Objective: Familiarize students with the application of ratio and trend analysis.   This project allows students the opportunity to perform critical thinking, by addressing specific financial trends and industry comparisons for a company of their choosing.  This project will be a comparison/contrast paper that shows a demonstration of the application of financial analysis and critical thinking in a large organization.  The student will be performing trend analysis and industry comparisons on 3-4 years worth of financial statement data (whatever tells the story).   Trend Analysis & Ratio Analysis Ratio analysis uses percentage or decimal calculations of comparison to at least two different sets of financial data.  You are comparing how one relates (compares) to another.  Decision makers use ratios because they illuminate relationships between financial data taken from the company's statements.   Although ratio analysis can be used to evaluate financial performance, the number, by itself, does not reveal the entire story.  To take the analysis to the next level, one must engage in trend analysis.  Trend analysis utilizes the aforementioned ratios and shows the changes in those ratios, over time.  Stakeholders can use trend analysis to not only compare "this year" to "last year" for this company, but can compare each year to the industry as a whole and even to the number one competitor for benchmarking purposes. When you are setting up your paper, it would help to group your ratios and analysis together by content area (profitability, debt management, asset utilization, liquidity, and market value ratios). Deliverables Choose a publicly traded, publicly held, U.S. company.  This means you need to pick a company that is public and has stock that trades on the exchange.    You will use a variety of sites to find your financial data.  Start with either Yahoo! Finance site or www.reuters.com . These two sites will allow you to capture at least one year of data for each of the two companies you are going to review as well as the industry ratios you will need. You will need to acquire annual reports for the company sites for years older than the most current year. You will need to review three - five years of financial information on this company, more years of data will produce a more thorough analysis. Specific areas of analysis are noting major ratio categories and identifying whether the trend is up or down, whether that is good or bad, and why.  Once the data are gathered, analyzed, and trends revealed; the student will acquire the same information for a competitor within the same industry.  The same ratio and trend analysis will be gathered for the competitor.  A comparison will ensue, identifying specific strengths and weaknesses of various components of the financial statements.   Upon completion of the original company trend analysis and the competitor's trend analysis, an analysis and trend comparison with the industry is required. .

1. Objective: Familiarize students with the application of ratio and
trend analysis.
This project allows students the opportunity to perform critical
thinking, by addressing specific financial trends and industry
comparisons for a company of their choosing. This project will
be a comparison/contrast paper that shows a demonstration of
the application of financial analysis and critical thinking in a
large organization. The student will be performing trend
analysis and industry comparisons on 3-4 years worth of
financial statement data (whatever tells the story).
Trend Analysis & Ratio Analysis
Ratio analysis uses percentage or decimal calculations of
comparison to at least two different sets of financial data. You
are comparing how one relates (compares) to another. Decision
makers use ratios because they illuminate relationships between
financial data taken from the company's statements.
Although ratio analysis can be used to evaluate financial
performance, the number, by itself, does not reveal the entire
story. To take the analysis to the next level, one must engage in
trend analysis. Trend analysis utilizes the aforementioned
ratios and shows the changes in those ratios, over time.
Stakeholders can use trend analysis to not only compare "this
year" to "last year" for this company, but can compare each year
to the industry as a whole and even to the number one
competitor for benchmarking purposes.
When you are setting up your paper, it would help to group your
ratios and analysis together by content area (profitability, debt
management, asset utilization, liquidity, and market value
ratios).

2. Deliverables
Choose a publicly traded, publicly held, U.S. company. This
means you need to pick a company that is public and has stock
that trades on the exchange. You will use a variety of sites to
find your financial data. Start with either
Yahoo! Finance site or www.reuters.com
. These two sites will allow you to capture at least one year of
data for each of the two companies you are going to review as
well as the industry ratios you will need. You will need to
acquire annual reports for the company sites for years older
than the most current year. You will need to review three - five
years of financial information on this company, more years of
data will produce a more thorough analysis.
Specific areas of analysis are noting major ratio categories and
identifying whether the trend is up or down, whether that is
good or bad, and why. Once the data are gathered, analyzed,
and trends revealed; the student will acquire the same
information for a competitor within the same industry. The
same ratio and trend analysis will be gathered for the
competitor. A comparison will ensue, identifying specific
strengths and weaknesses of various components of the financial
statements. Upon completion of the original company trend
analysis and the competitor's trend analysis, an analysis and
trend comparison with the industry is required. This will allow
the student to demonstrate an understanding of financial ratios
and what trends are present between two different companies in
one industry, as well as, being able to determine the position of
the industry and be able to project future trends and how the
company being evaluated can budget for changes in the
industry.
So . . . .what is required . . . .
1. Your chosen company (financial ratios and trend analysis)a.

3. Using the data provided at the Yahoo! Finance site, use the
ratios in the textbook and determine the status of your chosen
company based on those ratios. Also, identify any trends you
notice and what the impact might be if those trends continue.
The ratios you will be reviewing are the same ratios; as you
will find in your textbook. Note that some of these ratios may
not be applicable to your company. Some ratios are specific to
certain types of firms. Not all firms carry significant accounts
receivable as an example.2. A competitor in the same industry
(financial ratios and trend analysis)a. Using the data provided at
the site, use the ratios in the textbook and determine the status
of your chosen competitor based on those ratios. Also, identify
any trends you notice and what the impact might be if those
trends continue.3. The industry as a whole; how does your
chosen company compare and what evaluations can you make
(predict) for future financial success?a. Review industry data
and determine where these two companies fit within that
industry. Are they leaders/followers? What does the future
hold for this industry?4. Using your chosen company and the
current conditions in the financial markets, assume the firm
needs to raise a large amount of cash. Compare the choices of
raising these funds in the capital market (selling new shares of
stock) versus the bond market (debt financing), and make a
decision as to what is best and why. Also, consider ethical
implications of financial reporting and how it relates to
acquiring additional investors and accessing markets for
additional capital.5. Take one of the following positions and
justify your decision:a. You are a banker who has been
approached by this company to borrow a sum of money (you
decide how much, and why). Based on the company’s financials
and its future business prospects, would you loan the money?
Why or why not.b. You are an investor with a large sum of
money (or a company looking for an investment), and buying
either the company or shares of stock in the company is being
considered. Determine, based on the company’s financials and
its future business prospects, whether you will invest in this

4. company or not.
There is no specific number of pages required to do this
assignment, but past experience has shown it takes at least 10-
12 pages of text to adequately complete this assignment. This
is a critical thinking assignment so all the specifics are not laid
out in front of you. You must research, assess, analyze, and
strategize about the company you have chosen, the competitors,
and the industry as a whole.
When using the Yahoo! Finance site or other similar financial
sites, you are going to have access to a large volume of data, as
well as company websites. Understand this must be cited using
APA methodology. DO NOT COPY and PASTE anything from
this or other sources without proper citing. Failure to properly
do this will result in a violation of the Baker College Academic
Honor Code, which can result in failure of assignment or failure
of the course (for a first offense in the College), to dismissal
from the College if a pattern is discovered.