Term Paper on "Crash of United Airlines Flight 173"

Quoted Instructions for "Crash of United Airlines Flight 173" Assignment:

FORD MOTOR COMPANY

This security analysis project is designed to give you practice in applying various techniques to evaluate the investment desirability of a firm's common stock. One of the main purposes of this project is to familiarize you with the tools and techniques of using financial information that is pertinent to security valuation. You will be working with readily available data in your analysis.

Suggested Structure:

The title of the report and the student's name should appear on the outside cover of the report. A binder is not necessary but the paper must be securely fastened together.

1. Title page. DO NOT DUE

2. Table of Contents. DO NOT DUE

3. Executive Summary – Required one to two pages in length. This summary and conclusion/recommendation section must be clear and concise.

4. The Report Proper.

Economic and Market Analysis: In this section you will provide an analysis of key economic trends. You will assess the stock market and determine how conducive the market is to stock investment in the near (1-2 years) and longer term (3-5 years out).

Industry Analysis: The future prospects of the industry that your selected company belongs to will be analyzed in this section. All sources you use for projections must be properly cited. There are eight pertinent issues listed in your text that must be considered in your analysis.

You must also briefly discuss long-term and short-term prospects regarding:

(i) Industry growth

(ii) Competitive environment

(iii) Technology, research and development

Company Analysis: In the company analysis you will need to come to a conclusion on the riskiness of the company and stock, its valuation and whether it is properly valued or not. In order to do this you will need to assess the management, the financial strength and so forth.

Qualitative Factors to include:

i) Introduction - a short description of the company.

ii) Demand for their products - stability and trend.

iii) Outlook and prospective new products.

iv) Nature of the production process and cost structure

v) Competitive factors faced by the company.

vi) Special problems of the company (and industry) - government regulation, litigation, tariffs, foreign demand, etc.

vii) Quality of management – the ten items listed in the ten are of use here.

Quantitative Factors:

Financial Statement Analysis:

Collect financial statement data for at least five years, both company and industry.

Conduct a ratio analysis of the company and industry.

Analyze the ratios for strengths and weaknesses.

Be aware of debt provisions.

Risk Analysis and Beta:

Calculate the beta and total risk measures of the stock. Evaluate the market performance of the stock. You should look at these measures in both a short and long term perspective. Determine the appropriate discount rate for the company.

Valuation:

i) Calculate the intrinsic value of your security using more than one method and variant of the models (CAPM, APT, Constant growth model, etc.). See how these values change for optimistic versus pessimistic states of the economy and the related growth rates.

ii) Compute the expected rate of return and the variability of the rate of return as a near term and long term (five years forward) investment.

(D) Recommendation:

Determine if you would purchase today, and the length of holding period for the common stock of the company. Support your decisions by referring to your analysis. At what price would you buy?

5. A Bibliography is required. You will be graded on proper use of English, grammar, page numbering and citations.