North Carolina Wesleyan College
at Raleigh and Durham
BUS 307
Finance
8-week Session
ADVANTAGE
Last Updated Winter 2008
PLEASE NOTE THE CURRENT NCWC POLICY
REGARDING ATTENDANCE AT
ADVANTAGE CLASSES
Attendance at the first class meeting of all ADVANTAGE courses is MANDATORY. Any student
not in attendance will be administratively withdrawn from the course. Any student administratively
withdrawn WILL be responsible for payment of the full tuition for that course.
Additionally, students are expected to attend all class meetings for this
course. Because of the accelerated nature of ADVANTAGE courses,
missing any class will have a negative impact on a student’s learning and
course performance, as well as on expected group work. If an absence is
unavoidable for class meetings other than the first meeting, the student is
responsible for contacting the facilitator. Additional make-up work, arranged
between the facilitator and the student, is required for a missed meeting. Any
absence will negatively impact the student’s final grade.
A facilitator may administratively withdraw any student who misses more
than 20% of a course (one ADVANTAGE workshop/class). A student who
is administratively withdrawn for missing more than 20% of a course will be
responsible for payment of the full tuition of that course. A student being
withdrawn under these conditions may also receive a grade of “F” if the
absence occurs after the stated deadline for withdrawing with a “W.”
2
ADVANTAGE COURSE MODULE
BUS 307 - FINANCE
COURSE DESCRIPTION
BUS307 is a 3-semester hour class covering the principles of corporate finance including analysis of
financial statements, ratio analysis, and the statement of cash flows; capital budgeting; risk and return;
stocks and bonds; cost of capital; financial institutions; securities markers and international finance.
LOCATION/SCHEDULE
This class will meet for the full scheduled contact hours. This class is an 8-week course.
PREREQUISITES
Before enrolling in this course students are required to have junior standing and to have completed:
ACC 201/202
ECO 211
CIS195
MAT092 or
equivalent
Financial Accounting & Managerial Accounting
Principles of Economics I (Macroeconomics)
Computer Applications
Intermediate Algebra (Note, this course is a prerequisite for ECO211
and, therefore, it is assumed that the student has this background.)
COURSE OBJECTIVES
Upon completion of the course students should be able to:
1. Explain the concepts and processes involved in: ratio analysis, capital structure, interest rates,
debt/equity, risk and return, tax laws, equity markets, break-even analysis, cost of capital, proforma
statements, capital budgeting, planning forecasts, current asset management, valuation, mergers and
acquisitions and time value of money.
2. Explain the techniques used to generate financial statements.
3. Explain the functions, technology and techniques of financial management.
4. Interpret financial data for use in making effective financial decisions.
MATERIALS OF INSTRUCTION
Required:
Ross, Stephen A., Westerfield, Randolph W., Jordan, Bradford D. Essentials of Corporate Finance, 6th
ed. New York, New York: McGraw-Hill, 2008.
3
MATERIALS OF INSTRUCTION (Continued from Prior Page)
Optional:
Ross, Stephen A., Westerfield, Randolph W., Jordan, Bradford D. Student Problem Manual, 6th ed. .
This workbook lists the Concepts for Review, Chapter Highlights, Key Terms and Concepts,
Concept Test, and Problems.
CALCULATOR
Each student must purchase a financial calculator. Many of the problems involve complex algebraic
and financial calculations -- and a financial calculator is necessary to solve them. The Texas
Instruments BA-II Plus (TI BA-II Plus) is the most economical and will perform the basic calculations
including present/future value calculations. The Texas Instrument does not perform linear regression
or standard deviation calculatins. You may choose to use one of the HP calculators, either the HP-10B
or HP12C. The HP12C is used by Dr. Shirley McLaughlin. These will be more expensive. Page 594596 of the text will be very informative as you practice working with your calculator.
The ability to use a financial calculator is critical to your success in this class. You are responsible for
learning how to operate your calculator -- and it is crucial that you are familiar with your calculator by
the time we begin Chapter 4.
Though not required, students with access to a personal computer are encouraged to experiment with
solving problems using spreadsheet software. Make use of basic computational abilities and learn the
many pre-programmed financial macros provided by standard spreadsheet software. Present/Future
value calculations, linear regression and standard deviation calculations are easily done with Microsoft
Excel software.
A NOTE REGARDING WORKLOAD
This course will meet once a week, for four hours at a time, for a total of eight weeks. The highly
accelerated pace requires students to take a great deal of responsibility for their own learning outcomes.
While in class, students are expected to actively participate in discussions and group activities led and
assigned by the facilitator. Outside class, students are expected to do a minimum of 10-to 15 hours per
week of study, homework assignments, and/or group projects.
