Finance Project

OBJECTIVE

The specific objective of this graded written research exercise is to prepare an executive-level financial report to the chief financial officer (CFO) of a mythical company by which you are employed as a financial analyst. This report will pertain to the financial evaluation of a real, publicly-traded company. It will require independent research (Web-based or library), careful financial analysis, and the proper application of key financial theories and formulas.

SITUATION

You are a financial analyst with the mythical High Technology Corporation (HTC). HTC is an established manufacturer of a line of electronic components, and it services an international market. HTC is a new fully integrated wireless communication service for worldwide use. A competitive technical and economic product evaluation has determined that SPRINT NEXTEL (a real publicly traded company) is the best potential supplier. SPRINT is offering a competitively favorable deal.

However, based on some serious general concerns about the fallout of companies in the IT industry in general, the CEO has asked your CFO to conduct a financial analysis of SPRINT to determine if it is prudent to commit to this company’s communication system. The cost of cutting over to the new communication system is significant, and any interruption in support during the next few years would adversely affect HTC’s performance and profit. Specifically, the question is, will SPRINT be financially viable over the next two to three years?

YOUR SPECIFIC ASSIGNMENT

Your specific assignment is to conduct research, analyze it, and prepare a report for the CFO on the actual financial performance of SPRINT for the years 2009, 2010, and 2011. In addition to reviewing the traditional financial performance indicators, you are also to review SPRINT’s past and current stock performance for the same periods. Your report is to consist of three parts:

1. an evaluation of SPRINT’s financial performance for the periods 2009, 2010, and 2011
2. an evaluation of SPRINT’s stock performance for the periods 2009, 2010, and 2011
3. finally, a specific recommendation, with supporting rationale, as to whether or not SPRINT’s recent financial and stock performance are of sufficient financial strength to warrant entering into a long-term commitment with the company

To assist you in your task, the CFO has provided the following general guidance. As it is recognized that the telecommunications industry is undergoing a major contraction, it is very important for you to compare SPRINT’s financial and stock performance trends with those of the industry.

You are to consider all necessary and relevant financial performance and stock information, trends, and projections in supporting your recommendation. Relevant factors include, but are not necessarily limited to, financial statement analyses, 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.

REFER TO SITES SUCH AS http://finance.yahoo.com/q?s=S    and

http://www.sec.gov/cgi-bin/browse-edgar?company=sprint+nextel&match=&CIK=&filenum=&State=&Country=&SIC=&owner=exclude&Find=Find+Companies&action=getcompany

REPORT REQUIREMENTS

Your final report is to be an executive-level financial report directed to the CFO. This report must be no longer than six (6) single-spaced typewritten pages. Include suitable comparative, quantitative, and qualitative analyses and conclude with a specific and supported recommendation based on the projected financial viability of SPRINT for the next several years.

Essential research data, financial calculations, and other documentation needed to support your recommendation should be referred to in summary form in your report and attached in detail as enclosures. All major sources should be referenced. There is no set limit to the size of the enclosures, but it is recommended that only essential enclosures be attached. You should use references and a bibliography to identify any remaining supporting documents you wish to include.

Your report is to be submitted electronically and limited to a maximum of two files, one for the executive report and one for attachments. One file is acceptable, with attachments included as separate pages at the end of your report. Only Word, Plain Text, Rich Text, and Excel file formats are acceptable.

This report is an individual effort and must be researched, developed, and prepared by you. However, to maximize the learning benefit, you are encouraged to share freely and exchange sources of information (Web sites), general approaches, alternatives, and information on general financial theory and applicability as related to the report with your fellow students.

All questions related to this assignment should be referred to the mythical CFO (i.e., me).