Guidelines for Term Project – Analysis of Financial Statements This term project counts for 20% of your course grade. Term project must be done individually. Each student will select an industry (excluding financial related industries) and two publicly traded firms in that industry to analyze. You will have to inform me your selection for two firms in a particular industry by directly entering the industry and firms. . 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 within an industry. You have to prepare a comprehensive and comparative analysis by submitting (1) the supporting Excel spreadsheets along with the annual reports and (2) the written report. The submission deadlines are specified as follows. Part 1 (5%) – You will have to submit the Excel spreadsheets including your financial data and ratio calculations (in Excel format) and the firms’ financial reports (Forms 10K in Word or PDF format) under Assignments in Canvas by uploading files (NOT via e-mail or Canvas Inbox) by . Part 2 (15%) – You will also have to submit the written report in Word or PDF format ( 5-10 pages excluding tables, figures, and references) under Assignments in Canvas by uploading a file in Word or PDF format (NOT via e-mail or Canvas Inbox) . The written report must be typed and submitted in one file. Zip files and any files sent via e-mail or Canvas Inbox will not be accepted. Grading rubrics for the term project are available under Assignments for Term Project in Canvas. Late submissions for the project will not be accepted under any circumstances. Guidelines and Procedures: Part I – 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 necessary financial statement data into Excel spreadsheet. 4. Program the spreadsheet to compute the financial ratios for the most recent three years (based on formula sheets from Chapter 4 – Profitability Ratios & Chapter 5 – Risk Ratios). However, you are NOT required to compute the basic EPS, diluted EPS, Altman’s Z-score, and the returns on common stock based on Capital Asset Pricing Model (CAPM).