Part 1: Adjustments to F/S
o In the “FSA Project” module found in Blackboard, open the spreadsheet for your chosen company and competitor.
o Read the 10-Ks for both companies (only read the MDA, Financial Statements and Notes to the Financial Statements).
o When applicable, adjust the necessary balance sheet and income statement accounts for the following:
• Non-recurring items (non-persistent), be sure to read the notes, not only the income statement.
• Effective tax rate, if not an appropriate rate.
• Any other issue you feel is not representative of the company’s operations and financial position.
NOTE: be sure to identify all your work. For example, use the “Adjustments” worksheet and the “Ratio” worksheets.
Part 2: Final Write-up of FSA Project
A suggested structure for the project is as follows:
• An executive summary. This section contains a brief summary of the entire report.
• A brief description of the company, its competitor, and the industry.
• For both companies, briefly compare and contrast the following issues, if applicable:
o Risks, including types of derivatives to manage their risk.
o ARO, including any assumptions made.
o Fair value measures, where used, hierarchy, assumptions made, etc.
• A discussion of the financial statement analysis. This would begin with a description of any pro-forma adjustments and caveats you made to the financial statements. The discussion of the actual analysis might be structured along the lines of beginning with ROE and its relation to the cost of equity capital. Then “analysis” into the margins, asset turnover, and leverage components (including “analysis” into the various ratios that help explain those drivers) for both the multiplicative and additive models. There should be some benchmarking, using the competitor’s adjusted number and industry numbers.
o Industry ratios (I will provide).
• This section should include a conclusion about the financial health of the company.
A typical report should not exceed 10 pages of text (double-spaced, font size than 11 or 12, Times New Roman). Appendices are additional and must be included to support your write-up.
• Properly reference any sources used to compile your analysis.
• The project should read as if one person wrote it.
Download the document and any other files necessary to Blackboard.
Chose from one of the two choices:
Main Company (Yr. End) Competitor (Yr. End)
Expedia Group, Inc. (12/31/2021) Booking Holdings Inc. (12/31/2021)
Bed, Bath & Beyond Inc. (2/26/2022) Kohl’s Corporation (1/29/2022)
• The links for the 10-Ks are provided on Blackboard