ECON42915 Financial Statement Analysis

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SUMMATIVE ASSIGNMENT – ECON42915

Financial Statement Analysis

Write an equity research report on a company listed on a stock exchange. The report should cover the following analyses:

i. Strategy analysis: introduce the company’s main business through which it creates value; analyze the company’s business strategies, and its industries competitive environment; comment on the company’s social, environmental, governance strategies/activities and its potential for achieving sustainable development goals.500           (20 marks)

ii. Accounting analysis: reformulate the company’s balance sheet and income statement and assess the company’s accounting quality.500           (20 marks)

iii. Financial analysis: conduct the trend and comparative analysis of the company’s sales and financial ratios.500                (20 marks)

iv. Prospective analysis: forecast the company’s future sales, future net operating profit margin ratios, and operating assets turnover ratios, and estimate the company’s weighted average cost of capital, utilizing your analysis in items (i), (ii), and (iii). You should detail and justify all the assumptions underlying your forecasting methodology and estimation.450                 (18 marks)

v. Apply the residual operating income model and the free cash flow valuation model to estimate the fundamental value of the equity capital of the company and do a sensitivity analysis.450                              (18 marks)

vi. Provide stock recommendation and conclusion remarks. 100                             (4 marks)