ACADEMIC DISHONESTY
North Carolina Wesleyan College is committed to intellectual integrity in its academic pursuits. The
college's policy prohibits all forms of academic dishonesty. Academic dishonesty is normally defined
by, though not necessarily limited to, the following:
Cheating: defined as using inappropriate sources of information on a test or assignment.
Plagiarism: defined as presenting, as one's own, the ideas, works or products of another.
The academic dishonesty policy, as stated in the North Carolina Wesleyan College catalog, applies to
all courses, regardless of learning format. The academic dishonesty policy also applies to any
assignment or quiz submitted by a student, whether in person or by electronic means.
4
SUGGESTED GRADING CRITERIA
The grading procedure is the prerogative of the facilitator, who may present alternative grading criteria,
in writing, the first night of class, as circumstances and experience dictate (for example, the addition of
assignments, extra-credit options, or different weights for the assignments). Changes to the suggested
grading criteria will be announced in Workshop One; otherwise, the criteria presented in this module
will be followed.
GRADING
Quiz I 15%; Quiz II 15%: Quiz III 15%; Quiz IV 15%; Paper 15%;
Workshop Seven/Eight presentation of paper 5%; Homework 5%; Class attendance/participation 15%.
Students can also receive Extra Credit points -- up to 2 points.
Each of these course requirements is discussed in the following pages.
Letter grades will be assigned based on your final numerical average based on the following rubric:
Numeric Average
Letter Grade
Numeric Average
Letter Grade
93+
90-92
87-89
83-86
80-82
77-79
A
AB+
B
BC+
73-76
70-72
67-69
60-66
<60
C
CD+
D
F
QUIZZES
Four one-hour, in-class, open-book, open-notes quizzes will be given during the eight-week course.
Each quiz counts 15%. Below is the planned coverage of chapters on each quiz. Note, this chapter
layout may change. You will not be quizzed on a chapter that the class has not completed.
Quiz
Which week?
Covering Chapters?
1
2
3
4
2
4
5
7
1, 2
3, 4
7, 10
6, 11
5
RESEARCH PAPER
Each pair of students (hereafter called the team) will select a company for which an in-depth financial
analysis will be prepared. The facilitator will form the teams during the first class meeting. The team
should not select either team member’s own employer. The team will need to quickly select their
company, as they will most likely need to request the mailing of financial information from the
company (unless they prefer to download it). See Appendix A for detailed information about the
content of your analysis.
This research paper will be submitted at the last session. Note, that the research paper will also present
a short summary of their project as described in the “Workshop Seven/Eight Participation” section
below. The paper should be 4-6 double-spaced typed pages plus appendices (i.e., Financial statements,
calculations, graphs, etc. should be included as appendices and do not count toward the 4-6 page
count.). The paper is expected to be in the general format discussed in Appendix A of this module.
PLUS, each team should attach copies of all resources they plan to use for their paper with the
exception of the company’s annual report and SEC-filed documents.
The team is expected to research their topic through the appropriate channels: library, getting
information from companies, various on-line sources, etc. We will discuss extensively methods for
locating company and industry information during classes 1 and 2. We will be building the skills
required to perform the analysis progressively through class 6. It is recommended that you can work
progressively on your paper throughout the eight-week section.
The research paper assignment counts 15% toward your final grade. Grading for the overall
assignment will be based on criteria described in the “holistic scoring guide” attached to end of
syllabus. Note, the exclusion of any major component will result in point deductions as itemized in
Appendix A. Equal contribution by both/all team members is expected. Also, please review the
module attachment and college policy on Plagiarism before writing your paper.
WORKSHOP SEVEN/EIGHT PRESENTATION OF PAPER
Each research paper team will present the results of their company analysis (see above). The
presentation will count 5% toward your final average.
Guidelines for and Frequently Asked Questions about the presentation:
When is presentation?
The last night of our class (unless you need to do it earlier because one of the team members
will be absent on the last night of the class). See below.
How long should presentation take?
Approximately 10 minutes per company with each team member presenting about half of the
information. Spend the majority of the time talking about the financial analysis.
Should we have visuals?
Yes. You should prepare slides to present the main issues.
6
WORKSHOP SEVEN/EIGHT PRESENTATION OF PAPER (Continued from Prior Page)
Guidelines for and Frequently Asked Questions about the presentation (Continued from Prior Page):
What if one of the team members must be absent for the last class?
If possible, all teams will present during week 8. If a team member must miss class 8, their
team may present during week 7. The main value of this assignment is the presentation of the
material, so you must actually present to get full credit. If you miss your presentation day, you
can make up to 50% of the presentation value by turning in your slide presentation. If one
member of a team is absent from the presentation, the other team member can present their
portion of the presentation for full credit for themselves.
