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Requirements – Financial Statement Analysis Project
I (Dr. Pilloff) have tried to make this checklist comprehensive, but note that the instructions
document is “official” and this checklist is “unofficial” so there may some unintentional gaps
Requirements – writing & general
Clear and easily understandable writing
All paragraphs are at least 3 sentences (unless noted otherwise)
Grammatically correct writing
Discussion addresses all required areas
All assertions and conclusions clearly conveyed and supported by data, information, and sound reason
Written report (except table) is pdf, double-spaced, left justified, & 12-point font in Calibri or Times
New Roman font with 1-inch margins
Paragraphs either start with an indent or have a blank line between them
Page numbers in pdf document
All external thoughts, opinions, assertions, etc. are cited in accordance with instructions
Firms are treated as singular (not plural) in written material (e.g., it sells, not they sell)
Requirements – Excel file & other
The company being analyzed satisfies the required conditions – HQ in US, at least 2 full years of data,
NYSE or NASDAQ, assets of at least $500 million, some debt & interest expense, and not financial,
insurance, or real estate.
The “other company” should be an appropriate peer for the company being analyzed
The “other company” satisfies the required conditions
“Raw data” items are based on data from NetAdvantage as described in instructions
Repeat (since this is important and has ben overlooked by students): “Raw data” items are based on
data from NetAdvantage as described in instructions
“Raw data” cover the companies’ most recent fiscal years (for your firm) and most recent fiscal year
(for peer)
“Raw data” are consistently reported in $ millions (recommended) or dollars. $ thousands, or $ billions
“Raw data” are reasonable and internally consistent with basic accounting (such as A = L + E, total
assets = sum of asset items, and total liabilities = sum of liability items)
Fiscal years are properly labelled as year (such as 2022 or 2023) or fiscal year ending “date”
Ratios and measures based on a flow & a stock use end-of-period stock information
Relevant “Raw data” items set to 1 if reported as 0 and relevant “other” items are decreased by 1
Ratios and measures are computed from the “Raw data” presented in the spreadsheet
All ratios computed from figures included in Excel file. Ratios and measures are not simply copied from
10-K or other source.
All relevant cells, which are those highlighted in green or yellow, are filled in
No rows or columns are added to the spreadsheet
Nothing is included in the “black” columns
The name of the tab in the Excel file is not changed
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Requirements – Table (in written report)
Ratios and measures presented with 2 digits to right of decimal point
Profitability measures as percentages (e.g., 23.45%) and others in decimal format (e.g., 23.45)
Table presented on 1 page
Table presented as the last page of the relevant Word document
Table is single-spaced (unlike rest of document) and has no extra spacing between lines
Table has “clear” background (not yellow, green, or other color)
Names of firms and actual years are included (replace placeholders like “Other Firm Name”)
Requirements – Written analysis
Cover with title (Financial Statement Analysis of your firm name), your name, & date
1 paragraph introduction
–Starts on new page and has no heading
–Names company
–Overview of discussion and analysis
Section heading (in bold and underlined): Company description and discussion of risks
1 paragraph describing the company
–Headquarters location
–Size
–Stock ticker symbol & exchange
–What firm does
1 paragraph describing most threatening risk facing firm
–describe risk (from 10-k) in your own words
–describe why you think it’s such a big risk (make sure to effectively convey seriousness of the risk’s
threat)
1 paragraph describing a relatively non-threatening risk facing firm
–describe risk (from 10-k) in your own words
–describe why you think it’s a small risk
Section heading (in bold and underlined): Financial statement analysis, part 1
Subheading (in italics and on its own line): liquidity
1 paragraph discussing the liquidity class of ratios
–Start paragraph with a sentence that describes what this class measures / captures
–Is the firm’s overall liquidity position weak, neutral, or strong (with adjectives if relevant)
–Has the firm’s overall liquidity position weakened or strengthened over the past year (with adjectives
if relevant)
–Make sure at least 1 relevant number is included in the paragraph
Subheading (in italics and on its own line): solvency
1 paragraph discussing the solvency class of ratios
