Big Spenders Inc. plans to expand its portfolio of investments and requires your firm to suggest and evaluate several Canadian equity investment opportunities. Your responsibility is to pick an industry that you are an expert in and choose a listed company that you think will be a great potential investment opportunity (the target company). You will then have to perform a comparative analysis of the profitability and financial health of this company compared to one of its competitors (the competitor). Finally, you will be asked to give recommendations on why you think your target company will be a great investment for Big Spenders Inc. As you are new to the job, your Manager has provided you with some initial instructions to carry out this project. He recommends that you break the project into parts.

Part 1- Identify the Companies

To start with, you can visit the Toronto Stock Exchange website for information on listed companies in Canada. You can then perform a stock screening to obtain information about the stocks listed as well as the companies' financial information. The stock screener can be found at https://web.tmxmoney.com/screener.php?locale=EN.

After you have picked a company of your choice and identified one of its competitors (due Unit 2), your Manager has asked that you provided a brief background on the operations of the two companies as well as on the current stock prices of the two companies. (Due Unit 5) (Ungraded)

Part 2- Read and Understand the Financial Statements

Similar to your past project, an important part of the analysis of the potential equity investment is an assessment of each company’s current and future profitability as well as their financial soundness. You will have to extract details from their income statements in the last five years for both the target and the competitor companies. You can obtain this information directly after you have performed the stock screening on the TSX website, or you can go to the SEDAR filing system to search for Canadian companies’ financial statements (https://www.sedar.com). (Due Unit 7) (Ungraded

Final Project- Perform Financial Statement Analysis

Based on the information obtained from the two companies' income statements as well as the background information, you are to compare the performance of the two companies using financial statement analysis. Begin with performing the horizonal analysis, the vertical analysis and the ratio analysis. Discuss any other issues that you believe are relevant to the investment decision and make a recommendation to Big Spenders Inc. for whether your target would be a good investment.

Big Spenders Inc. would likely be a long-term client of FINACC LLP if you could once again gain their trust from this project. The Manager would like you to prepare the final report and trust that your analysis will be thorough and complete as always. (Due Unit 10) (worth 15%)

Evaluation

Competencies Demonstrated	% of Total Grade
1. Identification and Analysis of Issues (80%)
a. Company backgrounds, financial statement information, stock prices	30%
b. Horizontal analyais	15%
c. Vertical analysis	15%
d. Ratio Analysis	20%
2. Recommendation (20%)
a. Provides appropriate recommendation given the facts and analysis completed	20%
Total	100%

Answer rating: 100% (QA)

1 Identification and Analysis of Issues 80 a Company backgrounds financial statement information stock prices The two companies chosen for this comparison are ABC Corporation and XYZ Corporation ABC C... View the full answer