Finance Class
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Jump to Company Financial Statement Analysis Project Info Jump to Calculator I'll flag new items in the page with the words "Recently added" for a week or two after they are posted.
My.NCWC.edu:
Passwords for this
page: Course Module and Module Addition Document:
These documents are posted under My.NCWC.edu - see link above.
Module Addition Document: This one-page document containis some additional course information -- including contact info, a summary schedule of chapters, etc. We will talk about the flow of the class including this document on first night of class. This was posted to the files/handouts section of My.NCWC.edu and also emailed to you at your My.NCWC.edu address. Please READ/ PRINT before class. "PRINT FOR FIRST NIGHT"
Research tools through NCWC:
*** Don't forget to make use of the college's
library resources. Wall Street Journal Student Portal: WSJstudent.com provides online order forms at great student rates, Journal archives, discipline-specific resources and more. Go to http://WSJstudent.comWhen asked for the first three characters of your school's zip code, use "278" -- they have the main campus zip code on file.
Calculator Info and Spreadsheet with TVM & CF
functions:
Textbook Web Site:
Note Taking Slides,
Homework Solutions, etc. Other misc. documents: (Remember, see my.NCWC.edu for slides, homework solutions, etc.) |
Company Financial Statement Analysis Project:IMPORTANT: It is important that you read through all of this basic information before you really start your research. You'll especially want to read the section below about what the project should look like before you begin; otherwise you'll miss important info as you research. There is a real chicken-egg dilemma here -- you need to know what you are looking for, before you start to look for it. Below you will find: NOTE 1: I will not be constantly monitoring all the sites that this site links to, so you may run into a page that fails to link or a page does not contain the referenced info. If so, Email Brenda and let me know! NOTE 2: Issues
related to researching/downloading info on the internet: B. When using this page, you'll notice that most links will open in a new window, so you can leave this page open while you look at the other page. Don't forget to close pages periodically or your PC! C. You may need to get one of these industry standard document format viewers, if you don't have them already, because these formats are widely used.
STEP 1: TARGET
COMPANY DATA GATHERING
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| What to do or look for? | Sample using McDonald's |
| Go to the
company's main web site page. On this main page, look for investor information. You may have to go to sub-pages if the company is complicated, has a lot of non-business customers, and/or has international reach. Note: McDonald's asks the site visitor to pick a country, when they first visit the corporate site. Then, McDonald's has a "Corporate McDonald's" link in small print on the bottom of the USA site. Note that the link to corporate information is subtle, as McDonald's has tracked that the majority of their site's visitors are non-business. On the "Corporate McDonald's" page, choose "Investors" from the menu bar near the top of the page. Note, regardless of your company's site layout, you are looking for "corporate information", "investor relations" or "shareholder services". |
McDonald's Web Site
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| This is
McDonald's "Investor Home" page! Most public companies will
have similar info! On this page, you'll
find: Also, stock quotes, webcast info and News. PLUS menu links to: Corporate Governance: You can see the increased importance in light of Sarbanes-Oxley and corporate scandals. For Shareholders: Notice of annual meeting, contact info, eDelivery of statements, other online services McDirect Shares: McDonald's Direct Stock Purchase Plan Publications: Annual reports, SEC filings, etc. Stock and Dividends: Historical information and dividend/split info
See also menu about: |
McDonald's Investor Home Page Corporate Governance About McDonald's Financial Publications Shareholder Information MCDirect Shares |
| On the "Publications" page, you will
see that McDonald's has "Interactive Financial Highlights". Click
on these "(2003) Interactive Financial Highlights" and you'll find that McDonald's has downloadable
financial statements.