–Start paragraph with a sentence that describes what this class measures / captures
–Is the firm’s overall solvency position weak, neutral, or strong (with adjectives if relevant)
–Has the firm’s overall solvency position weakened or strengthened over the past year (with adjectives
if relevant)
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–Make sure at least 1 relevant number is included in the paragraph
Subheading (in italics and on its own line): leverage
1 paragraph discussing the leverage class of ratios
–Start paragraph with a sentence that describes what this class measures / captures
–Do you think the firm uses a little or a lot of debt (with adjectives if relevant)
— is more or less leveraged than in the previous year (with adjectives if relevant)
–Make sure at least 1 relevant number is included in the paragraph
Subheading (in italics and on its own line): efficiency
1 paragraph discussing the efficiency class of ratios
–Start paragraph with a sentence that describes what this class measures / captures
–Has the firm’s overall efficiency worsened or improved over the past year (with adjectives if relevant)
–Make sure at least 1 relevant number is included in the paragraph
Subheading (in italics and on its own line): profitability
1 paragraph discussing the profitability class of ratios
–Start paragraph with a sentence that describes what this class measures / captures
–Has the firm’s overall profitability worsened or improved over the past year (with adjectives if
relevant)
–Make sure at least 1 relevant number is included in the paragraph
Section heading (in bold and underlined): Financial statement analysis, part 2
1 paragraph that describes the peer firm
–Name of peer firm
–Stock ticker symbol and exchange of peer firm
–Why you selected it as a relevant peer (clear explanation with specifics)
Subheading (in italics and on its own line): liquidity
1 paragraph discussing which firm is in a more preferable position with respect to liquidity and how
meaningful any differences are (in your opinion)
–Make sure at least 1 relevant number is included in the paragraph
Subheading (in italics and on its own line): solvency
1 paragraph discussing which firm is in a more preferable position with respect to solvency and how
meaningful any differences are (in your opinion)
–Make sure at least 1 relevant number is included in the paragraph
Subheading (in italics and on its own line): leverage
1 paragraph discussing which firm is in a more preferable position with respect to leverage and how
meaningful any differences are (in your opinion)
–Make sure at least 1 relevant number is included in the paragraph
Subheading (in italics and on its own line): efficiency
1 paragraph discussing which firm is in a more preferable position with respect to efficiency and how
meaningful any differences are (in your opinion)
–Make sure at least 1 relevant number is included in the paragraph
Subheading (in italics and on its own line): profitability
1 paragraph discussing which firm is in a more preferable position with respect to profitability and how
meaningful any differences are (in your opinion)
–Make sure at least 1 relevant number is included in the paragraph
Section heading (in bold and underlined): Conclusion
1 paragraph that summarizes firm activities & risk, and conclusions and analysis
The table, single-spaced (with no additional spacing between lines), on 1 page, after the conclusion
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Requirements – Submission
All required documents are submitted in same submission – 1 Excel & 1 pdf
Submitted on time
Submitted through relevant item in “Assignments & projects” folder on Blackboard
Submitted documents can be opened and read
File names = your first name & your last name (so mine would be named Steve Pilloff)
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Financial statement analysis project
As you work on the project, make sure you read everything in this document. Note that the
instructions and guidelines for the project may be modified during the semester to provide
additional clarity or to increase the project’s relevance to the course.
General Notes
Writing expectations
For written material to earn full credit, it must be clear and easily understandable. The
submission should also be grammatically correct and have very few, if any, typos (especially
those that are easily preventable) and other errors such as incomplete sentences. In addition to
simply being understandable, the discussion should include all items laid out in the instructions.
All assertions and conclusions should be clearly conveyed and supported by data, information,
and sound reason.
Remember that a company is singular. For example, Walmart wants to be a low-cost seller, so it
has low prices. “They have low prices” is not correct.