What key information should you cover during your presentation?
 Cursory overview of what company does
 Results of your analysis
 What you saw in Appendices A & B – were there any big movers in the normalized balance
sheet and income statement? What ratios changed year to year? What changed and why?
How did your company compare to the industry norm or competitor you used?
 What is your company’s beta? What is the required return? What is the max stock price?
Show the maximum stock price based on the suggested calculations.
 Your final thoughts on the company and its financial future – soundness of the company
and stock price…
HOMEWORK (as a component of your grade)
As with all Advantage classes, it is assumed that the student has read the Chapters for the class meeting
and has attempted to work the problems assigned for those chapters. As a measure of the student’s
preparation, the facilitator will review the student’s assigned homework for a brief period near the
beginning of class to check whether the homework has been attempted. (Note, “Assigned Homework”
means the homework that is specifically listed in each week’s preparation/reading assignment. The
facilitator may also override the default assignment during the class.) The homework does not have to
be typed or organized in any set pattern, but it should show that the student has attempted to master the
chapter material. If you miss a class, you are responsible for showing the facilitator the attempted
homework for the missed class at the next class meeting to get credit for the missed week’s homework.
CLASS ATTENDANCE/PARTICIPATION
Because of the accelerated nature of these classes, attendance and participation is very important.
Making up missed material, quizzes, homework: If you must miss a class, please notify the facilitator
in advance. IMPORTANT: It is assumed that the student has covered the material discussed during
the missed class on their own. If there was a quiz during the missed class, the student is responsible for
coming in to the Advantage office within a week of the missed class and taking a make-up quiz on site.
Other arrangements can be made for any make-up quiz per the discretion of the facilitator. Contact the
facilitator to ensure that a quiz is waiting for you at the office. As mentioned earlier, the student is
responsible for showing the facilitator the attempted homework for the missed class at the next class
meeting to get credit for the missed week’s homework.
7
CLASS ATTENDANCE/PARTICIPATION (Continued from prior page)
Making up class participation grade: If the student desires, the class participation grade for a single
missed class can be made up by preparing a written summary and short presentation to the class (5
minutes) about a financial topic. The topic can be from a financial web site, magazine, paper, etc. The
facilitator can assist you in locating a topic, at your request. The facilitator will not remind you to
make up the class participation grade – it is solely the student’s responsibility. Only one absence can
be made up in this manner.
What if I need to miss more than one class? NCWC policy is that the student cannot miss more than
20% of the class meetings. The need for two or more absences will cause the student to have to drop
the class until a later session.
EXTRA CREDIT
In each class, we will discuss finance topics in the news and related specialty topics not covered in our
text. Students can bring in relevant financial articles from web sites/business journals/papers/etc. and
summarize (not read) the article for the class. Student should tie article to class subject matter and
should try to stimulate further class discussions. Your summary should take 1-3 minutes. One point
per week up to a max of 2 points for the entire class can be gained in this way.
READING, WRITTEN AND PROBLEM ASSIGNMENTS
An important component of any course is the student’s preparation for the class by completing all the
pre-reading and assignments. It is assumed that each student has read the chapters for the class
meeting and has attempted to work the problems assigned for those chapters. See the section on
“HOMEWORK (as a component of your grade)” for additional information.
We may also have other problems/assignments for each chapter we cover. Expectations, scheduling
and kinds of assignments will be discussed in workshop one. The "Characteristics of Effective
Writing" and the "Holistic Scoring Guide" at the end of the module may be helpful for students in
organizing and evaluating written assignments. The facilitator will use the “Holistic Scoring Guide” to
evaluate the research paper assignment.
The intent of the assigned text readings is to provide students with analytical and conceptual skills as
well as mechanical application skills. Therefore, students should attempt to understand concepts and
of major formulas/tools. The intent of the assigned problems is to provide students with a review
process to insure understanding of the concepts presented in this course and to provide valuable
immediate feed-back.
It is recommended that students attempt to answer unassigned
questions/problems for each chapter in addition to the specific “homework” problems that are assigned
in the module for each workshop.
Short articles may be distributed during some classes out for supplemental reading and discussion.
Discussion of financial trends and events will take place in each class. A list of resources for
supplemental reading is shown in Appendix B.
8
ASSIGNMENTS TO BE COMPLETED BEFORE WORKSHOP ONE
Carefully read the course description, course objectives and any course outcomes listed at the
beginning of the module. Spend some time thinking about how the stated course objectives and
outcomes relate to your professional and/or personal experiences and goals. Also reflect on any
additional course objectives or outcomes which would enhance the value of this course for you.
