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Financial Statement Analysis

Introduction

Written report requirement

Requirement

Write a 2000-word report including quantitative and qualitative analysis of a company whose shares are traded on a major stock exchange.

It is your responsibility to ensure that the company you choose has sufficient publicly available information in a format that you can understand. A typical stock exchange would be the London Stock Exchange and a typical stock would be on a large index such as FTSE 250. However, international equivalent exchanges and indices are acceptable.

The report is for the purpose of advising potential investors about the profitability, efficiency, solvency and investor performance of the company.

Include in your report:

1. An executive summary of your results (approximately 500-700 words)

2. Quantitative and qualitative analysis of the company’s performance for the previous 5 years using time, industry and any other comparisons/context you think is relevant (approximately 1000-1200 words). You must include in your analysis calculations (with evidence – see below) and/or comments on:

o Calculate the Return on Equity (ROE)

o Calculate Return on Capital Employed (ROCE)

o Calculate Free Cash Flow

o Obtain the company’s payout policy, choose a growth rate and give appropriate justification to a valuation based on the payout policy and the return on equity (ROE)

o Calculate the Price Earnings (PE) ratio and compare it with the industry using the ‘relative valuation’ function in Bloomberg

o Calculate some relevant figures for up to three comparable companies and give appropriate justification for the choice of comparator companies

3. Evaluate the pricing of the company’s initial public offering (IPO) including an assessment of the initial price and day 1 trading (400-500 words)

Evidence required

1. You must upload alongside a Word or pdf file of your written report, files supporting your analysis e.g. Excel files created by you and  downloaded from Bloomberg. But Noticed: you need to show all the progress of calculation of each required ratio on excel and  provide extracts from the financial statements on Bloomberg to verify the figures used.

Evidence is not included in the word count.

The analysis must be performed by you either manually or by using data analysis tools (Bloomberg, Excel, others if supported and relevant). This is necessary to demonstrate the skills required.  

Word count and submission date

The word count is 2000 words (+/- 10%)

Additional guidance

Please write in Arial font, size 12 and 1.5 line spacing.