You will evaluate an individual dividend paying company. Your goal is to write a convincing report that demonstrates reasons for buying or selling short the company chosen. Groups can be up to 5 students can form as long as all names are on the report.



Calculate the following ratios for your company.

(Show all of the numbers used in calculation using the attached financial reports)

Current ratio
Quick ratio
Total debt ratio
Equity multiplier ratio
Inventory turnover
Total asset turnover
Profit margin
Return on Assets
Return on Equity
Market-to-Book
Price-to-Earnings


Use SML equation to calculate the required return on your stock.

Use 10 year Treasury rate for risk free rate (use historical return (your book is a good place to find this number)).

Use an average market return for expected return on market (at least 50 years (your book is a good place to find this number)).

Use the current beta (many sources like Yahoo Finance).



Use the constant growth formula to calculate the required return on your stock.

To estimate g, take the next 5-year earnings per share annual growth rates or a similar estimation. (Value Line)

Find current market price in WSJ.

Use for D0, the indicated annual dividend.



Do a SWOT (strengths, weaknesses, opportunities, and threats) analysis.



Use technical analysis (charting) to see if any information about future prices can be found.



Use both plus any outside information (analyst reports, etc.) to make an argument that the current price is undervalued, overvalued or accurately priced. You are trying to convince me you are correct in your analysis. Use anything argument you believe supports your conclusion.