Financial Management & Markets

FIN 601: Financial Management and Markets Instructor: Dr. Jinsuk Yang Project Report Part 1 ⚫ Instruction for Project Part 1: Total 50 points

◼ The project part 1 is due by 11:00 pm CST, November 24, 2020.

◼ You have to submit “Project Part 1” through Blackboard to earn credits.

◼ Any late submission will not be accepted.

◼ Use your own words. If you obtain some information from other website, interpret those with your own

words! Any plagiarism will not be tolerated (you will be received zero credits for your project and, as a result, automatically fail the class. Read the following article http://www.usi.edu/media/5599778/academic-integrity-policies-and-procedures-fall-2016.pdf )

A. Describe the business of Costco Wholesale Corporation (5pts). Your description must include the following topics (at least top 3).

1. Which industry?

2. When did Costco become public company?

3. Type of business

i. How does Costco generate revenues?

4. Do you have anything else you want to share with us?

B. Discuss about Corporate Governance (10 pts)

1. Read the following articles:

i. Get On Board: Understanding The Role of Corporate Directors

ii. Corporate Governance Guidelines Costco Wholesale Corporation

iii. Some thoughts on corporate governance by Douglas Foshee

iv. Board members

2. Discuss about the corporate governance of Costco Wholesale Corporation

Do not use “numbering” or “bullet points”. I am more interested in your opinion on the corporate governance than just a list of information.

C. Provide SWOT analysis (10 pts)

• Please read the following guide

• An Essential Guide to SWOT Analysis by Justin Gomer and Jackson Hille

• The SWOT analysis is organized into two factors: internal and external factors:

• S&W (Strengths and Weaknesses): The analysis of S&W can start from an internal factor of

company operation such as what the company operates well and which part the company needs

to improve. This analysis is more related to the current situation of the company.

• O&T (Opportunities and Threats): The analysis of O&T can start from an external factor of

company operations such as what external factors (industry trends, economic health, or any outside forces) can pose threats for the company and what external factors provide opportunities for the company. This analysis is more related to the future of the company.

• Provide your SWOT analysis of Costco Wholesale Corporation. And, provide major competitors. I am more interested in your SWOT analysis than just a list of information.

D. Provide Financial Statement Analysis (25 pts)

1. Download the Case Study 1 Solution from Blackboard

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FIN 601: Financial Management and Markets Instructor: Dr. Jinsuk Yang Project Report Part 1

2. Download the SumRatios PDF file in “Project Resource” folder. Read Textbook and watch lecture videos.

3. Use above files and resources and write your own financial statement analysis.

i. Interpret the ratios by using your own words.

1. Download the file “Project Part 1 Analysis Topics” in “Project Resource” folder

2. Your analysis must contain all ratios listed in the file

3. Use “SumRatios” and the textbook to complete this project.

E. Submit your Project Part 1

• Submission Guideline:

1. Insert “Cover page”

On the cover page, the following information should be included

▪ Your information: First-name Last-name and email address ▪ Course information

o FIN 601: Financial Management and Markets o Instructor: Dr. Jinsuk Yang

o Semester: Fall 2020

2. Style:

▪ Insert “page number” at the bottom of each page. ▪ Font: Times New Roman

▪ Font Size: 12

▪ Margin: 1 inch for all sides

▪ Single space

▪ Minimum number of pages: 6 excluding the cover page, references, and Appendix

3. Tables:

▪ If you include tables, figures, graphs, or exhibits, everything must be in “Appendix”

o No tables, figures, exhibits, or graphs between paragraphs

o When you use any table or graph for the analysis report, please refer to the table. (for

instance, “... based on Table 1, the income increases...”). o Remember all tables must be in the appendix.

o Make everything professional.

4. No numbering or bullet points to list your information.

5. Report should be in the form of a research paper.

▪ Add the reference pages

▪ You need to follow APA format related to the references.

Please visit the following site if you are not familiar with APA format.

https://apastyle.apa.org/

▪ The goal of this project is to share your opinion or analysis with other people, rather than providing data collected from various sources.

6. No plagiarism

You must use your own words. Any student found guilty of dishonesty including, but not limited to, plagiarism and/or cheating will be subject to disciplinary action. For more information, please visit Academic Integrity Policies and Procedures.

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FIN 601: Financial Management and Markets Instructor: Dr. Jinsuk Yang Project Report Part 1

7. File format

▪ Your report must be in Word file format.

▪ Your file name must be “PP1-first name-last name”: e.g., PP1-Jinsuk-Yang

8. Do not make “ZIPPED FOLDER”

9. Double check your submission

After you submit the files, download them again and open files to make sure if all files are readable and can be opened. I found often that the submitted files are broken or cannot be opened. Once the due date is passed, you will not be able to resubmit or revise your reports.

10. Remember that no late submission is accepted regardless of the reason

11. Failure to comply with the instruction or requirements including the submission guideline will result

in penalty.

• FAQ:

o Do I have to meet the minimum required number of pages?

If you describe the company (Description of company, Discussion of corporate governance, and SWOT analysis) and analyze the ratios (15 ratios) as the instruction requires, you might actually end up with more than 6 pages. If you are just saying "Costco has good corporate governance", then, of course, you won't be able to meet the requirement and to earn full credits on the section of "corporate governance". Please read the rubric. (It applies to all other sections as well.)

Also, as the instruction indicates, the cover page is not included in the minimum number of pages. Furthermore, all tables or figures go to appendix. If you want to include a table from the "Case Study 1 Solution", it also goes to appendix. And, the appendix is not included in the minimum number of pages. Lastly, the reference page is not included in the minimum number of pages.

o Do I need to include the specific numbers for each ratio?

My answer would be "Yes" because you analyze each ratio from year to year and find out increase/decrease of each ratio and because you are required to express your opinion why it increase/decrease.

For example: Let's suppose that the "current ratio of 1.1 in 2018" increase compared to the previous year 2017, which was 0.6 by 0.5 or 83% (= (1.1-0.6)/0.6). And, you might find that the ratio increased because from 2017 to 2018 the total current assets increased. Or, you might find that the current liability decreased from 2017 to 2018.

o What is the story behind ratios?

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FIN 601: Financial Management and Markets Instructor: Dr. Jinsuk Yang Project Report Part 1

The story behind the ratio is nothing but what the ratio tells or indicates. If you read the textbook or watch the lecture videos, you will find what ratios tell us. So, please read the textbook and watch lecture videos.

o Where can I find the resource regarding the story behind ratios?

Textbook (Chapter 3), Lecture videos (Module 1), and the Project Pt1-SumRatios are good resource

for you to complete the analysis.

o Do I use the ratios that I computed or are in the solution? Please use the ratios in the solution provided by the instructor.

o Where can I find the case study 1 solution?

Solution to each case study is posted after the due date in the same folder: Module Assignments.

o What should I write regarding “DuPont Analysis or Identity”?

The chapter 3 (page 58) explains the DuPont Identity in great detail. DuPont Analysis tells us the

determinant of ROE changes. DuPont Identity is provided in the Case Study 1 Solution

o When will the grade be available?

Coaches and I are grading more than 200 students. And, the Project Pt1 has many pages to read. So, it will take longer time (usually 6 days) for us to complete grading Project Pt 1 than other case studies.

o How about “Industry average”?

The industry average is not required. What you see from the example is what I created when the data was available. Now, it is not easy for use to find a good resource we can use to collect the average. So, please do not include the industry average in the report.

o All other questions:

Please use the “Module Forum Q&A” posted in the each module so that all classmates can know what to do.

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