1) Choose two publicly traded companies from the same industry (For example, Abbot Laboratories and AstraZeneca Group plc. are the two firms in the pharmaceuticals industry).
2) Obtain the latest financial statements (balance sheets, income statements, statement of retained earnings) of these two firms. All the financial statements of the companies must be attached in your final assignment report.
– Please make sure that you obtain the annual statements (not quarterly nor semi-annual reports),
– Please do not select the companies from financial sector.
You may download the financial statements of the firms from their own web sites and they are usually available in the “investor relations” menu.
3) In this section you are required to make a financial statement analysis by calculating and comparing the following financial ratios of the two companies:
a) Short Term Solvency (Liquidity) Ratios,
b) Long Term Solvency (Financial Leverage) Ratios,
c) Asset Management Ratios,
d) Profitability Ratios,
e) Market Value Ratios.
4) Calculate the cash flow identity of the two firms. After that, you are required to provide comments on the following results:
a) Compare their Cash Flow from Assets,
b) Compare their Cash Flow to Creditors,
c) Compare their Cash Flow to Stockholders.