If you are concerned about your writing, you are encouraged to make an appointment with the
GMU writing center for help with any writing-related assessment in the course
(https://writingcenter.gmu.edu/).
The text in written documents should be double-spaced and 12-point font in either Calibri or
Times New Roman font. All margins (top, bottom, left, and right) should be 1 inch. Page
numbers should be included (preferably, at the bottom center of the page). New paragraphs
should be clearly indicated either by starting with an indent or by having a blank line between
paragraphs (this document, which is single-spaced, takes the “blank line” approach). Text
should be left justified.
All written documents should be submitted as a pdf file, not as a Word (or other word
processing software) file. I anticipate that many of you will work in Word or other word
processing software such Google docs, which is fine, but when you have your final version, save
it as a pdf or print it to file.
Submissions should be made through Blackboard. If I cannot open a document, then you may
not receive any credit for it. This is true for all documents submitted through Blackboard –
Excel, PowerPoint, or Adobe (pdf). Therefore, you are responsible for ensuring that your
document was submitted properly and fully accepted by Blackboard. In general, emailed
submissions are either not accepted or accepted with a deduction.
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Grading
The maximum score on this project is 100 points.
Late submissions will be accepted without any deductions or penalty for up to 7 days (168
hours) after the assignment is due. If you think additional special arrangements, like a further
extension, may be relevant, contact me (Dr. Pilloff) and we can discuss the situation. In general,
extensions beyond the grace period are unlikely, especially if an issue isn’t raised before the
grace period starts. Students are encouraged to view the initial, pre-grace-period deadline, not
the end-of-grace-period deadline, as the relevant deadline. Students who use the grace period
do so at their own risk. Submissions will not be accepted once the grace period ends.
Unlimited submissions are allowed, but only the most recent submission will be graded, so
make sure it has all relevant documents.
Academic integrity
Students must work alone on this project. You may not work together. If you have questions,
you can talk to me (Dr. Pilloff) or consult the course materials (anything posted on Blackboard,
notes from class, or an external source that does not involve a person providing help, feedback,
answers to questions, etc.). Individual projects are individual endeavors. Using or obtaining
unauthorized assistance is considered cheating.
Project requirements
1) Select a company to analyze
This project requires you to conduct firm and financial statement analysis on your choice of a
company that satisfies all of the following 7 conditions:
1) The company is headquartered in the United States
2) The company has at least 2 full years of historical data
3) The company’s common stock is currently trading on the NYSE or NASDAQ (which refers
to any stock on either the NASDAQ Global Select Market, NASDAQ Global Market, or
NASDAQ Capital Market)
4) The company has total assets of $500 million or more in all years being analyzed
5) The company has some debt and interest expense in all years being analyzed
6) The company is not primarily engaged in financial, insurance, or real estate activities.
Banks, credit card firms, mortgage lenders, insurance companies, and real estate
investment trusts are among those entities that cannot be analyzed.
7) The company cannot be W.W. Grainger or a company you analyzed for any individual or
group project in FNAN 341 during a different semester.
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2) Fill in the relevant cells in the Excel file provided with the project
Fill in all the yellow and green cells in the Excel file provided with the project. Do not add any
rows or columns to the spreadsheet on this file. You should rename the file to your name
(simply to your first name from Blackboard or Patriotweb and then your last name from
Blackboard or Patriotweb), but do not change the name of the tab in the file (keep it as FSA
info). Making impermissible changes could have a substantially adverse effect on your grade
(adding rows or columns may make your spreadsheet impossible to evaluate). Also, do not
enter anything in the columns highlighted in black.
Some of the requested figures are ratios and measures that will be included in the written
report. Other ratios and measures (such as net working capital, operating net working capital,
and common size financial statement figures) are asked only for the spreadsheet.
