Finally, a specific recommendation, with supporting rationale, as to whether or not THE COMPANY?S recent trend in financial and stock performance is of sufficient financial strength to warrant entering into a long-term commitment.
You are a financial analyst with the mythical High Technology Corporation ("HTC"). HTC is an established manufacturer of a line of electronic components, which services an international market. HTC is currently a new fully-integrated wireless communication service for world-wide use. A competitive technical and economic product evaluation has determined that THE COMPANY THAT IS TO BE ANALYZED FOR THIS PROJECT (The Walt Disney Company) (a real publicly-traded company) is the best potential candidate for a long-term commitment. THE COMPANY (The Walt Disney Company) is offering a competitively favorable deal. However, based on some serious general concerns about the fallout of companies in the industry in general, the CEO has asked your CFO to conduct a financial analysis of THE COMPANY (The Walt Disney Company) to determine if it is prudent to commit to this company’s communication system. The cost of cutting over to the new communications system is significant and any interruption in support during the next few years would adversely affect HTC’s performance and profit. Specifically, the question is: will THE COMPANY (The Walt Disney Company) be financially viable over the next two to three years?
YOUR SPECIFIC ASSIGNMENT
Your specific assignment is to research, analyze, and prepare a report for the CFO on the actual financial performance of THE COMPANY THAT IS TO BE ANALYZED FOR THIS PROJECT (The Walt Disney Company) for the last three years. In addition to reviewing the traditional financial performance indicators, you are also to review THE COMPANY?S past and current stock performance for the last one year. Your report is to consist of three parts:
(1) An evaluation of THE COMPANY?S financial performance for the last three years.
(2) An evaluation of THE COMPANY?S stock performance for the last one year.
(3) Finally, a specific recommendation, with supporting rationale, as to whether or not THE COMPANY?S recent trend in financial and stock performance is of sufficient financial strength to warrant entering into a long-term commitment.
To assist you in your task, the CFO has provided the following general guidance. Since it is recognized that the industry is undergoing a major contraction, it is very important to comparatively evaluate THE COMPANY?S financial and stock performance trends against its Industry.
You are to consider all necessary and relevant financial performance and stock information, trends, and projections in supporting your recommendation. These factors include, but are not necessarily limited to financial statement analysis, 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 these documents are available.