Ompany Financial Analysis Research Paper ICO John Deere and Company
Company for analysis: John Deere and Company
SITUATION (12 pt font, double spaced, 1 inch margins)
You are a financial analyst with the mythical High Technology
Corporation (HTC”). HTC is an established manufacturer of a
line of electronic components for industrial-use machinery,
which services an international market. A competitive
technical and economic product evaluation has determined
that John Deere (a real publicly-traded company) is the best
potential candidate for a long-term commitment. John Deere is
offering a competitively favorable deal. However, based on
some serious general and economic concerns about the fallout
of companies in the industry in general, the CEO has asked
your CFO to conduct a financial analysis of John Deere to
determine if it is prudent to commit to this companys product
line. The cost of cutting over to the new product line is
significant and any interruption in support during the next few
years would adversely affect HTCs performance and profit.
Specifically, the question is: will a commitment to John Deere
be financially viable over the next two to three years?
YOUR SPECIFIC ASSIGNMENT
Your specific assignment is to research, analyze, and prepare a
report for the CFO on the actual financial performance of John
Deere for the last three years. In addition to reviewing the
traditional financial performance indicators, you are also to
review John Deeres past and current stock performance for
the last one year. Your report is to consist of three parts:
(1) An evaluation of John Deeres financial performance for
the last three years.
(2) An evaluation of John Deeres stock performance for the
last one year.
(3) Finally, a specific recommendation, with supporting
rationale, as to whether or not John Deeres recent trend in
financial and stock performance is of sufficient financial
strength to warrant entering into a long-term commitment.
To assist you in your task, the CFO has provided the following
general guidance. Since it is recognized that the industry is
undergoing a major contraction in selected markets, it is very
important to comparatively evaluate John Deeres financial and
stock performance trends against its Industry.
You may wish to include all necessary and relevant financial
performance and stock information, trends, and projections in
supporting your recommendation. These factors may include,
financial ratio trends and industry comparatives, capital
spending, stock growth, Beta values, credit rating service
valuations, bond rating valuations, and management and
investment reports when these documents are available.
YOUR SPECIFIC ASSIGNMENT
Research and analyze the following information for John Deere:
a? Annual Balance Sheets for the last three years.
a? The Income Statements for the last three years.
a? Annual reports, 10K or 10Q
a? Industry data
a? Analystsa reports on performance
a? Management reports or press releases
Using this information the students have to develop evaluation
of the financial performance for John Deere. (Totally 85% of the
1. Background and Industry (one short paragraph).
2. Select of most significant financial performance results for the
company: Compare Revenue, net income, working capital, total
assets for the last three years and other results of your choice
of the company against the industry or main competitor.
Present the table with this information in your report. Write
about 1 page of the analysis of these financial performance
results. (15% of the project grade)
3. Find financial ratios for the company and its major competitor
in the Internet. Write about 1-2 pages of analysis of the ratio
results you received. (15% of the project grade). Compare the
ratio results against the industry or main competitor.
4. Evaluate Return on Equity for the company for the last three
years using the DuPont analysis. (10% of the project grade).
Compare the companyas results to a major competitor.
5. Taking the information from the Income statements and the
Balance sheets, calculate the companyas return on equity using
the DuPont technique for the company for three years. Follow
the formulas on pages 437-438 of the textbook. Show your
6. Write about 1 page of analysis of the results that you received.
Compare the results to main competitor. If the management of
the company would like to improve their return on equity, what
should the management of these companies do?
7. Evaluate other areas of financial analysis: capital spending,
stock growth, Beta values, credit rating service valuations (if
possible), bond rating valuations (if possible), etc. Make an
overall conclusion about financial performance of the company
during the last years. Compare the results that you received
against the industry or main competitor. Summarize the results
that you received in 1 pages. What are the firmas financial
strengths and weaknesses? (10% of the project grade)
8. Collect and evaluate the data about stock performance of the
assigned companys for the last one year. Compare the results
that you received against the industry or main competitor.
9. Write about 1 page of analysis of the ratio results you received.
(20% of the project grade).
10. Develop a specific recommendation, with supporting
rationale, as to whether or not the assigned companys recent
trend in financial and stock performance is of sufficient
financial strength to warrant entering into a long-term
commitment. (about 1 page) (15% of the project grade)