Posted: September 3rd, 2015

Revenue recognition policies.

Apple analysis project

Provide a one-page brief description and history of the company, and analyze its competitive position and growth opportunities.

Business Description:

Provide a brief description of the firm’s business.
Identify the business segment within the industry.
Identify the core / primary revenue sources for the firm.

Industry Analysis:
Provide an overview of the industry drivers, including key risk factors.
Industry risk factors are generally those outside direct control of management. For example: Fed Reserve monetary policy, government tax, rapidly changing technology.
Analyze your firm’s competitive position and growth opportunities. Use Michael Porter’s competitive strategy framework if you like.Historic Financial Analysis
Accounting & Financial Analysis
Analyze quarter-to-quarter (Q/Q) performance reflecting the firm’s operating trends.
Does the firm’s historic financial performance support management’s future goals and strategies for the business?
Is the firm’s historic financial performance in line with the industry norms?

Template for
Fiscal Year Ended
2Q2011
3Q2011
4Q2011
1Q2012
2Q2012
Industry / Peers
Net Revenue

Gross Margin %

Operating Profit

Net Earning

Leverage Ratio

Net Working Capital

Liquidity Ratio

Inventory turnover ratio

ROA, ROE

Income Statement Analysis

Discuss revenue recognition policies.
Discuss changes in trends; unusual or extraordinary items
Quality of earning: potential red flags
Balance Sheet Analysis

Major changes in assets/liabilities
Significant trends in liquidity, working capital and balance sheet ratios.
Identify off-balance sheet exposure and identify potential impacts.
Cash Flow Statement Analysis

Amount of cash generated;
Source and uses of cash.
Availability of funds to finance capital expenditures, expansion of business activity, etc.
Analyzing your firm’s financial statements for the most recent three years. Compute your firm’s Current Ratio, Quick Ratio, Account Receivables Turnover, Total Asset Turnover, Inventory Turnover, Fixed Assets Turnover, Gross Profit Margin, Operating Profit Margin, Net Profit Margin, Return on Total Assets, Return on Common Equity, Debt to Equity Ratio, and Interest Coverage. For the same years, use ratios from either the industry or a similar firm as a benchmark for comparison.

Bond Valuation I: Prepare a brief description of at least one bond for your company, including such factors as its credit rating, bond’s call feature (if applied), collateral, interest dates, sinking fund provisions, and refunding provisions. Note: bond information can be found on yahoo finance (bond), E-trade. Also you can try NASD website for bond information: http://www.nasdbondinfo.com/asp/bond_search.asp. Barnes & Noble bookstores also has corporate bond book for all major companies.
Bond Valuation II: Using current price and information on coupon interest and maturity date, compute a yield to maturity (YTM) for your company’s bond. Compute the duration for your company’s bond.
Stock Valuations: Using Earning Multiple [i.e. price-earnings (P/E) multiple model] and Multi-stage Dividend Discount Model (DDM), compute the value of your firm’s common stock. Compare your calculated value to the current market price. Make investment recommendations. Note that for firms with no dividends or negative earnings, P/E model and DDM are not applicable.
Regression Analysis & Beta: For your firm’s common stock, collect the Friday closing price for the last 12 months and compute the weekly percentage price changes (ignoring dividends) and the standard deviation (s) of these weekly rates of return. Do the same for a market index, e.g., the Standard & Poors 500 index, QQQ, or DASDAQ. Plot the computed returns on a graph and use least-squares regression to construct a line of best fit. The slope of this line is an estimate of the beta for the stock.
Financial Derivatives: Discuss / describe how the firm achieves consistent revenue and earning growth through the uses of financial options / derivative tools / off-balance sheet financing (e.g. foreign exchange hedging, interest rate risk management, and off-balance sheet financing like joint partnership). Off-balance sheet exposure may be substantial for certain technology companies (including high-tech and bio-tech firms) due to standby letters of credit or synthetic leases. Identify off-balance sheet exposure and identify impact to leverage and repayment.

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