Capstone Financial Ratios & Statement Analysis Project

The Capstone Financial Ratios and Financial Statement
Analysis Project presents you with an integrative framework to further develop
and use skills for business analysis, business forecasting, and to a lesser
extent, equity valuation using quantitative and qualitative financial
information. By completing this capstone project, you will gain an
understanding of the conceptual mutuality between our continual reference in
this course of using accounting information to make business decisions, and how
to apply these concepts to make practical, real-world business decisions. To be
clear from the beginning; this assignment requires you to do independent
research, writing, financial ratio calculations, financial ratios analysis, and
to interpret your data and the qualitative and quantitative data and opinions
of others. It requires you deduce from your work a clear recommendation
statement on what you think should be done going forward based on your
research, calculations, and personal opinions. You will also be required to
read and study ahead. What that means is that this assignment requires you to
access, reasonably understand, and use information we may not have covered in
the class before you start and finish this assignment. Please refrain from emailing
me to report that you are running into concepts that we have not yet covered as
a class. We agree at the start that you are required to study ahead as much as
possible. Through-out the course I assign homework that introduce you to tools
used to analyze a firm’s financial performance to date, forecast its future
performance, and estimate its intrinsic value implied by financial ratios.
Furthermore, we introduced mini-cases and homework that exposed you to
examining the relation between a firm’s business strategy and accounting
numbers reported in financial statements. Through these learning activities you
have already been exposed to the same techniques and information sources used
by Wall Street professionals to discuss the impact of global and domestic
economic trends. We have already been using the financial ratios used in
industry to conduct business performance evaluations, to review the effect of
managerial talent on the future financial success of a business, and to learn
how to convert qualitative data into quantitative value estimates. The capstone
project presents you with a real-world, action-based learning experience. The
project provides an opportunity for you to demonstrate the process of
integrating various business strategy and large amounts of data in an applied
manner. You will engage in a real-time forecasting exercise where you forecast
a company’s future performance over a specific time. This project will require
you to research and find realtime information and data about the industry,
company, management plans, past annual financial statements, and other analyst
opinions. You will then analyze your findings in order to help decide whats
important for you to further examine and to apply therelevant financial ratios
and financial ratio analysis to the business analysis framework you wish to
construct your financial forecasts and recommendation. The two companies that
you will be required to research, apply financial ratio analysis, analyze
quantitative and qualitative findings, make an informed decision on which
company has a better short-term performance outlook, and write up your
methodology and recommendation are: Expedia and Airbnb Inc. By using the
companys most recent financial statements you will critically examine the reasons
for any key changes between the financial statements over 3-5 years. There are
many financial ratios and sets of financial results available in every case
that might be used to make forward predictions. It is important that you keep
in mind we are undertaking a final capstone comprehensive learning experience.
I do not expect that we have all the learning and skills needed to compete with
the pros or to even compete with the students that have already taken a
corporate finance course. Therefore, please temper the scope of the assignment
to your research abilities and prior skillsets. At all times you must remember
that your focus is to: Select and examine enough years of financial
statements for the two companies assigned. I suggest 3-5 years of financial
statements. Decide which financial ratios you feel are appropriate for you to
apply to the two companies in making and supporting your opinion and
assumptions. You must select and use select ratio from the following
categories. 1. Liquidity 2. Quick Ratio 3. Profitability 4. Working Capital
Ratio 5. Earnings Per Share Ratio (EPS) 6. Price-to-Earnings Ratio (P/E Ratio)
7. Deb-Equity Ratio In addition to the above minimum ratios you are required to
apply: 8. Horizonal Analysis 9. Vertical Analysis Given the recent Covid19
caused economic crisis in the tourism and travel industry, many expect that the
sector is about to experience a recovery. The two companies that each student
will examine to develop an investment opinion on which company has the best ability
to create the most short-term (1-4 year) stockholder value are: Expedia
Company Airbnb Company Your 1216-page written paper and final recommendation
must demonstrate that you performed and reasonably understood the
following:Qualitative Short industry analysis Brief overview of each
company that includes a brief statement about their business strategy Quick
assessment of senior managements ability to lead their company over the
short-term Summary of the strengths and weaknesses of each company to compete
Short statement on your overall personal take on the qualitative data.
Quantitative Review of each companys selected 3-5 years financial
statements Financial ratios from the categories listed above have been
computed based on the financial statements you selected. While you must sect
ratios from each category listed above in numbers 1-9, you do not have to
perform every ratio in those categories. Select only the ratios in each
category that you feel supports your opinion and recommendation. You must
perform a Horizontal and Vertical Analysis on each company. Writing Straight
off, it is important to know that I am not an English writing instructor and I
do not teach grammar or composition courses. However, I feel it is fair to expect
that all of you have completed one or more of these courses before finding
yourself in this class. It is your responsibility to recall your learning of
grammar, writing, and composition as you undertake this capstone project. North
Seattle College has the following resources available to help students in
writing, use of grammar and composition. You can access theses resources
through the following link: ING Page One Writing & Language Center
Regarding this assignment, while I do not pretend to be versed in an abundance
of writing skills, I want to remind you that I am a teacher and a long-time
business professional. That means that in my role as an instructor I will
assess your writing and use of grammar skills applied in this assignment. I
have included some additional information for you to review and to learn more
about what is required in writing your reports. A detailed rubric for the
assignment is forth coming. I will also post information as it comes to my
attention that might help you better understand financial statement analysis.
The first of these random posts in my attached financial statement analysis
chapter review, instructor notes, and optional quiz. I will occasionally post
more information and related articles as they become available. The assessment
rubric will be uploaded to the Canvas assignment sight for your use in planning
and completing the project