OBJECTIVE:
The specific objective of this written research exercise is to make an executive-level financial report to the chief financial officer (CFO) of a mythical company by which you are employed as a financial analyst. This report will pertain to the financial evaluation of a real, publicly-traded company. This will need independent research (Web-based or library), careful financial analysis, and the proper application of key financial theories and formulas.
SITUATION:
You are a financial analyst with the mythical High Technology Corporation (HTC). HTC is an established manufacturer of a line of electronic components and it services an international market. HTC is a new fully integrated wireless communication service for world-wide use. A competitive technical and economic product evaluation has determined that Disney (a real publicly traded company) is the best potential supplier. Disney is providing a competitively favorable deal.
Though, based on some serious general concerns regarding the fallout of companies in the IT industry in general, the CEO has asked your CFO to conduct a financial analysis of Disney to find out if it is prudent to commit to this company's communication system. The cost of cutting over to the new communication system is significant and any interruption in support throughout the next few years would adversely affect HTC's performance and profit. Specifically, the problem is, will Disney be financially viable over the next two to three years?
YOUR SPECIFIC ASSIGNMENT:
Your specific assignment is to conduct research, analyze it and prepare a report for the CFO on the actual financial performance of Disney for the years 2009, 2010 and 2011. Additionally to reviewing the traditional financial performance indicators, you are as well to review Disney’s past and current stock performance for the same periods. Your report is to comprise of three parts:
A) An evaluation of Disney’s financial performance for the periods 2009, 2010 and 2011.
B) An evaluation of Disney’s stock performance for the periods 2009, 2010 and 2011.
C) Finally, a specific recommendation, with supporting rationale, as to whether or not Disney 's recent financial and stock performance are of adequate financial strength to warrant entering to a long-term commitment with the company.
To assist you in your task, the CFO has given general guidance. As it is recognized that the telecommunications industry is undergoing a major contraction, it is very significant for you to compare Disney’s financial and stock performance trends with those of the industry.
You are to consider all essential and relevant financial performance and stock information, trends and projections in supporting your recommendation. Relevant factors comprise, but are not essentially limited to, financial statement analyses, financial ratio trends and industry comparatives, capital spending, stock growth, Beta values, credit rating service valuations, bond rating valuations and management and investment reports, when such documents are available.
REPORT REQUIREMENTS:
Your final report is to be an executive-level financial report directed to the CFO. This report should be no longer than six (6) single-spaced typewritten pages. Comprise appropriate comparative, quantitative and qualitative analyses and conclude with a specific and supported recommendation based on the projected financial viability of Disney for the next several years.
Necessary research data, financial calculations and other documentation required to support your recommendation should be referred to in summary form in your report and attached in detail as enclosures. All main sources must be referenced. There is no set limit to the size of the enclosures; however it is recommended that only essential enclosures be attached. You must use references and a bibliography to recognize any remaining supporting documents you wish to include.