Fiscal years should not be labelled as a date only and can be labelled as either:
A) a year (the calendar year accounting for the majority of the fiscal year or the later
calendar year if fiscal year ends 6/30) such as 2022 or 2023
B) either “fiscal year ending ‘date’” or “FY ending ‘date’” or other language. Examples would
be FY ending 12/31/2022 or FY ending 6/30/2023
All ratios and measures should be computed with financial statement data for the consolidated
firms obtained from NetAdvantage as described below. The process involves 2 steps:
A) Fill in “raw data” items by following the directions noted below
B) Compute ratios and measures using the “raw data”
A) Fill in “raw data” items
The purpose of reporting “raw data” is to explicitly note the financial figures that will be used to
compute ratios and measures, so that the accuracy of the ratios and measures in your
spreadsheet can be evaluated.
i) Go to NetAdvantage
Go to https://library.gmu.edu/, search for articles and databases, click on N at top of page, click
on NetAdvantage (you may be prompted to log in), select the desired firm by typing its name or
ticker in search box, click on income statement (or balance sheet and statement of cash flows)
on the left to go to financials.
Making the following selections will facilitate data collection:
Set Template to Standard
Set Restatement to Latest Filings
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Set Period Type to Annual
Set Order to Latest on Right
Click on “More Options” to get 4 more items
Set Currency to US Dollar (since companies for project are US, Reported Currency should be OK)
Set Conversion to Historical
Set Units to Millions (mm)
Set Decimals to Capital IQ (default)
You are strongly encouraged to report figures for the “raw data” part of the spreadsheet in
millions of dollars. I suggest using millions as it is commonly used and appears to be the default
for NetAdvantage (so you get millions without any special settings). That said, you may report
figures in dollars, thousands of dollars, millions of dollars, or billions of dollars, but make sure
that regardless of the approach you choose, you are consistent throughout the “raw data” part
of the spreadsheet.
The entries in the relevant “raw data” cells should be numbers that can be evaluated with Excel
functions.
ii) Fill in the “raw data” items in the Excel file with the noted items from NetAdvantage (or
relevant computations)
The following notes explicitly lay out how to use NetAdvantage to fill in the “raw data” for the 2
most recent fiscal years for the firm being analyzed. Note that NetAdvantage may report data
for the most recent 12 months in the column furthest to the right. Use this information only if it
reflects the most recent fiscal year. Do not use it if it reflects parts of several fiscal years. You
can tell when fiscal years end by looking at earlier years of data for the firm.
If an item is not reported by NetAdvantage, assume it is 0. This commonly occurs with shortterm debt and current portion of long-term debt, and sometimes with inventory and accounts
receivable. When the firm has nothing to report for the relevant item, NetAdvantage often
excludes it from the report.
Balance sheet items
“Raw data” cash = NetAdvantage Cash and equivalents
“Raw data” other nonoperating current assets (besides cash) = NetAdvantage Total Cash & ST
Investments – “raw data” cash
“Raw data” accounts receivable = NetAdvantage accounts receivable
“Raw data” inventory = NetAdvantage inventory
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“Raw data” other operating current assets (besides AR & inventory) = NetAdvantage total
current assets – (“Raw data” cash + “Raw data” other nonoperating current assets (besides
cash) + “Raw data” accounts receivable + “Raw data” inventory)
“Raw data” PP&E = NetAdvantage net property, plant, & equipment
“Raw data” other long-term assets (besides PP&E) = NetAdvantage total assets – (“Raw data”
cash + “Raw data” other nonoperating current assets (besides cash) + “Raw data” accounts
receivable + “Raw data” inventory + “Raw data” other operating current assets (besides AR &
inventory) + “Raw data” PP&E)
“Raw data” total assets = NetAdvantage total assets
“Raw data” accounts payable = NetAdvantage accounts payable
“Raw data” short-term debt = NetAdvantage short-term borrowings (or other name that
suggests it is short-term debt)
“Raw data” current portion of long-term debt = NetAdvantage Curr, Port. Of LT Debt (or other
name that suggests it is current portion of long-term debt)
“Raw data” other current liabilities (besides AP, ST debt, & current portion of LT debt) =
NetAdvantage total current liabilities – (“Raw data” accounts payable + “Raw data” short-term
debt + “Raw data” current portion of long-term debt)
“Raw data” long-term debt (reported in long-term liabilities) = NetAdvantage long-term debt
(or other name that suggests it’s long-term debt)
“Raw data” other long-term liabilities (besides LT debt reported in LT liabilities) = NetAdvantage
