Analysis of financial statements of two firms Chevron vs Hess.
This project requires you to use the tools of financial ratios to evaluate the current and
past performance (for the most recent three years) of two firms from a single industry.
Then you have to prepare a comprehensive and comparative analysis. ( 8 pages writing excluding
tables, figures, and references) Your analysis should use only publicly available information (Standard &
Poor’s Industry Surveys, Form 10-K, etc). You must attach the firms’ financial reports used in your
Guidelines and Procedure:
1. Obtaining and using sufficient financial statement data for two publicly traded firms
selected in a particular industry.
a) Use Form 10-K or annual report as the primary source.
b) Use the most recent three years of income statements and statements of cash
flows and the most recent four years of balance sheets.
c) The extra year for the balance sheet is for calculating average accounts on certain
accounts on the balance sheet and particular financial ratios for a year.
d) The average amount is the sum of the amounts on the balance sheet at the
beginning and end of the year divided by 2.
2. Study the financial statements and notes.
3. Input the financial statement data into Excel spreadsheet.
4. Program the spreadsheet to compute the financial ratios.
5. Perform the quantitative analysis of profitability and risk ratios.
6. Compare two companies in the same industry based on the financial ratios you
calculate above. Interpret your main findings for the analysis of the financial ratios.
a) Do a time-series analysis for each firm first. Explain those financial ratios that
have changed significantly over time. It’s helpful to read the Management
Discussion and Analysis section of the annual report to shareholders or the Form
10-K to find explanations for the time-series changes.
b) Do cross-section comparisons across two firms over time. Explain those financial
ratios differ significantly across firms.
7. Identify the financial problems that may have impact on the sustainability of profits.
8. Make investment recommendation based on your analysis and comparisons.
· Your project report must be typed, single-spaced. at least a 12-point font.
· In your project submission, you must attach the financial annual reports for each firm being
discussed and supporting Excel documents used in your analyses.
· Your project report must include references and appropriate citations for quoted
§ SEC: http://www.sec.gov
§ SEC EDGAR (The Electronic Data Gathering, Analysis, and Retrieval System):
provides information regarding SEC filings and forms such as Form 10-K. 10-K is the
annual report that most reporting companies file with the United States Securities and
Exchange Commission (SEC).
§ Yahoo Finance: http://finance.yahoo.com
§ Hoover’s: http://www.hoovers.com
§ Investor Guide: http://www.investorguide.com
§ MSN Money: http://moneycentral.msn.com
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