Prepare the chapters listed below and specifically prepare answers to the following questions/problems
prior to class.
Chapter
1. Chapter 1
2. Chapter 2
Chapter
Review and
Self-Test
Problems
2.1
Critical
Thinking
and
Concepts
Review
1.2, 1.7, 1.14
2.1, 2.5, 2.11
Basic
Questions
and
Problems
5, 6, 7
Intermed.
Questions
and
Problems
15
Other
Appendix D (text)
Review your basic
understanding of financial
statements from your
accounting classes.
For Each Class:
 Test yourself as you read with the “Concept Questions”. Scan/attempt other self-test, starter, examtype and general problems at the end of the chapter. Note, only the “assigned homework” above
will be checked by the facilitator for your homework grade. Note, answers to most problems and
the solutions themselves to the Self-Test problems appear in Appendix C of the text.
 In the Student Problem Manual, complete the exercises for each chapter to practice your
understanding of the concepts in the material.
9
WORKSHOP ONE
Chapter 1 Introduction to Financial Management
Chapter 2 Financial Statements, Taxes, and Cash Flow
OBJECTIVES
Students will develop an understanding of how to analyze and interpret financial statements and learn
the goals and strategies of financial management by:
1. Examining the functions and goals of financial management.
2. Demonstrating an understanding of the balance sheet, income statement and statement of cash
flows. Utilize common tools to objectively evaluate the financial statements of a company.
ACTIVITIES
1. Lecture/Discussion of chapters 1 and 2
2. Discuss the course objectives, grading criteria and administrative matters.
3. Discuss stated course goals and objectives relate to your personal and/or professional experiences
and goals. Describe additional course objectives or outcomes which would enhance the value of
this course for you.
4. The facilitator will lead a discussion on the goals and functions of financial management.
5. The class will discuss financial statements and highlight the differences between accounting and
cash flow results. Taxes will also be discussed.
6. Review homework assignments from Chapters 1 and 2.
7. The class will discuss the research paper assignment. The facilitator will place the students into
teams for this assignment and then each team will be allowed to meet and select a company for
which an in-depth financial analysis will be prepared.
ASSIGNMENTS TO BE COMPLETED BEFORE WORKSHOP TWO
Chapter
Chapter
Review and
Self-Test
Problems
Basic
Questions
and
Problems
Intermed.
Questions
and
Problems
Other
3.1, 3.2
Critical
Thinking
and
Concepts
Review
3.4, 3.5, 3.9
3. Chapter 3
2, 6, 16, 24
32, 36
Work on Paper
4. Chapter 4
4.1, 4.2, 4.3
4.2, 4.3, 4.4,
2, 3, 8, 9
18
Study for Quiz #1
10
WORKSHOP TWO
Chapter 3 Working with Financial Statements
Chapter 4 Introduction to Valuation: The Time Value of Money
OBJECTIVES
1. Continue study of financial statements utilizing ratio calculation and analysis.
2. Understand real-world sources of company and industry data that can be used in company analyses.
3. Understand how the company’s mission and strategic plans determine the company’s operating and
financial plans.
4. Calculate the future value of an investment made today.
5. Calculate the present value of cash to be received at a future date.
ACTIVITIES
1. Lecture/discussion of chapters 3 and 4
2. Be prepared to discuss progress of the assigned project.
3. Students will use ratios and other analytical methods to continue to analyze company financials.
Emphasis will be placed on analyzing the results and locating real-world sources for the company
and industry data.
4. Students will understand how company management constructs pro forma (projected) financial
statements based on the company’s strategic and operating goals. Students will see how
management uses these pro forma statements to anticipate the firm’s future financing needs and
how the company’s overall value can be projected based on these pro forma plans.
5. Research paper teams can examine the financial statements from their own companies.
6. The class will spend more time discussing the framework of the research paper as described in
appendix A of our module.
7. Review homework assignments from Chapters 3 and 4.
8. Quiz on Chapters 1 and 2.
ASSIGNMENTS TO BE COMPLETED BEFORE WORKSHOP THREE
Chapter
Chapter
Review and
Self-Test
Problems
Chapter 7
7.1, 7.2
Critical
Thinking
and
Concepts
Review
7.1, 7.2, 7.3,
7.4
Basic
Questions
and
Problems
Intermed.