total liabilities – (“Raw data” accounts payable + “Raw data” short-term debt + “Raw data”
current portion of long-term debt + “Raw data” other current liabilities (besides AP, ST debt, &
current portion of LT debt) + “Raw data” long-term debt (reported in long-term liabilities))
“Raw data” total liabilities = NetAdvantage total liabilities
Total equity = “Raw data” total assets – “Raw data” total liabilities
Income statement items
“Raw data” revenue = NetAdvantage total revenue
“Raw data” gross Income = NetAdvantage gross profit
“Raw data” operating income = NetAdvantage operating income
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“Raw data” net income = NetAdvantage NI to common incl extra items
“Raw data” Interest expense on debt (enter as a positive number) = -interest expense (note
that you need to flip the sign, so you’re reporting a positive number in “Raw data”)
Miscellaneous items
“Raw data” depreciation & amortization = NetAdvantage Depreciation & amort from the
statement of cash flows
“Raw data” EBITDA = compute from relevant items in “Raw data”
iii) Deal with 0s
In some cases, a balance sheet item requested in the “raw data” may be 0 for your firm, making
it impossible to compute certain ratios and measures. Common items with 0 amounts are
inventory, accounts receivable, short-term debt, and current portion of long-term debt. If you
encounter any of the noted “raw” item reported as 0, then modify your “raw data” as follows.
Note that changing 0s to 1s is not something that is regularly done by analysts. We are doing it
so no important items are 0 and that everyone can do each computation for this project.
Changing a figure to 1 means changing the presented figure to 1, so if figures are reported in
dollar millions, the relevant 0 would be changed to 1, which would mean 1 million and the
relevant “other” would be reduced by 1 (again, meaning 1 million), so the relevant totals (like
total assets or liabilities) would still equal the sum of any subtotals (like current assets, longterm assets, current liabilities, or total liabilities).
If “Raw data” cash is 0, change it to 1. Other nonoperating current assets (besides cash)
should decrease by 1, so “Raw data” total assets remains unchanged and accounting
relationships still hold
If “Raw data” other nonoperating current assets (besides cash) is 0, it can remain 0
If “Raw data” accounts receivable is 0, change it to 1. Other operating current assets
(besides AR & inventory) should decrease by 1, so “Raw data” total assets remains
unchanged and accounting relationships still hold
If “Raw data” inventory is 0, change it to 1. Other operating current assets (besides AR &
inventory) should decrease by 1, so “Raw data” total assets remains unchanged and
accounting relationships still hold
If “Raw data” other operating current assets (besides AR & inventory) is 0, it can remain 0
If “Raw data” PP&E is 0, change it to 1. Other long-term assets (besides PP&E) should
decrease by 1, so total liabilities remains unchanged and accounting relationships still hold
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If other long-term assets (besides PP&E) is 0, it can remain 0
“Raw data” total assets should not be 0
If “Raw data” accounts payable is 0, change it to 1. Other current liabilities (besides AP, ST
debt, & current portion of LT debt) should decrease by 1, so “Raw data” total liabilities
remains unchanged and accounting relationships still hold
If “Raw data” short-term debt is 0, change it to 1. Other current liabilities (besides AP, ST
debt, & current portion of LT debt) should decrease by 1, so “Raw data” total liabilities
remains unchanged and accounting relationships still hold
If “Raw data” current portion of long-term debt is 0, change it to 1. Other current liabilities
(besides AP, ST debt, & current portion of LT debt) should decrease by 1, so “Raw data”
total liabilities remains unchanged and accounting relationships still hold
If other current liabilities (besides AP, ST debt, & current portion of LT debt) is 0, it can
remain 0
If “Raw data” long-term debt is 0, change it to 1. Other long-term liabilities (besides LT debt
reported in LT liabilities) should decrease by 1, so “Raw data” total liabilities remains
unchanged and accounting relationships still hold
If “Raw data” other long-term liabilities (besides LT debt reported in LT liabilities) is 0, it can
remain 0
“Raw data” total liabilities should not be 0
If “Raw data” total equity is 0, it can remain 0 (although it is very unlikely that total equity
would equal 0)
After converting 0s to 1s and making any other associated changes, confirm that
Total assets = the sum of all asset items
Total liabilities = the sum of all liability items
Total assets = total liabilities + total equity
iv) Collect data for your firm and a peer
In addition to collecting 2 years of “raw data” for “your” firm, you also need 1 year of “raw
data” for a “peer” firm. This other firm should be a competitor to your firm that you think is a
good peer for comparison.
