A fictional company, the Granada Corporation, has hired you as an outside consultant to its investment committee, and has requested that you thoroughly analyze a company of your own choosing as a potential investment for the Granada Corporation. You are to use an Annual Report or a 10K from your selected company as the basis for your analysis as well as any other information that might be available – newspapers, magazines, the Internet including peer group data from Dun & Bradstreet, Moody’s, Standard & Poor’s. Don’t overlook other SEC disclosures such as information included in 8K filings.
Assume that the Granada Corporation is a national, publicly owned food products company, which is based outside Dallas, Texas. For 2017, it earned approximately $72,000,000 on sales of $500,000,000. At 12/31/17 its investments in marketable securities were $32,000,000 which represented 8% of total assets of $400,000,000.
The final product to be delivered to the investment committee of the Granada Corporation shall consist of the following:
Part I
A letter to the investment committee of the Granada Corporation with a recommendation as to whether the company that you have analyzed would be considered a safe and viable investment option. The letter should summarize the main reasons for your conclusion with detailed support to follow. In the letter speculate on the amount of earnings/loss for your company that you would expect to see in the near future. Also, give your impression of the three most important issues your company will face in the coming year. These are not restricted to the financial arena, but could be the result of changes in technology, the environment, health care, the legislative process, etc.
Part II
A thumbnail sketch of the company you have selected to include who the CEO and CFO are (a little of their background), headquarters, year founded, fiscal period, independent auditors, related parties etc.
Part III – Main Support
A. Financial statement analysis to include ratios and trends. Select only those ratios that are
relevant. You financial statement analysis should include a summary highlighting positive
and negative trends or strengths and weaknesses that you have identified.
B. Footnote analysis – comment on areas of concern based on your understanding of the
footnotes. (Hint – you may need to “read between the lines”.
C. Auditor’s Report – identify whether it’s the standard unqualified opinion or if it has been modified. If there has been a modification, discuss the nature of it.
D. Management’s Discussion and Analysis –state how you feel about MD&A. Does it seem to
be a fair representation of the company or do you think that it presents an inaccurate picture?
I want your opinion? Need horizontal
and vertical
analysis for income
statement and
balance sheet for
part A.
My Company is Costco
E. Current Events – Is your company currently in the news? Identify issues currently affecting
companies, which are similar to your company, which have the potential to affect your
company as well. (Look at the BIG PICTURE and BE CREATIVE)
F. Social Responsibility – In what ways does the company you selected have a responsibility to
society? (e.g. Tobacco industry and consumer product safety) Does social responsibility
present a problem to your company?
Part IV – Non Financial
Investment decisions can be influenced by more than just financial results. Identify any non-financial issues facing your company, which tempered your conclusion.
Examples:
1.Technological4.Marketing
2.Environmental5.Major competitors
3.Largest customer6.Employee issues
Remember that the letter to the investment committee of the Granada Corporation is the finished product. Make it persuasive and professional looking. The paper should be typed (double-spaced) and about 10 pages in length. You will be graded on your writing skills, the strength of your analysis, critical thinking skills, and the overall effectiveness of your presentation.
The information that I have provided to you should be used only as a guide, leaving much room for interpretation. I like ingenuity. Have fun and good luck!
