INC 3332- NOTES ON RESEARCH PAPER
The project requires you to conduct a complete analysis of a business. You will assume the role of a financial analyst and your task is to advise the company’s investors and creditors about the company’s prospects.
I would like the project write-up to be a readily comprehensible and condensed report of YOUR WORK (i.e., not a detailed compilation of all the information you collected). Accordingly, your write-up should be 10-15 pages in length and you may add an appendix with tables and charts. In essence your paper is a detailed Executive Summary of your research. Please cite any sources of data.
YOUR ASSIGNED COMPANY IS: Helen Of Troy, Limited (HELE)
Your paper should be organized according to the following sections:
1) Identify the economic characteristics of the industry. In this section you should gather some background material on the primary industry(ies) in which the company operates. This knowledge will allow you to compare your specific firm with similar companies with which it competes. (15pts)
2) Identify the company strategies. Firms establish business strategies in an attempt to differentiate themselves from competitors. Briefly describe the company’s strategy for success and, most importantly, the sustainability of profits generated by the strategy. This information can be gathered from the 10K and Annual Reports. (15pts)
3) Assess the Quality of Earnings for your company. The main objective is to assess the degree of conservatism in your company’s reported earnings. This assessment should help you to determine how predictable earnings are and the degree of risk inherent in your company’s performance. Typical questions to ask are: a) were there any unusual of infrequent items reported on the income statement? b) Were there any discontinued operations? c) Were there any extraordinary items? d) Was there an accounting change? e) What method(s) did your company use to value inventory?) (15pts)
4) Analyze Profitability and Risk. Use ratio analysis, common-size analysis and cash flow analysis to evaluate the current and past performance of the business and assess its sustainability. You should definitely compare your company to some peers in the same industry (see section 1 above). Comment on your company’s performance trends, problems and strengths. Include an assessment of liquidity, capital structure, debt management and long-term profitability. (55pts)