Don't just download the financials without getting the commentary though...Look at this great info that McDonald's provides in downloadable format. More companies are making things available by download. If your company doesn't have this information available as a download, you will find it spread out in the annual report and 10K. If you have been studying your company for a while, you can just get the most recent period information, otherwise these statements get you started with multiple years of data. (Notice the industry convention of providing three years of data on the Income Statement and two years of data on the Balance Sheet.) Note, that most companies will provide their data in multiple formats as they try to allow you the reader to pick your preferred method of viewing/printing. For example: Look at the Annual Report under Financial Publications. Notice how they give you format options and options regarding content. They also link to their SEC filings such as the 10K. |
Financial Publications 2003 Interactive Financial Highlights
McDonald's Downloadable Financials in MS Excel Format NOTE: This presentation was written in 2004 and referenced the available financial info at the time -- the 2002-2003 fiscal years. Use your company's most recent two years -- most likely 2002/2003 or 2003/2004, depending on when your company concludes its fiscal year and submits their information. *** We are in the process of updating the presentation and all links used -- hence the mixed year references. Get 2003 Annual Report in PDF format (Best for printing) |
Step 1B: Getting Investor/Shareholder Information from the SEC site and other sites (using McDonald's Corporation as an example):
The primary mission of the U.S. Securities and Exchange Commission (SEC) is to protect investors and maintain the integrity of the securities markets. See SEC What We Do for more information. Many acts/laws have been enacted giving the SEC the duty of establishing a public file containing material financial and business information on public companies for use by investors and others. Public companies must also keep such public information current by filing periodic reports These filings are required of public companies with assets greater than $10 million and more than 500 shareholders unless exempt for some reason. (See the SEC site for more information about exemptions.
| What to do or look for? | Sample using McDonald's | ||||||||||||||||||||||
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Most companies will link you to their SEC filings from their web site. If you jump to the SEC site from the company, the company will typically provide look up information in their link, so that their company data is automatically presented when you get to the SEC site, saving you a few short steps of performing the lookup. |
McDonald's Link to SEC site
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Of course, you can (and should) always go directly to the SEC web
site.
Even if your company provides a link to their own filings, you'll want to go to the SEC site to get familiar with the document filings and structure of the data on the site and the data contained in each required document. This site has a wealth of information to help the visitor really understand the law/history/requirements of disclosure and of course, the SEC is a working agency, so you find the typical business contact information. |
www.sec.gov
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EDGAR:
The SEC computer system for the receipt, acceptance,
review and dissemination of documents submitted in electronic format
is called "EDGAR" -- an acronym short for "Electronic Data
Gathering, Analysis, and Retrieval".
The following choices are available from the
EDGAR sub-page:
About Edgar
- History of Electronic Filing |
SEC Filings and Forms (EDGAR)
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On the SEC Edgar site, search for your
company. By default, filings
are listed most recent first. Both document formats will contain a header which contains the company's selected SIC code. Make a note of your company's SIC code. For McDonald's, the SIC code is: "Retail-Eating Places [5812]". See the general finance page for more links to info about SIC codes. I recommend downloading/saving at least the three underlined forms from the earlier section (the 10K, 8K and 10Q (unless the 10K covers the most recent quarter)). Take a look at any other forms that might be applicable. The forms you do get may include data present in other forms, by reference, so you may need to get other forms later. (If you are reading this, good for you! As a special bonus for your good thorough work in reading through this material, send me an email with "Edgar" in the subject line and I'll give you an extra credit point. You can click here to send the email. Please do not point this out to other class members. Let them find it on their own -- just as you have!) LEARN WHAT IS IN EACH OF THESE DOCUMENT TYPES. There are required sections, so if you are familiar with the forms, you can research other organizations more easily in the future. What is in these documents?
