1) Identify an industry to focus on (It is suggested that you use an industry that is expanding rather than consolidating, but the choice is yours to make). Explain why you chose this industry and its
1) Identify an industry to focus on (It is suggested that you use an industry that is expanding rather than consolidating, but the choice is yours to make). Explain why you chose this industry and its environment.
2) Identify the top companies (3-4) in the industry using your own selection of criteria (market capitalization, ROE, or any other financial criteria you wish to develop.) Your decisions on which set of criteria to use, are to be considered part of the project and your rationalization must be explained.
3) Compile a ratio analysis of the top competitors in the industry using the company’s financial statements.
The ratio analysis should include for each company:
a) a 5-year trend analysis (if available) of each company selected and compared to the industry averages and;
b) a competitive analysis of the selected major competitors using four main standards: profitability, liquidity, debt and return on equity.
4) Establish growth projections for the top competitors using established financial methods.
5) Analyze the following elements of each competitor:
[It is expected that you will discuss why you selected the measures used, interpret the data and explain what this information suggests about the company’s financial situation and future financing needs.]
a) Each company’s capital structure.
b) Cost of capital, capital structure, CAPM, cash flow, value of common stock and MVA.
6) After selecting the main competitors and conducting your analysis you will need to choose one company as the projected future industry leader and project its future stock price in light of your review and analysis.
a) You are expected to look at a potential takeover target for the company you just selected (within the industry or closely related to the industry), evaluate the takeover benefits and the price to be paid for the target company using established valuation criteria. It is expected that you will discuss the selection of the criteria used and to comment on its relative value in the analysis.
b) If that company that is selected is engaged in foreign markets you will need to discuss any special risks those markets may pose, and risk management techniques for managing those risks effectively.