BCO312 Financial Statement Analysis Task brief & rubrics

Task: Assignment 2 “Industrial Comparative Analysis”
• This is a group task.
• There should be up to 3 students in each group.
• As a group, you are required to answer all questions to the following tasks.
• You should prepare your answers with the objective of applying all the knowledge learned in class that corresponds to the course content.
• You should demonstrate thorough understanding of finance concepts and principles. The students’ work will be assessed by depth of analysis, solid judgments, logic of statements, and understanding of implications of finance and business. For calculations, you should show all your workings and the results.
Submission format: You should prepare Report in pdf and Presentation in ppt.
Formalities:
• Font: Arial 12,5 pts.
• Text alignment: Justified.
• The in-text References and the Bibliography must be in Harvard’s citation style.
Submission: Week 10 – Report via Moodle (Turnitin) by Sunday December 10th, 2023, 23:59hrs. Presentations in Week 11 in class (12 minutes per group). All group members should present.
Weight: This task is 40% of your total grade for this subject. Report and Presentation contribute equally (each 50%) towards the task grade.

This task assesses the following learning outcomes:
Outcome 1: Develop a deep understanding on how to compare companies in similar industries and form opinions as to the relative strength of one company versus another supporting these opinions with financial data.
Outcome 2: Develop a deep knowledge of financial ratios used for evaluating companies.
Outcome 3: Demonstrate a deep understanding of the tools of analysis in financial statement analysis. Outcome 4: Compare and contrast information about enterprises with relevant benchmarks.

TASKS:
You need to select the main competitor for the company that you used for Assignment 1. Then you should prepare a report and presentation on the following five tasks, using two annual reports for year 2022, for the company of your choice and its competitor.

1. Introduction: Explain briefly the similarities and differences between your company and its competitor with focus on business activities.
(10 points)

2. Income Statement: Prepare common size analysis for two companies. Compare the composition of their costs, operating expenses, EBIT and net income. Compare their dividend payout and retention ratios.
(20 points)

3. Balance Sheet: Prepare common size analysis for two companies. Compare the composition of their Assets (what part is Current Assets and what part is Non-Current Assets). Also compare their inventories, accounts receivable and accounts payable, short-term debt and long-term debt. Compare the capital structures of two companies.
(20 points)

4. Ratio Analysis: compare two companies in terms of liquidity, profitability, leverage and efficiency. Make meaningful conclusions related to the ratio results. Explain which company performs better in every area.
(20 points)

5. Research the industry performance in year 2022 and summarize the main tendencies. Relate the companies’ performance to the industry trends. Highlight strong and weak points for each company and suggest improvements. Explain how you see the leading company in this industry in the future.
(30 points)

Note that all comparisons should be performed in relative terms (i.e., percentages, ratios, etc.) and not in absolute (monetary) terms.

Points are stated at the end of each task.

Rubrics

Descriptor
9-10 The student demonstrates an excellent understanding of the
concepts.
8-8.9 The student demonstrates a good understanding of the concepts.
7-7.9 The student demonstrates a fair understanding of the concepts.
6-6.9 The student demonstrates some, but insufficient understanding of the
concepts.
3-5.9 The student demonstrates insufficient understanding of the concepts. They may mention some relevant ideas or concepts, although it is clear that the relationship between them is not understood by the
student.
1-2.9 The student demonstrates insufficient understanding of the concepts
and does not mention any relevant ideas or concepts.
0 The student leaves the question blank or cheats.