, as to whether or not the assigned
company’s recent trend in financial and stock performance is of sufficient
financial strength to warrant entering into a long-term commitment. (about 1
page) (15% of the project grade)

Part of the Project I need help!
Evaluate Return on
Equity for Sprint for the last three years using the DuPont analysis. Compare
the company’s results to a major competitor.
Taking the information
from the Income statements and the Balance sheets, calculate the company’s
return on equity using the DuPont technique for the company for three years.
Show your calculation!
Write about 1 page of
analysis of the results that you received. Compare the results to main
competitor using a table. If the management of the company would like to
improve their return on equity, what should the management of these companies
do?

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