It is your task to analyze the financial structure of each company provided by analyzing the composition of the company’s assets, liabilities and equity. The primary question, IS THE COMPANY’S FINANCIAL STRUCTURE IS A FUNCTION OF THE COMPANY’S ACTIVITIES? AND, IF SO, WHAT IS IT ABOUT THE WAY THE COMPANY IS FINANCIALLY STRUCTURED THAT HELPS IT FUNCTION BETTER, AS OPPOSED TO SOME OTHER STRUCTURE? Analysis consists of both narrative and Excel analysis. When submitted, it should contain, as a minimum, the following:
• Identifying Data – This is a cover page (see format, NEXT PAGE, BELOW)
• Narrative –
o A brief summary of your data analysis findings, bullet format permitted UNLESS YOU FEEL A MORE DETAILED NARRATIVE IS NECESSARY.
o A SUMMARY OF YOUR ANALYSIS OF THE FINANCIAL INSTITUTION’S SOUNDNESS. This section may employ comparative, general financial institution data and would be best NOT in bullet format.
o A discussion of why you think the function of your company has influenced the capital structure of the company. In other words, is the firm’s capital structure a logical consequence of it corporate activities?
o HOW DOES THE CAPITAL STRUCTURE OF YOUR FIRM DIFFER FROM THE CAPITAL STRUCTURE OF THE COMPANIES FEATURED IN YOUR 1ST AND 2ND CASES? IF IT’S SIMILAR OR THE SAME, WHY?
• Excel Spreadsheet – 2 years of data to be obtained from SEC/Edgar and/or the company website since these are the primary sources for financial data. In other words, don’t necessarily trust Yahoo! Finance or MSN Money.
o Calculate the Company’s:
♣ ROE and ROA
♣ Profit Margin (net income/total operating income)
♣ Asset and Liabilities Structure (i.e., debt/equity ratios, special asset classes, special liability classes, etc.)
♣ You are free to use other ratios and analysis techniques (i.e., DuPont Analysis) but only if you feel they are important in making a point in either your analysis or conclusions. Don’t add them just to impress me; I won’t be impressed.
Maximum narrative length: 4 pages plus cover page and Excel file.
Use cover page template, below (don’t get creative here. I want the cover ****EXACTLY**** as shown ON THE NEXT PAGE– with your info obviously):
NAME OF INSTITUTION (Symbol)
Sector (Investment Bank, Asset Manager, Investment Fund, Brokerage)
Profile (brief as reasonably possible) – you may use Yahoo! Finance, MSN Money, Morningstar or other source including the institution’s webpage.
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