Principles of Business
Produce a report on a firm of her/his own choosing where she/he will investigate specific economic aspects using another firm as a comparison (also of her/his own choosing). The primary source of data and information shall be the annual financial statements, namely the balance sheet and profit and loss statement.
The aspects to be analysed are:
profitability
cost structure (fixed and variable costs, break even point, operating risk)
value added generated by primary functions
asset structure
financial structure
The student may focus her/his attention only on one or some of them, depending on how deep into the details the analysis goes.
Those aspects will be described with the help of ratios. Its important to provide a general interpretation of the ratios presented whereas the comparable firm will serve the purpose to spot differencies which will guide the student in her/his search for specific insights. To understand the data and provide a sound interpretation i strongly suggest you to read the corporate annual reports and look at how ratios change over time.
The report shall start with the general introduction of the firm chosen and a brief note explaining why it has been used a specific firm as a comparable.
From the comparisons i expect the student to find out what specific aspects or issues need to be expanded on.
Remember that its not important that you provide the correct explanantion but rather that you make an effort to address the issues on hand.
In specific i suggest the following framework:
1. introduce the firm whith a focus on the primary functions and markets served;
2. show the profit & loss statement and the balance sheet relative to the last 2/3 years;
3. choose one or more aspects youd like to investigate;
4. represent those aspects using financial ratios;
5. pick a comparable firm and calculate the same ratios;
6. compare the ratios and look for diversities;
7. try to explain those diversities.
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