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AEM1200
Spring 2020
 TABLE OF CONTENTS

Table of Contents……………………………………………………………….…………..p.1
Introduction……………………………………………………………………….………...p.2
Financial Analysis……………………………………………………………………..……p._
Liquidity Analysis
Profitability Analysis

(and so on…)
I. Introduction:

Company Name: XXX

Date of incorporation: Month, Year

Main business: Brief explanation of main business

Mission Statement: “xxx”

II. Organizational Structure

A description of the organizational structure of the company. How many businesses does it
have?

Does it engage a divisional structure? Of what kind? Include a simplified organizational chart. (4
pts) About 1 page in length.
III. Financial Analysis

(All calculations and equations should be shown in the Appendix, but you should insert charts
like those exemplified below within your report. You only need to show the equations and
calculations for one year in the appendix.)

Discuss each ratio with references to calculations in your Appendix. Be sure to discuss the
implications of changes, and reasons behind these changes. Further, compare this to top
competitors and industry averages.

A. Liquidity Ratios
Current Ratio

Quick Ratio

B. Leverage (Debt) Ratios

Debt-to-Equity Ratio

C. Profitability Ratios
Return on Sales

Return on Equity

Basic Earnings per Share

D. Activity Ratios
Inventory Turnover Ratio

All ratios must be calculated for the last 3 years. Simply calculating the ratios for this section is
not sufficient. You must also include a discussion of what the ratios indicate about the
company’s financial health, how your company’s ratios compare to the desired levels discussed
in class, and any conclusions you can draw from this data. 4-5 pages including the tables and the
ratio analysis (below).
Within the report use a table similar to the following:

Year 2019 2018 2017

Liquidity Ratios
Current
Quick
Leverage Ratios
Debt-to-Equity
Profitability Ratios
Return on Sales
Return on Equity
EPS
Activity Ratios
Inventory Turnover

E. Ratio Comparisons

Compare your company’s ratios to the industry’s average ratios and the ratios for their top
competitors for the last three years. This information can be found on a variety of
business/financial websites. Please refer to the lecture by Tom Ottaviano (Mann Library) and to
the Mann AEM1200/2200 Website. Additionally, this might be a good place to use tables and
graphs to support your claims.
IV. Zombie Company

Is your company a zombie? Why or why not? (NOTE: a zombie firm is unable to cover debt
servicing costs from current profits over an extended period.) If it is, how likely is it that it will
go bankrupt or be acquired? If not, how does it avoid being a zombie, and is it likely to remain
not a zombie for the foreseeable future? Why? (6 pts) Approx.. 1 Page

NOTE:

Please use as an indicator of “zombiedom” the behavior of the interest coverage ratio, defined as
the ratio of net profits before interest and taxes divided by interest due. A “hard and fast”
definition of a zombie is a firm that has had at least three consecutive years of less-than-one
ICRs and is at least ten years old. However, if the debt-equity ratio of the firm is high, and its
ICR is low and/or decreasing (you might want to consider ICRs of less than four as indicating
trouble), that company already stinks, even if it is less than ten years old, but already publicly
traded. On the other hand, a would be zombie that is actually showing consistent increases in
ICR may actually be on the mend. Keep in mind the results of the rest of your analysis. Is your
firm likely to show strong profitability in the near future? Finally, use your knowledge of
profitability and of debt to equity ratio to show how a firm may consistently avoid becoming a
zombie.
V. Environmental Analysis

Note: Remember that each environment should cite three references; one of them unique (not
used anywhere else in the report).

A. Social Environment – this should be an analysis of the external social environment,

centered around demographic and societal culture changes, not the internal corporate culture

A. Political, Legal and Regulatory Issues – this should also be an external analysis and
should focus on national and international political issues, rather than those within the
company

B. Diversity Issues – internal - this is the only environment that should deal with internal
issues. Look at how the company approaches diversity. For example, what initiatives have
they taken to promote diversity? It is often helpful to look under the career link on their
website to find examples of such initiatives.

C. Global Presence Issues – external

D. Sustainability and Triple Bottom Line Issues – This should emphasize the
environmental footprint and position of the company as well as its contribution to social
sustainable development (as opposed to, for example, the demographic evolution of its
markets)

Finally, indicate which one of these five environments is most relevant to the firm at the
moment, and why.

IMPORTANT: each section (including the final paragraph) ought to be supported by at least
three references, one of them unique (except the final paragraph)!!!

(Each environmental description and the final para should be about 1/2 to 3/4 page long. If you
are unsure whether your issue belongs under a certain category, ask a TA! Little leniency is
given for inaccurately described environments.)
VI. Environmental Analysis - Markets

State the target market of the firm. Importantly, most firms try to extend their offerings to appeal
to as many segments as possible; so identifying the “core” target market of any given firm is not
obvious. However, for every major firm it is possible to discern a core market segment that
defines the organization.

