Financial Analysis Project â€“ Guidelines
In this project, you form a team of four students, select a publicly traded Saudi company that has inventories and receivables (a manufacturing or retail company) and collect its annual financial statements for the last five years (income statements, balance sheets and cash flow statements) and do the same for other companies in the same industry. As well, you need to obtain the board of directorsâ€™ annual report for your company for the same periods.
The scope and structure of your report:
Your report should be double spaced report using Times New Roman, 12-point font size and include three main sections: introduction, analysis and discussion, and conclusions. The first and second sections combined should not exceed 14 pages while your conclusion should not exceed two pages. This means your project should not exceed 16-page long report, excluding the reference list and appendices.
Your introduction should include a short, brief preamble about the objectives of your report followed by two sections: Industry () and your company (Southern Provision Cement)
This part should include a summary description of your industry (the industry to which your company belongs). This summary (industry analysis) should address the followings:
- Before describing the detailed operations and strategies of an individual company (your company), it is important to understand the industry in which your firm belongs.
- Industry analysis has three primary objectives and should begin by finding out how the industry operates: What is the nature of the production process that takes place in the industry? What are the key inputs in the production process? What is the nature of marketing and distribution process?
- How your company positions itself in the industry? Strategy: there are three common strategies:
- Understanding the sensitivity of the industry to key macroeconomic factors (the world and domestic economic growth, geopolitical environment and the like).
- Understanding how the industry operates and the key performance measures for evaluating these operations. For example, in the oil production industry, key statistics include oil prices, the current demand for oil, crude oil and petroleum inventory, oil refinery capacity utilization rates, and oil service equipment utilization rates. Another example, in the semiconductor industry, key ratios and statistics include semiconductor industry monthly global sales report, the semiconductor equipment book-to-bill ratio, wafer fabrication plant utilization rates, the purchasing mangersâ€™ index and business capital spending.
- Understanding the competitive structure of the industry (you should look for characteristics that might allow firms to generate abnormal profits over a prolonged period of time, demands, population growth, rivalry among existing firm, threats of new entrants, availability of substitute products, bargaining power with suppliers, and bargaining power with customers).
This part should be focused on your selected company. In this section, you may answer the following questions:
- What does your company do?
- What is the market share of your company? Example, the percentage of your companyâ€™s total sales revenue to the total sales revenues of its industry.
- Cost leadership – a cost leadership strategy aims for low production costs and thin margin, with profits coming from a high volume as customers are attracted by the low price.
- Product differentiation – this strategy is achieved by producing a product with unique attributes that are valued by buyers who will pay a premium price for such quality, resulting in a high profit margin.
- Focus – The idea behind focus is to develop a niche strategy that supplies one segment of the market with exactly what they want such as low cost or differentiated product. Apple successfully implemented such a strategy in the PC industry.
Analysis and discussion:
This section should start by developing average financial ratios for your industry (e.g., an industry average liquidity and profitability ratios). Your ratios should be arranged in groups, i.e., liquidity ratios, solvency ratios and the like (individual ratios). Once you have completed your industry average ratios; then calculate the financial ratios for your company and assess them against the average ratios of the industry. The financial ratios, analysis and discussions should be integrated into a well written and organized report. I expect a very well-developed analysis and discussion report.
Your analysis should be time-series (trend) and cross-sectional analysis, i.e., comparing your Companyâ€™s performance over time (time series analysis) and to its industry (cross-sectional analysis) respectively.
Your conclusion should be a summary of your findings.
Your report should be very well-referenced and documented.
The calculations of your industry ratios must be done in an excel spreadsheet and a copy of it must be included as an appendix A to your report. As well, the financial statements for your selected company (not the entire industry) + the board of directorsâ€™ annual report of your company must be included as an appendix B to your report.
Dear I have worked on this assignment & develop attached excel , please I need your support to complete the missing Ratios ( please add complete formula & source of your data) , Also I have added the word document I have created for my assignment to be completed by you.
Also I have attached another example Alqassim for you may use it as guideline