Assignment 2: Discussion—Study Company Selection And Financi

Assignment 2: Discussion—Study Company Selection and Financial Statements

During the last week of the course, you will be asked to conduct an analysis of a company of your choice. Your chosen company will be referred to as the “study company” in various assignments throughout this course. To allow for the time necessary to gather information about that company, you are required to select your study company this week and have that company approved by your facilitator. The company should be a retail or manufacturing organization. Do not choose a financial or purely Internet-based company.

It must be publicly traded and must have positive earnings in the most recent year. You will find this information on the company’s Web site in the investor relations section. You may use a Web site such as Hoover’s to conduct the initial research on the company and its operations. Once your company is approved, you will begin your research and obtain the financial statements of the selected company from its annual report.

Your initial post this week should include:

  • The name, location, industry, and company web address
  • Stock exchange where the company is listed and its ticker symbol
  • The most recent sales numbers
  • Number of employees
  • Top 3 competitors
  • The reason you chose this company

By Saturday, September 10, 2016, post your response to the appropriate Discussion Area.

Through Wednesday, September 14, 2016, review and comment on at least two of your peers’ responses.

Questions and Answers Related to the Discussion

Question 1: Why is it important to select a publicly traded company with positive earnings for this analysis?

Choosing a publicly traded company with positive earnings ensures that there are tangible financial statements available for analysis, which accurately reflect the company's financial health. Positive earnings indicate profitability, making it feasible to evaluate financial ratios, performance metrics, and overall financial stability. This selection offers a meaningful foundation for learning about financial statement analysis, as negative earnings or recent losses could skew insights or complicate the understanding of core financial health.

Question 2: What criteria should be considered when choosing a top competitor for the study company?

When selecting top competitors, it is essential to consider companies operating within the same industry and market segment to ensure comparability. Factors such as market share, product or service offerings, size, and geographic reach should be evaluated to identify relevant peers. Additionally, the competitors should have publicly available financial data and comparable business models to facilitate a meaningful comparison, which helps in understanding the competitive landscape and relative financial performance of the study company.

References

  • Anthony, R. N., Govindarajan, V., & Reece, J. M. (2014). Essentials of Managerial Finance (13th ed.). McGraw-Hill Education.
  • Fridson, M. S., & Alvarez, F. (2016). Financial Statement Analysis: A Practitioner's Guide (5th ed.). Wiley.
  • Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2019). Intermediate Accounting (16th ed.). Wiley.
  • Penman, S. H. (2012). Financial Statement Analysis and Security Valuation. McGraw-Hill Education.
  • Rappaport, A. (1986). Creating Shareholder Value: The New Standard for Business Performance. Free Press.
  • White, G. I., Sondhi, A. C., & Fried, D. (2003). The Analysis and Use of Financial Statements (3rd ed.). Wiley.
  • Bank of America Merrill Lynch. (2019). Industry Comparison and Financial Ratios. https://www.ml.com
  • Investopedia. (2023). How to Analyze a Company’s Financial Statements. https://www.investopedia.com
  • SEC. (2023). EDGAR Filing Website. https://www.sec.gov/edgar/searchedgar/companysearch.html
  • Yahoo Finance. (2023). Company Financials and Market Data. https://finance.yahoo.com

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