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A good peer is one that engages in similar activities. Other factors like being roughly similar in
size are often taken into account as well. The peer must satisfy the same 7 conditions that
“your firm” satisfies – headquartered in the U.S., 2 years of data (even though only 1 is being
used), traded on NYSE or NASDAQ, assets of at least $500 million, not a financial, insurance, or
real estate firm, and not W.W. Grainger or previously analyzed firm in FNAN 341.
It is preferable that the “most recent” years for your firm and the peer firm be similar, but given
differences in the dates of fiscal years, I recognize they may differ. It’s OK if they do. It’s
acceptable for the project for the “most recent” years to differ between the 2 firms.
B) Compute ratios and measures using the “raw data”
Once the “raw data” have been collected and modified (if necessary because of certain items
being 0), ratios and measures should be computed.
i) Compute measures and ratios
Financial ratios and measures should be computed with the approaches covered in class. Do
not simply copy the ratios and measures from NetAdvantage, the relevant form 10-K, or some
other source.
Although the spreadsheet may be formatted to present answers to a limited number of decimal
places, the actual numbers that make up your answers should not be rounded. Using Excel to
compute ratios and measures will make this occur automatically. If you use a calculator, which I
strongly advise against, make sure to include many, many decimal places in every step and your
final answer, so that any rounding error is undetectable. The acceptable margin of error is
extremely small, so even small rounding differences can result in an answer being marked
incorrect. If you want to use a calculator, I believe it is most useful for checking, not generating,
your answers.
You can use cells below the “Ratios & Measures” section to do interim work if desired.
ii) Notes
For ratios and measures that involve both a stock and a flow, use the end of period stock, which
is the method used throughout this course. If you use the stock from the start of the period or
from an average, the answer will be marked incorrect if that stock changed over the period.
Assume the tax rate is 24.00 percent when computing return on invested capital (ROIC).
Common size financial statement measures should indicate the figure that would be presented
for the noted item on the relevant common size financial statement.
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Grading
Grades for this piece of the project are based on following the relevant directions. They are also
based on the reasonableness and internal consistency of the “raw data” presented on the
spreadsheet and the accuracy of the figures in the relevant “ratios and measures” cells.
3) Complete the “ratios and measures” table to be included in report
Complete the table that can be found at the end of this document using figures from the Excel
spreadsheet.
Replace all “name” headings and labels with the actual firm names. The table should be
presented on a single page, as the last page of the written analysis described in item 3. If you
copy and paste cells from Excel into the Word table (or other word processing software), make
sure the table is formatted correctly with single-spacing with no additional spacing between
lines (unlike the rest of the write-up, which should be double-spaced), 12-point font, and
center-justified entries. Also, with the exception of the “gray” and “black cells that separate the
various classes of ratios and measures, all other cells in the table should have no “fill” and
should not be green, yellow, or any other color.