Questions
and
Problems
Other
1, 4, 12
14, 18, 22,
23,25
Work on Paper
11
WORKSHOP THREE
Chapter 7 Equity Markets and Stock Valuation
OBJECTIVES
1. Understanding and calculations of stock prices based on future dividends.
2. Determine stock prices/valuation using fundamental analysis.
3. Calculate the return on an investment.
ACTIVITIES
1. Lecture/discussion of chapter 7
2. Review homework assignments from Chapters 7
3. Calculate future stock prices using several methods.
ASSIGNMENTS TO BE COMPLETED BEFORE WORKSHOP FOUR
Chapter
Chapter
Review and
Self-Test
Problems
Chapter 5
5.1, 5.3
Chapter 10
10.1, 10.2
Critical
Thinking
and
Concepts
Review
5.2, 5.4
Basic
Questions
and
Problems
Intermed.
Questions
and
Problems
Other
1, 2, 3
29, 32
10.1, 10.2,
10.3
1,7, 9
22, 24
Study for quiz/Work on
paper
Study for quiz/Work on
paper
12
WORKSHOP FOUR
Chapter 5 Discounted Cash Flow Valuation
Chapter 10 Some Lessons from Capital Market History
OBJECTIVES
1. Determine the future and present value of investments with multiple cash flows.
2. Determine how loan payments are calculated and how to find the interest rate on a loan.
3. Understand the impact of diversification
4. Calculate the return on an investment
5. Understand the historical returns on various important tupes of investments.
6. Understand the historical risks on various important types of investments.
ACTIVITIES
1. Lecture/discussion of chapters 5 and 10
2. Be prepared to discuss progress of the assigned project.
3. Review homework assignments from Chapter 5 and 10
4. Work on variety of real world investment problems.
5. Exam on Chapters 3, 4, 7
ASSIGNMENTS TO BE COMPLETED BEFORE WORKSHOP FIVE
Chapter
Chapter
Review and
Self-Test
Problems
Chapter 11
11.1, 11.2,
11.4
Critical
Thinking
and
Concepts
Review
11.1, 11.2,
11.3, 11.9
Basic
Questions
and
Problems
Intermed.
Questions
and
Problems
Other
1,7,11,13
16, 31, 32
Study for Quiz 3
13
WORKSHOP FIVE
Chapter 11 Risk and Return
OBJECTIVES
1. Understand how to calculate expected returns.
2. Understand apply the systematic and unsystematic risk principles.
3. Understand the security and capital market lines and the risk-return trade-offs.
ACTIVITIES
1. Class discussion/lecture of chapter 11.
2. Be prepared to discuss progress of the assigned project.
3. Review homework assignments from Chapter 11.
4. Quiz chapters 5 and 10.
ASSIGNMENTS TO BE COMPLETED BEFORE WORKSHOP SIX
Chapter
Chapter
Review and
Self-Test
Problems
Chapter 6
6.1, 6.2
Critical
Thinking
and
Concepts
Review
6.1, 6.2, 6.3,
6.5 6.8
Basic
Questions
and
Problems
Intermed.
Questions
and
Problems
Other
3, 4, 5, 6,
22, 25, 26,
27
Work on Projects
14
WORKSHOP SIX
Chapter 6 Interest Rates and Bond Valuation
1.
2.
3.
4.
Understand important bond features and types of bonds
Understand bond ratings and what they mean.
Understand the impact of inflation on interest rates.
Understand term structure of interest trates and the determinants of bond yields.
ACTIVITIES
1. Be prepared to discuss progress of the assigned project. A team may present next week, if required.
2. Discussion/lecture of chapter 6
3. Review of the homework for chapter 6.
ASSIGNMENTS TO BE COMPLETED BEFORE WORKSHOP SEVEN
Chapter
Chapter 8
Critical
Thinking
Self-test
Problems
Basic
Intermed.
Questions
Questions
and
and
Problems
Problems
This class will be flexible in that projects may be assigned to
be presented at this class as well as class 8 depending on the
size of the class and the discretion of the facilitator.
Chapter 9
15
Other
Study quiz 4 on chapters 6,
and Prepare for presentation
WORKSHOP SEVEN
Chapter 8 Net Present Value and Other Investment Criteria
Chapter 9 Making Capital Investment Decisions
OBJECTIVES
1. Understand the payback rule and some of its shortcomings.
2. Understand accounting rates of return and some of the problems with them.
3. Understand the internal rate of return criterion and its strengths and weaknesses.
4. Understand why the net present value criterion is the best way to evaluate proposed
investments.
