One of the learning activities is to prepare a report on some company whose stock is traded on some stock exchange. You are to choose a company, gather data about the company throughout the semester, and turn in your report on Dec. 3. The goal of this exercise is to become familiar with reading financial statements, to become aware of stock as an investment alternative and to try to understand why the stock of your company varies.
Choose a company
There are 100's of companies whose stocks are publically traded. Choose one that interests you in some way. Perhaps you plan to work in some particular industry. A company in that industry would be a good one to choose. It is important that you are able to obtain financial statements of the company. Many are free on the web. Browse through the links below to find one. At your first discussion section, tell your TA your choice. Our hope is there will not be too many of the same choice, so the TA may suggest that you choose another. You might make several selections. Try to pick a company that you think will still be in business at the end of the semester.
Find and print the financial statements
There are three main statements: the income statement, balance sheet and cash flow statement. Be able to print these statements for some recent period and one more periods in the past. One year statements are preferrable, but statements covering 6 months or quarterly periods are satisfactory. The printed statements will be part of your report.
Find the current stock price and track the price over the course of the semester
When you have the stock symbol, it is easy to find the current price of the common stock of the company. Gather the data on a weekly basis. The report should include a plot of the stock price.
Analyze the company with various ratios
From information in the financial reports and stock prices, you can compute various ratios regarding your company. We will discuss some of these in class and they are explained in some of the links below. We may ask for your ratios at some time during the semester, so we can make comparisons in class.
A table has been prepared to show four ratios for members of the class. Click here to see it.
Summary
Give a brief evaluation of your company. How has the price of the stock fared during the semester? Can you explain why it has gone up or down? Are the company's ratios out of line with others gathered by the class?
Links
http://www.prars.com
PRARS: The Public Register’s Annual Report Service
A selection of free financial reports are on-line in html format.
http://www.prars.com/ibm/ibmframe.html
Guide to Financials: A basic introduction to reading financial statements
http://finance.yahoo.com
Enter a stock symbol and get all kinds of information including financial statements
http://www.freeedgar.com
Free financial statements – registration is required
http://www2.conferenceboard.ca/busbasics/en/wbcont.htm
Ratio analysis explained