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FIN 510
Assignment 2-100 Pts
Questions in bold are worth in the aggregate 75% of the total score
REMEMBER, this is an analysis course. Don’t just parrot what the company says in its reports.
Please select one of the following pairs of companies:
Under Armour (UAA)/Nike (NKE) BlackRock (BLK)/Morgan Stanley (MS)
Micron (MU)/Intel (INTC) Walgreens (WBA)/CVS (CVS)
Booz Hamilton (BAH)/Accenture (ACN) PG&E (PCG)/Entergy(ETR)
Molson Coors (TAP)/Boston Beer (SAM) IRobot (IRBT)/Xiaomi (XIACF)
Please use the most recent available 10-K, 20-F or annual report for the two companies selected

General Information:
• Describe the capital structure of each company:
o How many classes of stock is the company authorized to issue? What are the features of each class?
o How many shares of each class of stock are outstanding as of the date of the annual report?
o How many stockholders does the company have?
• What is the company’s recent (last 2 calendar years) dividend and stock repurchase/recapitalization history?
• Who are the largest shareholders? How much of the company does management own?
• What is management’s compensation? How does it compare with the previous 2 years? Is overall compensation in line with the company’s performance?

Why, aside from the financial information, is this capital structure information important to an analyst?

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What is the company’s stock price today? Its dividend ratio? Its current EPS? Its current P/E ratio? Its price to book, price to sales and price to cash flow ratios?
Please focus on the Balance Sheet of each company only and perform the following tasks:
• Please perform a common size balance sheet analysis for both companies for the most recent two FYs. How are they similar? Different? What difference, in your analysis, accounts for any difference income between the companies and why? Internally, how do the balance sheets compare FY to FY?
• Please calculate the following ratios: Current Ratio; Debt to Equity; Leverage; P/E Ratio; fully diluted EPS. Which company is a better long-term credit risk? Why?
• How does each company calculate depreciation/amortization on its long-term assets? How does each account for doubtful/uncollectable receivables?
How does each company’s balance sheet valuation compare to its market capitalization? How do you account for any difference?
What else besides financial data can the balance sheet tell you about each company? What questions should you ask yourself as you analyze the balance sheet?
Please compare the business descriptions for each company and respond to the following:
In what sense are these two companies competitors? Do they compete for the same customers; do they offer the same products/services; are they in the same industry; do they occupy different market niches; do they offer two different solutions to the same customer need or desire? What advantages/disadvantages does each company see relative to the other and to the overall competitive environment?

Please review the accounting policies section of the notes to the financial statements and describe how the companies differ in their financial reporting practices.

 
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