finance research project

OBJECTIVE

The specific objective of this graded written research exercise is to prepare an “executive level
financial report” to the Chief Financial Officer (CFO) of a mythical company in which you are employed
as a financial analyst. This report will pertain to the financial evaluation of a real, publicly-
traded, company. It will require independent research (web-based or library), careful financial
analysis, and the proper application of key financial theories and formulas.
The company that is to be analyzed for this project is ESTEE LAUDER.

You are a financial analyst with the mythical High Technology Corporation (“HTC”). HTC is an
established manufacturer of a line of electronic components, which services an international market.
HTC is currently a new fully-integrated wireless communication service for world-wide use. A
competitive technical and economic product evaluation has determined that ESTEE LAUDER is the best
potential candidate for a long-term commitment. ESTEE LAUDER is offering a competitively favorable
deal. However, based on some serious general concerns about the fallout of companies in the industry
in general, the CEO has asked your CFO to conduct a financial analysis of ESTEE LAUDER to determine if
it is prudent to commit to this company’s communication system. The cost of cutting over to the new
communications system is significant and any interruption in support during the next few years would
adversely affect HTC’s performance and profit. Specifically, the question is: will ESTEE LAUDER be
financially viable over the next two to three years?

Your specific assignment is to research, analyze, and prepare a report for the CFO on the actual
financial performance of ESTEE LAUDER

In addition to reviewing the traditional financial performance indicators, you are also to review THE
COMPANY’S past and current stock performance. Your report includes three parts:

(1) An evaluation of THE COMPANY’S financial performance for the last year. DuPont analysis and
analysis of significant financial performance results are required for the last three years. (See
detailed description below)

(2) An evaluation of ESTEE LAUDER stock performance for the last one year.

(3) Finally, a specific recommendation, with supporting rationale, as to whether or not ESTEE
LAUDER recent trend in financial and stock performance is of sufficient financial strength to warrant
entering into a long-term commitment.

To assist you in your task, the CFO has provided the following general guidance. Since it is recognized
that the industry is undergoing a major contraction, it is very important to comparatively evaluate
ESTEE LAUDER financial and stock performance trends against its Industry.

You may wish to include all necessary and relevant financial performance and stock information, trends,
and projections in supporting your recommendation. These factors may include, financial ratio trends
and industry comparatives, capital spending, stock growth, Beta values, credit rating service
valuations, bond rating valuations, and management and investment reports – when these documents are
available.

REPORT REQUIREMENTS
YOUR SPECIFIC ASSIGNMENT

Research and analyze the following information for ESTEE LAUDER.

–Annual Balance Sheets for ESTEE LAUDER for the last three years.
–The Income Statements for ESTEE LAUDER the last three years.
— Annual reports, 10K or 10Q——
–Industry norms ———–
—Analysts’ reports on performance
— Management reports or press releases
Using this information the students have to develop evaluation of the financial performance for ESTEE
LAUDER (Totally 85% of the assignment grade)
-1—Background and Industry (one short paragraph).

-2—Select of most significant financial performance results for the company: Compare Revenue, net
income, working capital, total assets for the last three years and other results of your choice of the
company against the industry or main competitor. Present the table with this information in your
report. Write about 1 page of the analysis of these financial performance results. (15% of the project
grade)

-3—Find financial ratios for the company and its major competitor in the Internet. Write about 1-2
pages of analysis of the ratio results you received. (15% of the project grade). Compare the ratio
results against the industry or main competitor.

-4- Evaluate Return on Equity for the company for the last three years using the DuPont analysis. (10%
of the project grade). Compare the company’s results to a major competitor.
Taking the information from the Income statements and the Balance sheets, calculate the company’s
return on equity using the DuPont technique for the company for three years. Show your calculation!
Write about 1 page of analysis of the results that you received. Compare the results to main
competitor. If the management of the company would like to improve their return on equity, what should
the management of these companies do?

-5- Evaluate other areas of financial analysis: capital spending, stock growth, Beta values, credit
rating service valuations (if possible), bond rating valuations (if possible), etc. Make an overall
conclusion about financial performance of the company during the last years. Compare the results that
you received against the industry or main competitor. Summarize the results that you received in 1
page. What are the firm’s financial strengths and weaknesses? (10% of the project grade)

-6- Collect and evaluate the data about stock performance of the assigned company’s for the last one
year. Compare the results that you received against the industry or main competitor.
Write about 1-2 pages of analysis of the ratio results you received. (20% of the project grade).