After identifying this target market segment, you should analyze it from an external social
environment perspective, centered on demographic and societal culture changes, not the internal
corporate culture.

Remember that this section of the report should cite three references; one of them unique (not
used anywhere else in the report). A unique reference means it only occurs during that section of
the paper. Failure to provide one unique source in each section and a total of three sources per
section will result in point loss.

This section should be about 1 ½ to two pages long. If you are unsure whether you have
identified an appropriate issue, ask a TA! Little leniency is given for an inaccurately described
target segment or social environment, and this is a major point loss section for students in the
past.
VII. 4 P’s Analysis

A. Product

B. Place

C. Price

D. Promotion

(this analysis should take 2-3 pages)

Please make sure that you are analyzing either one of the most successful products in the product
mix of your firm, or a new product either about to be launched or just launched (definitively in
the “Introduction” stage of the product life cycle or, said differently, in the “Question Mark”
stage of the BCG matrix). And, please, be appropriate.

When in doubt, you may analyze a full product line. Keep in mind, though, that it is more than
likely that different components of a product line have quite different positioning, as they are
attempts of the part of a company to reach many market segments with the same brand.

In the case of a retailer, it maybe possible to analyze a specific store format.

VIII. Competitive Analysis

A. State the generic strategy (differentiation, cost leadership, focused differentiation or

focused cost leadership) the company currently follows and explain your assertion

B. Locate the company in relationship with actual and potential competitors with
regard to generic strategies. In what direction is the company moving? Is it a voluntary
decision, or an industry- or economy- wide development?

C. What should the company be doing regarding its strategic direction?

Elaborate on and explain each aspect above, using approximately 2/3 of a page for each of the
three sections.
IX. Leadership

This section should take 1-2 pages.

First, include a brief biography of the CEO (no more than ½ page) and how he or she came to
that role.

The main part of this section is the analysis. How does the CEO support the current corporate
strategy or culture? Or, how is he/she trying to change that strategy? Provide examples as well as
a broad description. Feel free to include a brief analysis on the CEO’s strengths/weaknesses and
the impact of this on the firm and firm strategy. If the CEO is trying to turn around the company,
explain how.

References: 3 total, 1 unique

NOTE: in practice, chances are that you will need at least double the references
X. Strategic Initiatives –
CHOOSE ONE AND ONLY ONE OF THE BELOW

This section should take about two pages.

NOTE: Your choice must reflect an understanding of the strategic situation of the firm, and
describe an initiative that either affects or takes advantage of that strategic situation significantly.

Productivity Initiative

Analyze a recently undertaken initiative at the company which increases the firm’s productivity.
When researching topic choices, operations, supply chain investments, and some HR initiatives
are good places to start. Be careful if you choose a merger, acquisition or international expansion
as you must remember that increased output does not equivocate to increased efficiency.

IMPORTANT: This section is easily misinterpreted by students, be sure to pick an initiative

which increases the firm’s productivity. A supply chain improvement, for example, improves
productivity while a new product launch, for example, does not.

References: 3 total, 1 unique

Merger/Acquisition

Examine an acquisition the company has made during the CEO’s tenure, or a merger in which it
has been involved during the CEO’s tenure. Analyze why the merger or acquisition occurred and
the result of it. Also describe what the terms of the agreement were and how this event was
publically perceived. Finally, select one element of the deal and detail it from a negotiation
perspective. Are there any lessons to be learned here?

References: 3 total, 1 unique

Introduction or Major Revampings of Significant Product Lines or Retail

Formats

If you take this option, you must analyze a different product line or retail format from that
presented in the 4P’s analysis. The chosen product line / retail format must be significant for the
current performance and future viability of your firm. While you can relax the 4P’s guidelines,
you must still present a clear understanding of the target segments and the positioning this new
or revamped product line or retail format engages, and why.

References: 3 total, 1 unique

XI. Valuation

As of 5/8/2020, is the stock price of the company overvalued, undervalued, or appropriate? Is it

likely to reach an appropriate valuation after the market stabilizes? Why? Why not? NOTE:
consider stock value from the point of view of "fundamentals”: connect what you have found out
about the company and its industry and competitors with its current stock value, the market
behavior of that stock value, and its P/E value relative to the market, its industry, and its
competitors. (Three references, at least one unique, 6 pts). About 1 page in length.
 Sources Cited

List of references (including Websites, broadcasts, and personal communications) used in the
report in APA citation format (http://www.library.cornell.edu/t/help/res_strategy/citing/apa.html)
Appendix

(contents in Appendix not included in the 24 page limit)