Common-Size and Trend Analysis

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Individual Research Project Part 1

Common-Size and Trend Analysis

Due at the end of week 3

Based on the course materials studied during week 1 > Chapter 5> Part 5.7 Common-Size Statements.

This project is closely aligned with the Course Outcomes and Finance Program Objectives.  Completion of this project can be used as part of a portfolio to show potential employers the student is skilled at performing company valuations and financial statement analysis and can be included on the student’s resume.

The project will be completed as an Individual Assignment. THE COMPANY to be analyzed for this project is selected by the instructor.


You are to assume you have been recently hired by THE COMPANY (selected by instructor). The head of your team is the CFO who is concerned about THE COMPANY’s current financial performance. The CFO would like your team to provide insights that will help them to project future financial performance. Specifically, the primary question to answer is to analyze the company’s financial trends over the most recent available 2-3 years, and which steps should be taken to improve its financial stability?

THE COMPANY that is to be analyzed for this project is to be a company selected by instructor. Alternatively, you can request approval of another publicly traded company. This request must be submitted before the end of the first week of the course. The request must include:

  • identification of the company by ticker symbol and name
  • a reasonable and appropriate explanation of why you want to examine the alternative company
  • the source of the analyst’s report that will be used in the analysis (which must be submitted to me)
  • acknowledgement by you that all of the specific elements of the assignment (see below) will be prepared by you and included in the final research project report.



Please note that you don’t need to sign up for any premiums or to pay for any information for the project.

Using the information from the websites the students will develop common-size and trend analysis for THE COMPANY (SELECTED BY INSTRUCTOR). (The evaluation portion will total 85% of the assignment grade)

Please choose one of the following companies for your project:

Morgan Stanley
Tenet Healthcare
Berkshire Hathaway


-1—Introduction (5% of the project grade)– The paper should begin with a short introduction that explains the purpose of the paper and provides an overview of the contents that follow (one short paragraph).

-2— Common-size analysis of the income statement (35% of the project grade).

Financial statements are available in  -To find the information for your company you need to type the stock symbol in the Search window to get into the company’s page. Click on Financial > Income Statement > Annual.

  1. Create the table that contains the most significant common-size analysis results of the of the income statement for the most recent available 2 years for THE COMPANY assigned for you for the project. To calculate common-size income statement results please follow the formula 5.9 from part 5.7 of chapter 5 of the textbook. Present the table in your project. Your table should include the amounts of USD in Millions and Percentage out of Revenue or Sales.


  • Sales or Revenue
  • Cost of Goods Sold or Cost of Revenue
  • Gross Profit
  • Operating Income
  • Interest Expense
  • Income Tax
  • Net Income
  1. Write about 2 pages of the analysis of the results you received. What important information does this analysis provide?

-3- Trend analysis (30% of the project grade)

The growth rates are available in  -To find the information for your company please type the stock symbol in the Search window to get into the company’s page. Click on Financial > Income Statement (or Balance Sheet) > Annual. Please use horizontal scroll below the table to see more years.

If you use published growth rates you must indicate that and cite the source.

  1. Create the table that contains the following data for your COMPANY over the most recent available 3 years. Present this table in your project.
  • Sales Growth rates,
  • COGS Growth rates,
  • Net Income Growth rates,
  • Total Liabilities / Total Assets Growth rates
  1. In addition, create the graphs for the most significant results on your choice and present them in your project.
  2. Write about 2 pages of the analysis of the financial trends and their stability. In your analysis compare the financial trends of your company to the results of the common-size analysis. What important information does this analysis provide?

4- Develop a specific recommendation, with supporting rationale, as to whether the assigned company’s recent trends demonstrate sufficient financial strength, will THE COMPANY be financially sustainable over the next several years, and which steps should be done to improve its financial stability? (about 1 page) (10% of the project grade). Your recommendations should be based on the results of your analysis of the project.

-5- Reflection – the student should write a paragraph in their own words reflecting on specifically what they learned from the assignment and how they think they could apply what they learned in the workplace. (5% of the project grade)

PRESENTATION OF PAPER AND WRITING (15%) of the project grade):

-Organization, Format and Presentation of Paper including the Title page, Introduction, Body, and Summary. Each section of the paper must begin with sub-headings.  Please use the sub-headings included in the assignment. Please use double space, with one-inch margins, and use 12-point Times New Roman font. (4% of the project grade)

Use of Tables, Figures and Other Graphics to Summarize and Support Analysis Presented in the Paper. All tables and charts should have the numbering system, like “Table 1…”, the title, and foot/end note to reference the source of the information. (3% of the project grade)

Logical and Smooth Flowing Transitions and Relationships among Sections of the Written Report (3% of the project grade)

Research Sources and Significance of Research Information and Data, Use of APA Citation Methodology (5% of the project grade)

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