FINANCIAL ANALYSIS TERM PROJECTFor your semester (group) project, you are required to perform a financial analysis of a publicly traded company assigned by the instructor (either Target Corporation or Wal-Mart Corporation). Using your own analysis of ratios, library and internet data, news reports, and other sources, you will perform a variance analysis of your firm by comparing a financial forecast of your company to actual realized financial results for a given year. The project grade will be shared equally by all participants so you must manage your group for best performance.Your project consists of three parts:1. Data tables and graphs: Three sets of tables (and appropriate graphs) will be constructed using Excel or a similar spreadsheet.a.Condensed 5-year financial statements (Balance Sheet and Income Statement) for the firm you have been assigned. See Tables 3-1 and 3-2 on pages 64 & 70 of your text for a simplified example of the format. The financial reporting years (2015, 2014, 2013, 2012 and 2011) should decrease from left to right when you create the financial statements.b.Trend analysis of the five-year period of changes in key financial ratios. (Use text pg. 125 (Figure 4-1) for a guide.) Use at least one ratio from each of the five categories as illustrated in the text (see Chapter 4 for ratios). These ratios are to be used in addition to those making up the extended Du Pont identity (ROE = NP * TAT * EM) as outlined below. The company-selected ratios should them be compared against the industry average for each respective ratio, and graphed as illustrated in Figure 4-1 on pg. 125 in the textbook. You will also need to locate the annual industry averages (2011-2015) for the Standard Industry Code in which your company operates (both Target and WalMart operate in SIC 5331). Once you have these data points, you can then perform a regression analysis to forecast for 2016. Industry Averages are only available in the Simpson Library, and you must use the Dunn & Bradstreet Industry Norms and Key Business Ratios book as a reference for this project (no other industry ratios are acceptable). For each ratio you select, you will need to show all numerator and denominator information—in addition to the final calculation.Your choice of ratios should complement the line of thinking regarding the future of the company. Your graphical trend analysis of your choice of ratios should be arranged in ascending annual order. FINC 301 03 – Principles of FinanceFall 2017Professor Robert StrassheimPage 8c.Changes in components of the Du Pont ROE identity: Net IncomeSalesTotal AssetsROE = Sales Total Assets Common Equity You will need to show this formula (with all appropriate numerators and denominators) for the years 2011 through 2015. 2.Financial Forecast: The third portion of your project grade will be your financial forecast. Using historical financial data for your company and industry averages from 2011 through 2015, you are required to complete a financial forecast for specific financial metrics for 2016. Using your regression analysis skills learned in your MIST courses, you will perform a regression analysis of the 2011-2015 financials and develop a forecast for Return on Equity (ROE), Return on Assets (ROA), and Sales for 2016. In order to complete forecast, you will need to calculate/locate the historical company financial data for these three items (2011-2015). You will complete the regression in Microsoft Excel and print out your work and place in the Appendix of your project. Once you have completed your ‘forecast’ for 2016, you should be prepared to compare the forecasted data with the actual 2016 reported data by your company, and provide variance explanations for any differences in your write-up. 3.Cover Report: The write-up of your findings. Summarize your impressions on the future of the firm based on your research. Use the first paragraph as an executive summary of your paper (you’ll want to write this last). Here you will be arguing from the evidence to assess the ability of the firm to continue its recent growth and profitability into the foreseeable future. Without exposing actual evidence, the executive summary should provide the reading audience with your strong opinion on the financial well-being of the company. As part of your write-up, you would be well-served to use current events from the industry (consumer spending preferences, interest rates, rising/lowering costs, etc.) as part of your write-up. By analyzing the strengths/weaknesses of your assigned company, you will get a much better sense as to the firm’s ability to maintain growth and profitability for the foreseeable future. Beyond your data, a copy of the Management Discussion & Analysis and the President’s Letter from the Annual Report is required. The more information you have to support your assessment, the better. As in any research, carefully cite your use of other’s work and information sources (where you found your data and information. Include data source and dates on all tables and graphs. X X FINC 301 03 – Principles of FinanceFall 2017Professor Robert StrassheimPage 9Some library resources you will find useful: Industry Norms and Key Business Ratios, Dunn and BradstreetThe Outlook, Standard & Poor’s Standard and Poor’s Industry SurveysValue Line Investment Survey: Ratings and Reports, Summary and IndexWall Street Journal Dow Jones Interactive Encyclopedia of Business Information SourcesWilson Business AbstractsUniversity of Mary Washington Libraries Website for Business Data: http://libguides.umw.edu/c.php?g=424023&p=2899204 While these are only a few examples of resources, the internet contains an abundance of information on individual companies. Your write-up is limited to five typed (double-spaced) pages with as many tables and graphs attached as exhibits/appendices as necessary. Grading will be based on the effectiveness of the argument for your assessment, insightful use of your data, clear presentation, depth of analysis, and use of library/internet sources to support your case. Thus, data from your tables and other sources must be worked persuasively into your report as supporting evidence. Your paper should be able to be read and understood without looking at the attached tables. Avoid general arguments that merely refer to exhibits and regurgitate facts—you must analyze the company/economy/industry data and use solid support to back your conclusions. All tables and ratios must be calculated using Excel, or similar spreadsheets, from raw data. When preparing the ratios, all work must be shown (numerators/denominators). The instructor should be able to look at your financial statements (balance sheet/income statement/etc) and view where your inputs from the equations come from. Industry ratios may be taken from library or other secondary sources (Indicate where they came from and the publication date.) You may want to check for internal consistency among your secondary source data. This project is due at 6:00pm on 26 March 2017