5. Understand how to determine the relevant cash flows for a proposed investment.
6. Understand how to analyzea project’s projected cash flows.
7. Understand how to evaluate an estimated NPV.
ACTIVITIES
1. If necessary, one or more class group(s) will give their chapter presentation.
2. Any previously incomplete chapter discussion will be completed during this class meeting.
3. Discussion/lecture chapters 8 and 9.
4. Possible discussion of various relative topics at the discretion of the facilitator.
ASSIGNMENTS TO BE COMPLETED BEFORE WORKSHOP EIGHT
COMPLETE Research Paper To Hand In by next week
COMPLETE Prep For Team Presentation of Research Paper
16
WORKSHOP EIGHT
Team Presentations of Company Research Paper
OBJECTIVES
Advantage students will present their analysis of their companies.
ACTIVITIES
1. Team Research Paper presentations.
2. Hand in research paper.
3. End-of Course Evaluations.
17
CHARACTERISTICS OF EFFECTIVE WRITING
The main idea is clearly conveyed. The paper is focused, meets the expectations set up by the writer,
and makes these expectations clear to the reader. The paper shows a clear sense of purpose.
Well-organized. The paper is clearly developed; transitions are clear from sentence to sentence and
paragraph to paragraph. In other words, the writer has not simply made a series of unrelated or vaguely
related statements. Rather, each sentence and paragraph carries the reader closer to an understanding
or appreciation of the writer's goal.
Support. The writer provides specific, concrete, and appropriate information from memory,
observation, reading, interviewing, or other sources. The paper is well developed with examples,
details, illustrations, anecdotes or the like.
Style. Sentences are varied and word choices are accurate. There is an absence of "clutter" or
"padding". Phrasing is clear and direct. Tone is handled consistently; sentence length and word
choices are appropriate to the audience and purpose of the piece.
Mechanics. Punctuation, grammar, spelling and aspects of format are handled correctly. The writer
has prepared the paper carefully with attention to appearance and other details. Opening, closing, and
title are strong and contribute to the sense of purpose, focus, and unity of the piece of writing.
Proofreading. Ask yourself the following questions:
1. What is my major point?
2. Have I supported generalizations, opinions, and conclusions with specific examples?
3. Have I avoided using unnecessary words and clichés?
4. Have I proofread for spelling, punctuation and typographical errors?
18
HOLISTIC SCORING GUIDE: TOTAL SCORE
6. (Outstanding) A paper in category 6 completes the task set by the assignment and meets all of the
evaluation criteria specified. It is virtually free from errors in mechanics, usage, and sentence structure.
It shows evidence of excellent control of language, and is distinguished by clear and orderly thinking.
5. (Very Good) A paper in category 5 may slight, but not ignore, the primary task of the assignment.
It may not be as thoughtful or as carefully reasoned as a 6 paper, but it will not be characterized by
mere statement and restatement of generalized ideas. There may be minor weaknesses in paragraphing,
but there is evidence of the ability to organize information into coherent units. The paper is largely free
from serious errors in mechanics, usage and sentence structure, and is generally well written.
4. (Satisfactory) Although a paper in category 4 may accomplish the assignment less completely than
a 6 or 5 paper does, the paper comes to terms with the basic task of the assignment. The reasoning may
be less precise than one would expect to find in a 6 or 5 paper, but it does not contain serious errors in
logic. It may insufficiently develop minor points, but it gives evidence of the writer's ability to support
key ideas. It is organized and paragraphed well enough to allow the reader to move with relative ease
through the discourse, though there may be some disjointedness and lack of focus. The paper may
contain errors in mechanics, usage and sentence structure, but not so frequently as to call into question
the writer's command of standard English or to consistently distract the reader from the content. The
paper shows generally accurate use of language.
3. (Minimally Satisfactory) A paper in category 3 shows serious difficulty managing the task of the
assignment and definite weakness in analytical thinking. Key ideas lack adequate support or
illustration. Errors in sentence structure, usage and mechanics seriously interfere with readability.
There may be distinct weaknesses in paragraphing and organization, but the total effect will not be
chaotic. The writer’s control of language is uncertain.
2. (Poor) A paper in category 2 fails to come to terms with the assignment. The primary task is
ignored, misconstrued, badly mis-handled, or redefined to accommodate what the writer wants to say
or is able to say. There may be a combination of the following defects: serious errors in reasoning,
little or no development of ideas, and no clear progression from one part of the paper to the next.
There are serious and frequent errors in sentence structure, usage and mechanics, showing a lack of
control in using standard English.
1. (Unacceptable) Category 1 is reserved for the paper in which a combination of errors, conceptual
confusion and disorganization demonstrates an inability to use the English language. However, there
are definite indications in this paper of the writer's attempt to deal with the topic.
Category 1 may also be used for the paper that is obviously "off-topic" by intention, regardless of the
writing quality. In this case, the paper does not deal with the topic assigned and, therefore, does not
fulfill the assignment.