All figures in the table should include exactly 2 digits to the right of the decimal point.
Profitability measures should be presented as percentages (e.g., 23.45% or 1.50%) and
measures for all other types of ratios and measures should be presented in decimal format
(e.g., 23.45 or 1.98).
Make sure to change the following items in the table template to the relevant names and years
for your project: Other Firm Name, Your Firm Name, Most recent year (for the other company),
Most recent year (for your company), and Previous year (for your company).
Grades for this piece of the project are based on following the relevant directions.
4) Produce a written analysis
Produce a written analysis of the company that satisfies the writing expectations described in
“General Notes” and is structured exactly as laid out below. Unless noted otherwise, all
paragraphs should have at least 3 sentences.
Use your own words wherever possible. If you quote a source or reflect another’s opinion,
assertion, or description. make sure to cite it. I expect that the report will cite the firm’s Form
10-K frequently. You can cite with any format you want, as long as the source is clearly
conveyed. For example, something like “Firm X 2020 10-K, p. 32” in a footnote or in
parentheses is sufficient. Do not attempt to convey thoughts, ideas, opinions, descriptions, etc.
from an outside source as your own. That is plagiarism and violates the Honor Code.
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Structure of written analysis
Include a cover page with a title similar to “Financial Statement Analysis of firm X” where
firm X is the name of the company being evaluated along with your name and the date.
Other information (like the company logo) can be included on the cover page, but is not
required and would not influence grading.
The report itself should start on a fresh page
i) One paragraph introduction that names the company you are analyzing and provides an
overview of the subsequent discussion and analysis. The overview simply lays out what the
report will cover. Note that there is no heading before the introduction.
ii) Section heading (in bold & underlined): Company description and discussion of risks
Headings go on their own line, with no other text (General Notes is the first heading in this
document).
iii) Three paragraphs that describe the company and key risks it faces.
The first paragraph should provide a description of the company by noting where it is
headquartered, how large it is (supported by at least 1 number), its stock ticker symbol
(note that $ is not part of the ticker symbol), and exchange (NYSE or NASDAQ), and most
importantly, what it does. I should understand the key basics about elements such as what
business the company is in, what products and services it offers, who its customers are, etc.
The second paragraph should describe the risk that you believe poses the greatest threat to
the firm. This risk should be taken from those listed and discussed in the form 10-K, but the
description should be in your words, not a cut and paste from the form 10-K. Make sure to
explain why you believe the risk poses such a large threat to the firm. Your opinion is a
particularly important aspect of this paragraph. Make sure to note that the risk was listed in
the 10-K in the “risk” section, so that the source is clear to readers.
Also, make sure you don’t just convey that the risk is important, but why you think it poses
such a large threat to the company. In past semesters, one of the most consistent sources
of deductions has been students not clearly conveying why the selected risk poses such a
great threat to the firm. Be very clear regarding the potential adverse consequences
associated with the selected risk. After reading this paragraph, a potential investor in the
firm should be highly concerned about the risk that’s discussed.
In past semesters, students have generally done a nice job of describing why the selected
risk raises concerns, but have not been successful at conveying why that risk should be so
highly feared that it’s been identified as the risk that poses the greatest threat to the firm.
Make sure to describe potential downside associated with the risk.
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The third paragraph should describe a risk that you believe poses a very modest threat to
the firm. This risk should be taken from those listed and discussed in the form 10-K, but the
description should be in your words, not a cut and paste from the form 10-K. Make sure to
explain why you believe the risk poses such a modest threat to the firm. In other words,
discuss a risk that is listed by the company in the “risk” section that you do not see as a
particularly dangerous threat to the firm. Your opinion is a particularly important aspect of
this paragraph. Make sure to note that the risk was listed in the 10-K in the “risk” section, so
that the source is clear to readers. Also, make sure you don’t just convey that the risk is
unimportant, but why you think it poses such a small threat to the company.
iv) Section heading (in bold & underlined): Fi
