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

Financial Authentic Assessment Project (course project)

The course project is designed to synthesize your financial studies into a comprehensive real-life case study.  Students are to assume they have been recently hired to work for a financial consulting company that is providing advice to investors.  The main task is to identify an industry (or market sector) and then research the industry to identify the leading companies in the industry, analyze their finances and provide your own " analyst's opinion " on the prospects for the industry and to identify which companies are best positioned to lead that industry. You should keep you list of companies to 3-4 companies that compete with each other within the industry. And from this group of company's; which company provides the best shareholder value for a potential investor.  This is an individual project that will involve significant research and in-depth financial analysis. 

The companies you select should be a publicly held companies and be listed on a U.S. stock exchange.  Your approach should include a discussion of each company's business model, core products or services, growth prospects and key cost items.  If the companies that are selected is engaged in foreign markets you will need to discuss the potential for growth of those markets and any special risks those markets may pose, and risk management techniques for managing those risks effectively.

The ultimate goal is to decide which company from the list of companies is best positioned to provide the most shareholder value in the future. 

(Please see your LEO classroom for specific instruction and grading rubric.)

 The ultimate goal is to decide which company is best positioned to provide the most shareholder value in the future from the list of companies you have selected. This would require you to conduct the following analysis for each company within the group of companies you selected.

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.

The primary goal of the assignment is to utilize the concepts and formulas you have learned in your course of study and apply them to full effect in looking at this industry and its environment. It is expected that you will comment on the industry’s environment, as well as the business and financial risks that face the industry and the major competitors in that industry.

 Your research should include a survey of business periodicals, industry data from scholarly sources, analyst reports, news articles and journals as appropriate. When using financial calculations, you must explain your calculations. Using a financial calculator is fine, Excel is recommended, but I need to know if you understand the data. For example, if you did a ROE calculation on a financial calculator, I need to see more than just the end result, i.e. what data you used to make the calculations.

The discussion portion of the paper should be 8-10 pages in length, double spaced, and employ APA style criteria. Also, in text citations and a reference page is required when using other authors' works. Keep in mind that supporting data should be submitted in less than 4 separate attachments. The attachments and title page are NOT counted toward the total page count. For example, attachments should include, proforma income statement, balance sheets, etc.

In a short response, summarize the results from your Financial Authentic Assessment, addressing the following;

1. What were the major finding of the Study?

2. Acknowledge the Study’s limitations.

3. State the Relevance of your findings.

4. What is your, Take Home Message, in the form of a conclusion.

Risk management: Risk management refers to identifying, analyzing and minimizing the occurrence of the uncertain events (risk) in business operations or in an investment. Due to the dynamic nature of the business, the business environment is full of risk. Therefore, there must be risk management practiced in every organization to analyze future risks and take necessary steps to reduce it.

Explanation:

Evaluation of Risk management techniques:

A risk management technique must have the ability to manage the liability of the employees' benefits, such as their pension plans, accidents and health insurance, medical or traveling expenses, disability insurance etc. In order to be effective, the risk management technique must understand the scope of the risk. It must be able to understand the nature and use past experience to resolve the problem at hand. An effective risk management technique must store critical employee records, and should have multiple benefits plans.

There are a number of factors contributing to business risk; one such is a risk of physical location. Physical location is concerned with the natural atmosphere of the business. An effective risk management technique must be prepared for future risk, such as any natural calamity or complete isolation such could lead to theft and vandalism, robbery etc. It must also consider the availability of raw materials and labor.