financial accounting: the company Suncor’s financial analysis and investment recommendation
the annual reports of SUNCOR for years 2010,2011,2012,2013 will be uploaded with the order.
horizontal Financial Analysis, investment recommendation. (Warren Buffet way) ALL ANSWERS IN EXCEL FILE
Below here are the full detailed instructions:
Using analytical techniques such as ratio and trend analysis, track the performance and financing of the company over the last four years. Ensure that a stock price
chart is included in the body of the report. These are readily available from sites such as the Globe Investor or Morningstar.
Compare key indicators for the company with its competitors including (where appropriate) the following items:
Net margin on sales (Profit margin)
Return on Equity
Inventory turnover (if applicable)
Days in Receivables (if applicable)
Times Interest Earned (Interest coverage)
Price earnings ratio
Determine trends from your analysis and how your company has performed relative to its industry group. You must compare each ratio to the industry average and one
competitor, or, if the industry average is not available, then to two competitors for each of the four years.
Note: You MUST calculate the key indicators for your company and provide an audit trail (in an appendix) showing how you arrived at your calculations. You are not
required to calculate the ratios for your competitors. Instead, you may use competitor ratios obtained from a credible investment source (be sure to provide
citations). The web site Global Investor is quite an effective source for determining the identity of publicly traded companies operating in a particular industry.
Prepare an investment recommendation that incorporates the philosophy of Warren Buffett as set below:
Buffett’s Tenets (extract from “The Warren Buffett Way”)
Is the business simple and understandable?
Does the business have a consistent operating history?
Does the business have favourable long-term prospects?
Is management rational?
Is management candid with its shareholders?
Does management resist the institutional imperative?
Focus on return on equity not on earnings per share.
Look for companies with high profit margins.
For every dollar retained, make sure the company has created at least one dollar of market value.
A discussion of the Warren Buffett tenets can be found in the book The Warren Buffett Way, Second Edition by Robert G. Hagstrom, John Wiley and Sons Inc., 2005.
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