1. TOWARDS THE BEGINNING
a. Choose a company which is publicly traded and have at least two years of trading history and two sets of financial statements.
b. Collect the relevant data for analysis and interpretation based on the below guidelines.
2. AVOID THE FOLLOWING:
a. Money losing companies
b. Financial Service Companies
c. Real estate investment trusts
3. ANALYZE THE FOLLOWING:
a. Investing and Financing Techniques (CLO 1)
i. What type of financing is the firm using? Short term or long term or any other possible features?
ii. Is there a distinctive project for this firm? If yes, what does it look like in terms of life (long term or short term), investment needs and cash flow patterns?
b. Financial Market Effects (CLO 2)
i. How does this firm interact with financial markets?
ii. How do markets get information on the firm?
c. Capital Budgeting and Cost of Capital (CLO 4)
i. Based upon the cost of capital approach, what is the optimal debt ratio for your firm?
ii. Bringing in reasonable constraints into the decision process, what would your recommended debt ratio be for this firm?
d. Debt financing and capital structure (CLO 3)
i. Does your firm has too much or too little of debt, relative to the sector or relative to the market?
ii. Given the current characteristics of the firm, how would you recommend that they disburse cash to shareholders?
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