Conduct Quantitative Analyses of the Companies (financial)
Present a comprehensive financial statement analysis of the target acquisitions. Prepare the common size statements and all the ratios and amounts for the measures given below for the most recent year for both of your companies and present in a clear tabular form. Then discuss each category given below.
Prepare common-size financial statements for both target acquisitions
Complete both a horizontal and vertical analysis for each target acquisition
Compare the common-size financial statements between the two companies using cross-sectional analysis
Calculate and interpret relevant profitability, solvency, liquidity, leverage, market value ratios for each company that will be useful in comparing the target acquisition
For each company, graphically trend the net income and cash flow from operations over the last five years. Based on a comparison of the income statement to the statement of cash flows, what accounts explain the greatest differences between net income (loss) and cash flow from operations. Comment on the quality of the earnings numbers.
Calculate and interpret the net present value (NPV) of the companies annual free cash flow (FCF) for a 5 year period (NPER) taking into account a constant growth rate (which will need to be calculated), and a discount rate that is equal to your companies weighted average cost of capital (WACC), which is 7%.
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