The company is Walmart

--- FINANCIAL RESEARCH PROJECT -------

OBJECTIVE

The specific objective of this graded written research exercise is to prepare an "executive
level financial report" to the Chief Financial Officer (CFO) of a mythical company in
which you are employed as a financial analyst. This report will pertain to the financial
evaluation of a real, publicly-traded, company. It will require independent research (web-
based or library), careful financial analysis, and the proper application of key financial
theories and formulas.

The company that is to be analyzed for this project is to be a company selected by

instructor.

Alternatively, you can request approval of another publicly traded company. This request
must be submitted before the end of the first week of the course. The request must
include

o identification of the company by ticker symbol and name

o a reasonable and appropriate explanation of why you want to examine the
alternative company
o the source of the analyst's report that will be used in the analysis (which must be
submitted to me)
o acknowledgement by you that all of the specific elements of the assignment (see
below) will be prepared by you and included in the final research project report

SITUATION

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 (COMPANY SELECTED BY INSTRUCTOR) (a real publicly-traded
company) is the best potential candidate for a long-term commitment.

THE COMPANY (COMPANY SELECTED BY INSTRUCTOR) 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 (COMPANY SELECTED BY
INSTRUCTOR) 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 primary question is: will THE 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 (COMPANY SELECTED BY INSTRUCTOR). In addition to
reviewing the traditional financial performance indicators, you are also to review THE
COMPANYS past and current stock performance. Your report includes three parts:

(1) An evaluation of THE COMPANYS financial performance for the last three
years. (See detailed description below)

(2) An evaluation of THE COMPANYS stock performance for the last one year.
(See detailed description below)

(3) Finally, a specific recommendation, with supporting rationale, as to whether or

not THE COMPANYS 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 COMPANYS financial and stock performance trends
against its Industry or major competitor.
SUGGESTED WEBSITES

www.marketwatch.com -To find the information for your company you need to type the
stock symbol in the Search window to get into the companys page.

www.morningstar.com - To find the information for your company you need to type the
stock symbol in the Quotes window to get into the companys page.

www.money.cnn.com -To find the information for your company you need to type the
stock symbol in the Search window to get into the companys page.

www.finance.yahoo.com - To find the information for your company you need to type
the stock symbol in the Search window to get into the companys page.

www.nyse.com Click on Data, then click on Stocks (under Quotes), and type the name
of the company or the stock symbol in the window Keyword or symbol to get into the
companys page.

www.nasdaq.com - To find the information for your company you need to type the stock
symbol in the Search window to get into the companys page.

Companys websites

YOUR SPECIFIC ASSIGNMENT

Using the information from the websites the students have to develop evaluation of the
financial and stock performance for THE COMPANY (SELECTED BY
INSTRUCTOR). (Totally 85% of the assignment grade)

-1Background and Industry (one short paragraph).

-2Analysis of the most significant financial performance results. (15% of the

project grade)

e. Select of most significant financial performance results for the company. Create a
table that contains the THE COMPANYS financial performance results for the
last three years and for the major competitor or industry for the last year:
 Revenue, net income, working capital, and other financial performance results of
your choice. Present the table with this information in your report.
f. Write about 1 page of the trend analysis of these financial performance results.

-3 Financial ratio analysis. (15% of the project grade)

Find financial ratios for the company for the last 1-3 years and its major competitor for
the last year in the Internet.

g. Present the ratios as the table(s) in your project.

h. Write about 2 pages of analysis of the ratio results that you found. Compare
the ratio results against the industry or main competitor. In your analysis you
should answer the following questions:
o How liquid is the company?
o How is the company financing its assets?
o Is management generating a substantial profit on the companys assets?

-4- Evaluate Return on Equity for the company for the last three years using the
DuPont analysis. (10% of the project grade)

l. Taking the information from the Income statements and the Balance sheets,
calculate the companys net profit margin, total assets turnover equity multiplier,
and return on equity using the DuPont formula for the company for three years.
Show your calculation!

ROE = Net profit margin x Total assets turnover x Equity multiplier

= Net income/Sales x Sales/Total assets x Total assets/Common equity

You can use Revenue instead of Sales.

b. Compare the results to main competitor. For the major competitor you can use
ratios from the Internet or calculate them for the last year.