Adapted from Edward M. White. (1985) Teaching and Assessing Writing: Recent Advances in Understanding, Evaluating and
Improving Student Performance. San Francisco, CA: Jossey-Bass Publishers.
19
Appendix A
Framework for Company Analysis
As you are analyzing your company, wear two hats. First, look at the results of your analyses from the
perspective of an internal consultant. Do you see downward or upward trends in the normalized
statements or ratios? How does your company compare to your industry source(s)? What is the beta of
other companies in your company’s field? Why is your company’s beta higher or lower? Is the
company’s stock price maximized? Is management doing its job?
Second, look at the results from the perspective of an outside industry analyst. Is this company
managing key business areas better or worse than industry counterparts? Is the company more or less
risky than others in its industry? Is the stock a good buy?
Your research paper should include the following key components:
What?
Comments
Company Overview
and then sections
discussing any
observations and the
results of your
analysis.
Approx. One Page General Company Overview:
 By general company overview, I mean what they do
and any discussion of company info in a non-financial
context. This is the smallest part of your paper…
Three to Five Pages Analyzing the Company Financially:
 Discuss the results of your analysis.
 Comment on year to year increases/decreases (trends)
in the normalized balance sheet and income
statement. Compare to industry info or another
The Holistic Scoring
company if you have it. Look for or hypothesize real
Guide will be used to
company or world events that caused the results you
evaluate and grade
see. Is the company well run?
the overview.
 Comment on trends in the company's ratios.
Compare to and comment on industry averages. Look
for or hypothesize real company or world events that
Do not
caused the results you see. Is the company well run?
PLAGIARIZE your
Are their results higher or lower than industry norms?
sources. Use your
 Discuss and calculate your company's beta, why it is
own analysis -- in
more/less risky than the market. What you
your own words.
determined your company's required rate of return to
be and then the maximum price an investor should
pay. Discuss your sources of assumptions; how you
derived these values; any caveats; why you got what
you got… Is the company's stock a good buy? What
is it selling for now?
 Historically, has the company been a good buy?
20
Where
discussed in
the book?
Throughout
What?
Balance sheet and
income statement for
the most recent 2
years.
Look for an Industry
Norm for the large
balance sheet and
income statement
line items (or
compare to a
competitor).
Comments
Show BOTH the company's Balance Sheet and Income
Statement. Include the following information:
Where
discussed in
the book?
Chapters 1, 2,
3
 Financial Statement Line Item Label (such as Cash,
Sales, etc.)
 Present and prior year’s results
 % Increase/Decrease from present to prior year’s
results
 Present Results
 Prior Results
 % Increase/Decrease from Prior to Present
 Industry Norm (if possible) - Cite source of industry
norm, attach source if possible.
Then look for and
comment on trends.
Calculate at least 10
key ratios for the
most recent 2 years.
Then look for and
comment on trends.
Include ROA,ROE,
P/E, etc.
Compare your
company’s ratio
results with industry
average(s)
Show the calculation of at least 10 key ratios for both
present and prior year for the company. Then compare to
an industry norm.
Show the following information for each ratio. For each
year (both present and prior), calculate the ratio showing
these three components:
1. Ratio Name = ratio formula; such as “ROE = Net
Income / Equity”
2. Ratio with balance sheet and/or income statement
numbers substituted
3. Ratio Result
4. Relate and compare ratios of your company to
Industry Norm or Competitor and market - Cite
source of industry norm, attach source if possible.
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Chapter 3
What?
Comments
All of this information can be put on one page.
Calculate and show
your firm’s beta and
standard deviation.
Discuss what the beta and standard deviations means and
show the firm’s return using these two methods.
Then calculate the
company’s required
rate of return using
the SML and CPL.
Calculate your company's required rate of return using
the Security Market Line Equation and the Captital
Market Line Equation.
KyourCompany = KRf + (KM- KRF)Betayourcompany
Where
discussed in
the book?
Chapter 11,
CPL = Kp = RF + (Km – RF ./. Std. Dev. market)std. dev. your company
Calculate the
maximum price a
reasonable investor
would be willing to
pay for the stock
based on its required
return.
Calculate the maximum price a reasonable investor
should pay for this stock (Using various methods
depending on whether company has paid dividends) and
show the current actual stock price.
Include in your calculations stock price determinations
using PE ratio, Market to Book ratio, Dividend Pricing
Model, Ben Graham Model.
Be sure and cite your sources and assumptions for the
calculations. (eg.) What is source for KRF and KM?)
Bond offerings
List/Discuss key
information you
found about your
company's stock
history.
Discuss bond ratings, prices, offerings, etc.
