FIN 421 Finance Project Report

FIN 421 Finance Project Report

FIN 421 Project Report

Obtain at least five years of financial data for each of those firms from the SEC web site

(www.sec.gov). I expect you to read the 10-K reports. It will help you write Phase I: History of

the industry part of the project. For the numerical analysis, we will use WRDS to download the

financial data. It is a data service which is widely used and therefore will be helpful for you to

learn.

This project is designed to i) familiarize students with 10-K reports and much of the data

available to investors for analyzing companies, ii) learn how to use the WRDS data service, and

iii) provide an opportunity to get some hands-on experience applying corporate finance theory and

models to real firms. In the process, students will:

(a) examine the history of the industry and perform a ratio analysis

(b) examine the sources of risk in the industry

(c) compare and contrast capital structures of firms in the industry

(d) compare and contrast the dividend and share repurchase policy of firms in the industry

(e) perform a simple valuation of the firm

Industry: Automotive Industry

Five U.S firms in the industry :

Tesla (TSLA)

Ford (F)

General Motors (GM)

Chevrolet (GM)

Jeep (STLA) which is Stellantis

Each Phase should be 3-4 pages excluding graps, tabales and refrence page.

Format for the Project Report

Phase II: Capital Structure Analysis (40 points)

A. What are the debt-to-asset ratios over the past five years for the group of firms in

your industry? Make a qualitative analysis of whether these companies have an

appropriate amount of debt. This is a difficult question, but you should address the

costs and benefits of debt, particularly with relevance to the characteristics of these

firms.

B. Evaluate the weighted average cost of capital for the most recent year for each firm.

You can use the cost of equity and cost of debt from existing sources. However,

make sure to list the sources for this.

C. Sources: Company Annual Reports (edgar.sec.gov), finance.yahoo.com, Moody’s,

Value Lin

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