Write about 1 page of analysis of the results that you received. In your report please
answer the question: If the management of the company would like to improve their
return on equity, what should the management of these companies do?
-5- Evaluate other areas of financial analysis: capital spending, Beta values, credit
rating service valuations (if possible), bond rating valuations (if possible), etc. (10%
of the project grade)

1) Find the data for capital spending. How much did THE COMPANY spend on
research, development, and engineering in the most recent year? How did this compare
with the previous year?

2) Find the current beta for the company and its major competitor in the Internet.

m. Present beta results as the table in your project.

n. Write about 0.5 page of analysis of beta values that you found. Compare the beta
values against the main competitor. In your report please answer the question:
How risky the company is?

-6- Collect and evaluate the data about stock performance of the assigned
company's for the last one year. (20% of the project grade).

1) Find the market ratios for the company for the last 1-3 years and its major competitor
for the last year in the Internet.

o. Present the market ratios as the table(s) in your project.

p. Write about 1 page of analysis of the market ratio results that you found. Compare
the market ratio results against the industry or main competitor. In your report
please answer the question: Are the common stockholders receiving an adequate
return on their investment?

-2) Analysis of the historical stock prices trend for the last year.

q. Collect and evaluate the data about stock prices of the assigned company's for the
last one year for the company and its major competitor.
r. Create the chart(s) using the stock price chart tools on the websites or Excel.
Present the chart(s) in your project.
s. Write about 0.5 page of analysis the historic stock prices trend for the last year.
3) Apply the Capital Asset Pricing Model (CAPM) Security Market Line to estimate the
required return on THE COMPANY stock. Note that you will need the risk-free rate and
the market return. Show this information in your project.

t. To get the current yield on 10-year Treasury securities go to Finance!Yahoos at

www.finance.yahoo.com -click on Market Data - Bonds. You will use the
current yield on 10-year Treasury securities as the risk-free rate to estimate the
required rate of return on stocks. Show this information in your project.
u. To get the market return go to money.cnn.com , Click on Market, then click on
S&P 500.You will use 52-weeks change for S&P500 listed as Year-to-Date
percentage change. Show this information in your project.
v. Calculate the required return on THE COMPANY stock using the Capital Asset
Pricing Model (CAPM) Security Market Line. Please show your work.
w. Find on the Internet the 52-weeks change of the stock price. Compare the required
return on the stock calculated using CAPM against it's historical return over the
last 52 weeks, found on the Internet. Is there a difference between these returns?
Is THE COMPANYS stock overvalued, undervalued, or properly valued? Why?
Explain your answer.

-7- Develop a specific recommendation, with supporting rationale, as to whether or

not the assigned company's recent trend in financial and stock performance is of
sufficient financial strength to warrant entering into a long-term commitment (about 1
page) (15% of the project grade).

PRESENTATION OF PAPER AND WRITING (15%) of the project grade):

-Organization, Format and Presentation of Paper including the Title page, Introduction,
Body, and Summary (4% of the project grade)

Use of Tables, Figures and Other Graphics to Summarize and Support Analysis Presented
in the Paper (3% of the project grade)

Logical and Smooth Flowing Transitions and Relationships among Sections of the
Written Report (3% of the project grade)
Research Sources and Significance of Research Information and Data, Use of APA
Citation Methodology (5% of the project grade)

Your final report is to be an executive-level financial report, directed to the CFO. This
report should be about 8-10 double-spaced typewritten pages (without tables and graphs).
Include suitable comparative, quantitative and qualitative analyses and conclude with a
specific and supported recommendation on the projected financial viability of THE
COMPANY THAT IS TO BE ANALYZED FOR THIS PROJECT (COMPANY
SELECTED BY INSTRUCTOR) for the next several years.

Essential research data, financial calculations and other documentation as necessary to

support your recommendation should be referred to in summary form in your report and
attached in detail as enclosures. All major sources should be referenced. There is no set
limit to the size of the enclosures, but it is recommended that only essential enclosures be
attached. You should use references and bibliography to identify any remaining
supporting documents you wish to include.

Format of the Research Project:

The paper should be written in APA style Research Paper format.

Please note that Use of APA Citation Methodology is required for the assignment.