-7- Develop a specific recommendation, with supporting rationale, as to whether or not the assigned
company’s recent trend in financial and stock performance is of sufficient financial strength to
warrant entering into a long-term commitment (about 1 page) (15% of the project grade)

PRESENTATION OF PAPER AND WRITING (15%) of the project grade):
-Organization, Format and Presentation of Paper including the Title page, Introduction, Body, and
Summary (4% of the project grade)

Use of Tables, Figures and Other Graphics to Summarize and Support Analysis Presented in the Paper (3%
of the project grade)

Logical and Smooth Flowing Transitions and Relationships Among Sections of the Written Report (3% of
the project grade)

Research Sources and Significance of Research Information and Data, Use of APA Citation Methodology (5%
of the project grade)

Your final report is to be an executive-level financial report, directed to the CFO.
This report should be about 8 double-spaced typewritten pages (without tables and graphs).
Include suitable comparative, quantitative and qualitative analyses and conclude with a specific and
supported recommendation on the projected financial viability of ESTEE LAUDER for the next several
years.

Essential research data, financial calculations and other documentation as necessary to support your
recommendation should be referred to in summary form in your report and attached in detail as
enclosures.

All major sources should be referenced.
There is no set limit to the size of the enclosures, but it is recommended that only essential
enclosures be attached.
You should use references and bibliography to identify any remaining supporting documents you wish to
include.

The Individual Research Report must be posted to the D2L Student Assignments as a Attachments are
limited to a maximum two files in doc, docx.,xls. xlsx., or rtf. formats.

OTHER FORMATS ARE NOT ACCEPTABLE, will not be reviewed and graded.

If these formats are not available, use the following option:
File – Save As – in the bottom of the window for saving file you see “save as type” – choose type Rich
Text Format for doc. file, and previous option of Excel for Excel file.
Pdf. files will not be accepted and graded.

All works must be Word processed.

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Evaluation Rubric for the Research Project.
An evaluation rubric is available for the research project. The evaluation rubric outlines the specific
requirements and elements of the project. It is suggested that the rubric be used as a guideline for
the content, preparation, and completion of the project.
The rubric will be used for the evaluation and grading of the final research project.

1. Financial statements analysis of the assigned company (15%) – Excellent and very thorough
development and articulation of financial statements analysis of the assigned company

2. Financial ratio trend analysis of the assigned company and industry comparatives. (15%) –
Excellent and successful effort to implement financial ratio trends analysis of the assigned company
and industry comparatives; very clear linkages between financial retio results and investment
decisions and recommendations;

3. DuPont analysis of the assigned company. Compare with main competitor. (10%) – Excellent and
successful effort to implement DuPont analysis of the assigned company very clear linkages between
DuPont analysis and investment decisions and recommendations

4. Other areas of financial analysis: capital spending, stock growth, Beta values, credit rating
service valuations, bond rating valuations, etc. (10%) – Outstanding effort to to analyze other areas
of financial analysis: capital spending, stock growth, Beta values, credit rating service valuations,
bond rating valuations

5. The evaluation of the assigned company’s stock performance for the last year. (20%) – Excellent
and accurate evaluation of the assigned company’s stock performance for the last year; very clear
linkages between stock performance results and investment decisions and recommendations;

6. The student developed specific recommendation, with supporting rationale, as to whether or not
the assigned company’s recent trend in financial and stock performance is of sufficient financial
strength to warrant entering into a long-term commitment. (15%) – Outstanding and very thorough effort
to explain relationships the assigned company’s recent trend in financial and stock performance. The
results are sufficient to warrant entering into a long-term commitment.

7. Organization, Format and Presentation of Paper including Introduction, Body, and Summary (4%) –
Paper is extremely neat and has no blemishes; its organization is outstanding and very easily followed

8. Use of Tables, Figures and Other Graphics to Summarize and Support Analysis Presented in the
Paper (3%) – Tables, figures and other graphics are very descriptive and provide exceptionally strong
support for the paper; there are no errors in labels or in the numbering sequence

9. Logical and Smooth Flowing Transitions and Relationships Among Sections of the Written Report
(3%) – Very effective transitions are used throughout the written analysis

10. Research Sources and Significance of Research Information and Data, Use of APA Citation
Methodology, use of double spaced, with one-inch margins, and use 12-point Times New Roman font. (5%) –
Excellent and successful effort to identify and use appropriate and professional research sources
including Library Search Engines, Websites, S&P, SEC, stock exchanges, Morningstar, NYSE, Competitors,
10K Report, analyst reports, news releases, articles, etc.; appropriate and accurate documentation