Re: Printing vs. Saving: I DO NOT
RECOMMEND PRINTING the whole SEC document unless you have a high-speed
printer, because the documents are long. Right click on the
documents and save them, so you can read them at your leisure and print
selectively. |
SEC Search Results for "McDonalds Corp"
including Forms 3, 4 & 5 SEC Search Results for "McDonalds Corp" excluding Forms 3, 4, 5
McDonalds Annual Report, Form 10-K405 for fiscal year
ended December 31, 2001, filed on March 25, 2002. McDonalds Current Report, Form 8K filed
on April 22, 2002 McDonalds Quarterly Report, Form
10-Q for quarter ended September 30, 2001, filed on November 9, 2001. NOTE: The company's SIC code is listed on the first page of either version of any SEC filed documents. |
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Third Party Sites
- that "slice and dice" the SEC Edgar data and provide other services
and data: NOTE: Some/most of these sites have some free content and a lot of "premium" content that is chargeable. Sometimes the "premium" content is just publicly available info in a prettier format or in an easier to search format. DO NOT pay for anything just for the purposes of our projects. But, you may find interesting sites that you may want to subscribe to, for your own personal usage. Edgar Online provides a lot of great ways to search SEC and other financial data. There is a lot of free content in addition to a lot of chargeable content. You can use this site in conjunction with the SEC site to search for the correct document/date and then go to the SEC site to look at the document. NOTE: Edgar Online has a lot of "sub sites" that it promotes separately like "IPO Express", "Fair Disclosure Express" and "FreeEdgar.com". (Student base rate for edgar-online is approximately $15 per quarter.) |
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Bond/Debt
Information for your company Don't forget to be on the look out for debt/bond related information about your company. The company's annual report and 10K will include a breakdown of their debt in the notes to accompany the financial statements. You'll include this info in Appendix C itemized below and in the module. To obtain market information about corporate bonds, go to the NASD Bond Info site and The Bond Market Association site |
www.nasdbondinfo.com |
STEP 2: SAMPLE
INDUSTRY DATA SEARCH
Find Industry
and/or Competitor Information!
Why? You want this industry and/or competitor data to
compare to your company for benchmarking purposes.
There is so much
good data and so many good resources out there. Here are same samples.
You may find sources you prefer. Email me with your favorite sources
and I'll post for everyone.
(Also remember the General Finance Links Page has
a lot of good sources.)
You can either compare your company to industry averages or to another company. If you plan to use another company, you'll get its financial statements as described above for your main company.
While you are looking at comparable industry information, be on the lookout for:
 | beta (We learn about this number, that expresses
your company's risk as part of a diversified portfolio, in discussed in Chapter 11. This value is required for Appendix C of your paper) |
| financial statement subtotals and key line items (expressed as a percentage) |
| financial ratios |
| other facts about the industry, its players and industry-wide issues |
| your company's position in the industry (industry-leader or industry-laggard?) |
Do you know your company's SIC code? Some industry sites list their data by SIC code, some sites use plain-old-words. See above for McDonald's example. McDonald's SIC code is 5812 which is for the industry segment "Retail-Eating Places".
| Narrative | Links |
| There are scores (hundreds,
thousands...) of great market & financial data out there. I've listed a few with links to McDonald's
and the general "retail-eating places" industry. See my
general finance page for more
great industry sources! Another thing about all of these sites is that they are detailed, multi-layered and linked to more great sites. You may want to right-click and "Open in New Window", so you don't lose your thread of research as you go through these sites. McDonald's stock symbol is MCD. Many sites will either let you search by company name or provide a stock symbol lookup link. |
General Finance Page (with
links to lots of other industry research sites) I've just used Yahoo! Finance here as an example. |
| Yahoo! Finance is a good
source for market, stock and other financial data and news. Go to the "Stock Research" link that is in the Investing menu on the left side of the screen. On the "Research Center" site, check out the categories of information. Here are some of the categories that you might find helpful: Sector/Industry Analysis: Look here for your industry. First you choose a sector, then from the sector listing, you can choose an industry. NOTE: There are ratios and other benchmarking numbers on each of these pages. (Market Cap., PE, ROE, Div. Yield, Debt to Equity (from which you can derive Debt Ratio), Market/Book (Price/Book), etc.) In McDonald's case, choose "Services" from the Sector Summary page.