Determine the company’s current stock price and some
about its financial history. When did it go public? Has
the stock split? What its history of paying dividends?
How many shareholders does the company have?
Supporting
Documents
Attach all sources except for company annual report and
SEC-filed documents.
Your sources may include:
Annual Report and 10-K. Value Line, D&B, S&P,
Robert Morris, other services. Value Line, S&P, other
services. Periodicals, banks, brokers, or online sources
for risk-free rate and market return. Investor package
from company, ValueLine, S&P, periodicals, banks,
brokers, or online sources for current dividend and
expected growth rate.
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Chapter 7
Appendix B
Supplemental Readings
Periodicals such as Business Week, Forbes, Fortune, CFO, Finance, etc.
Dailies such as the Wall Street Journal, Investor’s Business Daily, etc.
Internet Sources:
There are so many great internet sources! Morningstar.com, YahooFinance.com,
Valueline.com, Investorsbusinessdaily.com
HOW TO AVOID PLAGIARISM
Using Sources
When writing for your courses you may freely make use of other people's ideas and information from a
variety of sources, if you give full credit to the sources of the ideas and information.
Your sources may include published information: books, periodicals, brochures, other
reports, and the like. They may include correspondence, interviews, lectures, and
similar sources, as well. (Lesikar & Lyons, 1986, p. 202)
There are two important reasons for accurately citing the sources of any borrowed ideas or information.
The first, most obvious, reason is academic honesty. It is dishonest to present someone else's ideas as if
they were your own, and it is likewise unfair to the originator of those ideas not to give credit where credit
is due. The second reason for accurately citing your sources is that doing so gives credibility to your
writing.
Explaining where you got your material gives readers a chance to judge its reliability
and accuracy and also makes it possible for them to look up more about the subject if
they want to. (Johnson, 1992, p. 170)
There are two ways in which you may include information from sources in your writing: You may either
quote directly or paraphrase, that is, restate the information in your own words. The choice should be
made on a case-by-case basis. You should paraphrase when you can convey information more efficiently
or effectively than it is conveyed in the original. You should quote directly when the wording is
distinctive or when using the source's own words will add credibility to the information you are
presenting. (Lesikar & Lyons, 1986, p. 203
When quoting or paraphrasing you must "cite your source" by giving full information about where the
information was found. This information will usually include author, title, date, publisher, and page
number.
You must always cite the source when information or an idea belongs to a specific
person or group; however, if information or an idea is your own observation or is
common knowledge and accepted as true by most people, you do not need to cite
your source. (Johnson, 1992, p. 170)
23
Electronic Media/ Sources from the Internet:
Jennifer Attebery, from the Department of English and Philosophy at Idaho State University,
warns that a common problem is that students may paraphrase a large amount of material from
one or two sources, thus retaining the original organization of ideas. She labels this practice “a
subtle form of plagiarism” (Owen).
The key to documenting electronic media is to give enough information so that readers can retrieve the
source themselves. This means including as much of the following information as possible: author’s
name, title of the document, date of the document, name of the database (e.g., Internet), the type of
medium (e.g., on-line), electronic address, and the date the source was accessed (Hairston and
Ruszkiewicz, 549). If you have any questions regarding in-text or full documentation of electronic
sources, consult your facilitator for his/her preferred form.
Plagiarism
Plagiarism is the use of someone else's idea, as a quote or paraphrase, without giving full credit
to the source. It is an academic offense with serious consequences - unethical, unwise, and, also,
unnecessary.
There is certainly no need to plagiarize, since you are allowed to use sources,
provided that you acknowledge them. In fact, there is no advantage in it either; papers
based on expert sources, fairly acknowledged, are what is wanted . . . They are exactly
what instructors are looking for. (Veit, 1990, p. 152)
Detailed information on how to avoid plagiarism, how to quote and paraphrase, and how to cite
your sources fully and accurately, can be found in any standard writing guide.
LIST OF WORKS CITED
Hairston, M. & John J. Ruszkiewicz. (1996). The Scott, Foresman Handbook for Writers, (4th
(ed). New York: Harper Collins.
Johnson, J. (1992). The Bedford guide to the research process (2nd ed.). Boston: St. Martin's.
Lesikar, R., & Lyons, M. P. (1986). Report writing for business (7th ed.). Homewood: Irwin.
Owen, J.B. “Plagiarism,” adapted from Jennifer Attebery. Idaho State University, 1995 [article online]; available from http://isuux.isu.edu/owenjack/plag.html; Internet; accessed 19 June, 1996.
Veit, R. (1990). Research: The student's guide to writing research papers. New York: Macmillan.
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