FINANCIAL ANALYSIS PROJECT
You are an investment analyst in a new brokerage firm. The firm is interested in adding a new investment to its current portfolio of equity investment offerings and has decided to examine an
entity that operates in the pharmaceutical industry.
You have been asked by your supervisor to prepare an analytical review of the financial position of a company with a view to making a recommendation on whether an equity position should be taken in the potential investment. The name of the company has been specified for you and a copy of the financial information has been provided to you in Excel format.
Your analytical review report may address the following:-
An examination of the common sized Income Statements for the most recent two (2) years/periods. Observations should be made as it relates to three (3) major expenses and their impact on the firm’s profitability in each of the (two) 2 years under review.
An examination of the common sized Balance Sheets for the most recent two (2) years/periods. Observations should be made as it relates to the two (2) major elements in
the asset category and the liabilities category for each of the two (2) years under review.
Analysis of the financial strengths and weaknesses revealed by key ratio categories profitability, liquidity, asset management/utilization and leverage) for the most recent
two (2) years/periods. Three (3) ratios (at a minimum) should be presented in each of the previously mentioned categories.
A review of the capital market perception (i.e. stock price) of the company and its price performance for the periods under review and any other measures deemed relevant by you, the analyst.
The report should not be more than two thousand (2,000) words and should include:
A key point or executive summary of conclusions (preferably at the beginning of the report).
Please be aware that this is included in the word-count.
Graphical illustrations where appropriate (graphs and tables count as one (1) nominal word for word-count purposes). You should resist the temptation to relegate all charts and tables
to the Appendices. You should place the bulk data there and extract mini tables/charts/graphs, placing them in the body of your report at the appropriate places to illustrate or emphasize the points you wish to make. You should use a chart of share/stock price movements during the period under review and map significant rises or falls in the price against key events affecting the company in the review period.
Detailed tables, extracts or copies of financial information should be included in the appendices (which are NOT included in the word-count) but may be referred to in the body
of the report. Please note the appendices must NOT exceed 6 pages. A bibliography of sources of information (this is NOT included in the word-count). It is important that sources of information be cited and appropriately acknowledged. If you fail
to do this, it may constitute plagiarism, which is considered a serious offence against academic integrity.
Please be aware that you are NOT being asked to produce anything other than a financial analysis report, Long sections on corporate strategy, marketing or corporate history will not receive credit. Neither will credit be given for extensive sections of background material or unnecessary definitions. The principal focus of the report should be on the financial analysis
and the strengths and weaknesses it reveals. Your work should focus on financial issues and be grounded in the published financial reports provided. Note that while it is impossible to entirely separate the financial aspects from the strategic and wider management issues of the firm, the primary focus of the assignment remains financial.
You may use other information that is publicly available as long as you appropriately acknowledge the sources of the information. This is more an exercise in using financial information intelligently rather than simply performing calculations.
The overall aim of the assignment is to show your understanding of the key issues which financial analysts find significant in carrying out a financial review of the performance and financial position of a business. The assignment emphasizes the application of the analytical techniques you have studied and shows how financial information can be used to aid decision making primarily by investors.