Note you can see a list of Restaurants (i.e., competitors) by clicking
on "Restaurants". Or, you can go to a more detailed page about the
restaurant industry by clicking the "More Info" link at the right of the
page. Each company has its own "profile" -- set of pages with detailed analysis. Scan the entire page when you go to one of these sites looking for pertinent info and possibly helpful links.
Also there is an "Industry Profile". Look at the McDonald's Financial Profile Page. On the McDonald's "Profile" page, look in the right-hand column of data and you'll see a section marked "Reuters Abridged Financial Summary". Click on "Highlights" for info about 1, 3, and 5 year growth rates. Click on Reuters "Ratio Comparison" to see a few ratios and BETAs for your company and the industry. This link takes you to the "Valuation Ratios" page, where you'll see BETA for your company, its industry, etc. NOTE the menu on the left side of the screen that lets you go to other ratio sub-pages. Click through these to get comparables and to check your calculated company values. NOTE: Reuters has helpful "Learn about" links below each of its ratio sections. I won't go through all the Yahoo!/Reuters pages here, but scan through looking for helpful data and more links. On the McDonald's Financial Profile Page, click on the menu item "Key Statistics" for more financial data including BETA in the right column. You will see BETA = 0.67 which you need for appendix C of your paper. (Wendy's beta = 0.36, Industry Average beta = 0.68 NOTE: As you browse through sites and see pre-calculated ratios for your company, compare them to the ratios you calculated? Do they match? |
Yahoo! Finance
Sector/Industry
Analysis - Sector Summary Page Restaurant Industry Overview Page
Expanded Industry Statistics - from Reuters
Reuters "Highlights" containing 1,3,5 year growth rates Reuters Ratio Comparison including BETA and links to other RATIO AND comparable data
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| I have created a set of
example Excel Spreadsheets using the McDonald's data. Notes are
included in the Income Statement sheet of each Excel Workbook. The
final version (revision 5) contains the results of the data, but earlier
versions tell how to create the spreadsheet.
Take a look at the spreadsheets in order. Read the notes in each and perhaps print the final versions. |
Microsoft Excel
Versions: McDonald's 2003 Financials Revision 0 - AS DOWNLOADED.xls McDonald's 2003 Financials Revision 1 - Extraneous Info deleted - Notes in Income Statement.xls Also calculations related to Appendix C - historical stock/dividend returns: McDonalds Historical Share Returns and Dividends - Calculations done on last 10 years.xls |
| OUTLINE of Assignment
Organizational
Document/Project Rubric - Plan on turning a copy of this document in
with your project. BUS307 Group Project Rubric.xls "PRINT FOR FIRST NIGHT" |
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Written Analysis (Four to six pages)
- SEE/USE RUBRIC above.
See below for calculations and other components of the appendices. |
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| Appendix A: Normalized/Common-sized Balance
Sheet and Income Statement with either industry norm and/or competitor.
SEE/USE RUBRIC above. NOTE: The terms "Common Size" and "Normalize" are equivalent!!!!!
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Appendix B: Ratio calculations
with either industry norm and/or competitor
SEE/USE RUBRIC above.
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Appendix C:
SEE/USE RUBRIC above.
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Appendix D: SEE/USE RUBRIC above.
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Appendix E:
SEE/USE RUBRIC above.
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More supporting data related to appendix C - calculating required return
FOR/related to the risk free return
(Rf=Krf):
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Student Notes will
be here with a date:
I'll try to flag new items in the page with the words "Recently added" for a week or two after they are posted.
2/4/2011 Revised excel calculators posted!
1/11/2011 Hi everyone. Welcome to class! Please scan through this web page to become familiar with its content. Remember to go to my.NCWC.edu for course materials, etc. Call/email with any questions. (Email links abound on this page and all my contact info is in my.NCWC.edu.) See you in our first class.
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