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Project Overview

Identify 2 companies from the same industry, listed in BSE/NSE, for which financial information

is available for at least 3 years.

You will need to look at the audited financial statements of the company.

Evaluate the company’s financial performance and policy.

Analysis Requirements

You are required to do the following analysis:

1) Ratio analysis will be the core of your analysis, namely

i. Liquidity Ratios

ii. Leverage ratios

iii. Activity ratios

iv. Profitability ratios.

v. Market ratios

vi. Evaluate the company’s profitability using the DuPont Framework.

After calculating the ratios for both the companies for the last 3 years, you must interpret them.

Remember to use the notes to the financial statements and any narrative provided by management.

You must compare both the company’s ratios also. Focus on the interpretation!

2) Also do the horizontal , vertical and trend analysis for both the companies financial statement

items, which you consider as important.

3) Based on the ratio analysis findings, what suggestion would you give to the following stakeholders

of both the companies: ( please mention the ratios which you think are relevant for the concerned

stakeholders also)

i. Creditors

ii. Banks and Financial institutions

iii. Investors

iv. Governement

v. Management

4) For each of the 2 companies that you have analysed :

a. Explain how the information in the chairman’s statement and the director’s report is useful

in understanding the information in the financial statements.

b. Do the companies provide information that would enable investors and analysts to

understand its long term direction? ( based on 2014-15 annual report only)

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c. How is the corporate governance report useful? What additional information would be

useful? ( based on 2014-15 annual report only)

d. Calculate the companies free cash flow. What does it tell you about the company? ( for the

last 3 years)

e. How will you find out if the company is growing, maturing or declining?

5) Look at the share price movement of both the companies stock for the last 1 year, on a weekly

basis and give your observations.

6) Conduct a risk and return analysis of the company, calculate the cost of debt and cost of equity of

the company.

7) State your observations on the kind of investments that the companies are making and the way the

investments are being financed.

You are required to submit a report. In this report, the companies will be compared and contrasted and

the results will be presented. There will also be a viva.