Obtain financial information for your firm for at least a 5-10 year time period. This information should include: income statements, balance sheets, cash-flow statements. The financial measures should include: common-size income statments and balance sheets, ratios, DuPont equations, net working capital.
Using the end-point methodology compare the firm’s current financial performance to its financial performance in the beginning time frame. Describe, discuss, and analyze the changes the you observe. Obtain current industry data on the various financial measures you have determined for the firm.
Compare the performance of the firm to the industry and describe/discuss your results.
Summarize your findings. Based on the financial analysis you have just completed, summarize your findings and draw conclusions about the changes in the financial performance/structure of the firm over time and about the current strengths of its operations.
Calculate your ‘best’ estimate of the Weighted Average Cost of Capital (WACC) for the firm.
a.Determine the cost of debt: Please explain the approach and procedure you use to make this determination.
b.Determine the cost of equity: Please explain the approach and methodology you use in making this determination.
c.Determine the capital structure of the firm: Determine the market value of the firm’s debt and equity.
Estimate the firm’s stock price using the Dividend-Discount Model:
a.Use an investment source—e.g., www.yahoofinance.com , www.morningstar.com etc, to find the following information:
ii.analyst’s estimated growth rate for the next 5 or 10 years
b. Use your estimate of the cost of equity in the WACC for the rE part of your formula
c. Combine the above information into the Dividend-Discount Model
Compare your result to the current market price of your firm’s stock. Describe, discuss, and analyze how they compare. Based on your knowledge of finance, how would you explain any differences your observe. Explain your result and discuss how the firm will use this WACC.