Project Scenario
You have been an Analyst for the professional service firm,
FINACC LLP. Your firm specializes in providing a wide variety of
internal business solutions for different clients. In your first
day on the job you have helped the Manager in the Consulting area
in making investment decisions for one of your large clients, Big
Spenders Inc. Big Spenders Inc. was very impressed with your report
and has asked your Manager if you could work on another
project.
Additional Information
Big Spenders Inc. plans to expand its portfolio of investments
and requires your firm to suggest and evaluate several Canadian
equity investment opportunities. Your responsibility is to pick an
industry that you are an expert in and choose a listed company that
you think will be a great potential investment opportunity (the
target company). You will then have to perform a comparative
analysis of the profitability and financial health of this company
compared to one of its competitors (the competitor). Finally, you
will be asked to give recommendation on why you think your target
company will be a great investment for Big Spenders Inc.
As you are new to the job, your Manager has provided you with
some initial instructions to carry out this project. He recommends
that you break the project into parts.
Part 1- Identify the companies
To start with, you can visit the Toronto Stock Exchange
website for information on listed companies in Canada. You can then
perform a stock screening to obtain information about the stocks
listed as well as the companies' financial information. The stock
screener can be found at
https://web.tmxmoney.com/screener.php?locale=EN.
After you have picked a company of your choice and identified
one of its competitors, your Manager has asked that you provided a
brief background on the operations of the two companies as well as
on the current stock prices of the two companies.
Part 2- Read and understand the financial statements
Similar to your past project, an important part of the
analysis of the potential equity investment is an assessment of
each company’s current and future profitability as well as their
financial soundness. You will have to extract details from their
income statements in the last five years for both the target and
the competitor companies. You can obtain this information directly
after you have performed the stock screening on the TSX website, or
you can go to the SEDAR filing system to search for Canadian
companies’ financial statements (https://www.sedar.com).
Part 3- Perform Financial Statement Analysis
Based on the information obtained from the two companies'
income statements as well as the background information, you are to
compare the performance of the two companies using financial
statement analysis. From the BUSI 1043 course that you took in the
past at Yorkville University, you know there are at least the
horizonal analysis, the vertical analysis and the ratio analysis
that you can perform. You have been asked to discuss any other
issues that you believe are relevant to the investment decision and
make a recommendation to Big Spenders Inc. for whether your target
would be a good investment.
Big Spenders Inc. would likely be a long-term client of FINACC
LLP if you could once again gain their trust from this project. The
Manager would like you to prepare the final report and trust that
your analysis will be throughout and completed as always.
I want you to choose Nike Inc and Adidas AG.