Present a financial ratio analysis of People’s United Bank and two of its rivals in the industry.
FINANCIAL ANALYSIS ASSIGNMENT
Students present a financial ratio analysis of People’s United Bank and two of its rivals in the industry.
Maximum of 10 pages. This will include an Executive Summary. The Executive Summary should be no more than two pages and should be strategic, as if you were presenting to the CEO who is probably not going to read the rest of the document. The rest of the document will include the ratios with your analysis. Your analysis should be neat and well organized and show comparisons. You should strive to make it easy for the reader. It should not be just a data dump. The assignment is not to just calculate the ratios, but to interpret the story they tell about the industry and People’s United Bank.
For example, if you put the liquidity ratios on one page, explain how the ratios changed year over year, give the reason.
Approach the assignment as a series of questions that you are trying to answer before the reader asks them. You can use an Appendix to lay out the detailed calculations which will not be included in the 10 page limit.
The assignment is competitive meaning that the best papers receive the best grade. You should prepare a conclusion for your paper selecting which company is in the strongest financial position and the strongest operational position. Papers are judged on numerical accuracy, well organized with clarity of presentation and insightful analysis.
You must do calculate the ratios for People’s United Bank and one competitor (See presentation from People’s United to identify competitors). You have to do two years of common size income statements and two years of all the required ratios. In some ratios, specifically the ones using total assets, net fixed assets, and common equity, take the average asset balance. This will require you to use 3 years of balance sheets. Use the most recent full year financial statements available for your company. You must take the financial statements from the investor relations section for your company (within investor relations click on sec documents), or go to www.sec.gov. You CAN NOT take the financial statements from Yahoo finance or a similar source because they often do not contain all of the line items.
Financial Ratios (Note-these ratios are only for the financial ratio assignment-You will have different ratios when you complete your business plan later in the term)
Liquidity Ratios
Current Ratio = Current Assets/Current Liabilities
Quick Ratio= (Current Assets – Inventory)/Current Liabilities
Efficiency Ratios
Accounts Receivable Turnover = Net Revenues ÷ Accounts Receivable
Days Sales in Accounts Receivable = 365 Days ÷ Accounts Receivable Turnover (Sales/Average AR)
or = Accounts Receivable/ (Net Revenue/365 days)
Inventory Turnover = (Cost of Sales (COGS)) ÷ Average Inventories
Working Capital = Current Assets – Current Liabilities
Profitability Ratios
Operating Margin % = Operating Income ÷ Net Revenues
Contribution Margin % = Contribution Margin ÷ Net Revenues
Return on Equity % = Net Income/Common Equity (Average)
Return on Total Assets %=Net Income/Total Assets (Average)
Return on Fixed Assets%=Net Income/Net Property Plant & Equipment (Average)
Market Value Ratio