This is your second interview with a prestigious brokerage firm for ajob as an equity analyst. You survived the morning interviews with thedepartment manager and the vice president of equity. Everything has goneso well that they want to test your ability as an analyst. You areseated in a room with a computer and a list with the names of twocompanies – Ford (stock symbol F) and Microsoft (stock symbol MSFT) andare asked to do the following analysis including computing stock ratiosfor F and MSFT, comparing and contrasting those ratios, and analyzingthe performance of the stocks versus the industry averages.

Complete the following tasks and write a four- to five-page report onyour findings, including the analysis in Questions 2 and 3 below.

1. Compute ratios by following the below directions:

• Navigate to Morningstar (http://www.morningstar.com/).In the Quote box at the top of the page, enter each stock symbol,choose your companies, and click on the Financials tab. You will seeunderneath the Financials tab the three financial statements (IncomeStatement, Balance Sheet, and Cash Flow). An Export button is to the farright. Download the income statement and balance sheet financialstatements for each company.

• Next, you will need historical data for each stock. Navigate to Yahoo! Finance (https://finance.yahoo.com/),enter each stock symbol, click on Historical Data, and select endingdate of the most recent full reported year (for example, if the incomestatement ending is December 2016, select December 30 to 31, 2016). Notethe company’s stock closing price for the last day of the financialstatement reporting period you will use for this assignment. Todetermine each organization’s market capitalization at the closing dateof the most recent annual statements you downloaded from Morningstar,multiply the number of shares outstanding by the stock price youobtained from Yahoo! Finance. Use the number of shares outstanding byusing Basic under Weighted Average Shares Outstanding on the incomestatement you downloaded from Morningstar (remember, the share valuewill be in millions of shares, so make the adjustment by adding 0s).

• Compute the following ratios for F and MSFT (refer back to Week 1)for the most recent year of financial statements downloaded fromMorningstar:
• • Price-earnings ratio (for EPS, use diluted EPS total)
  • Market-to-book ratio (aka price-to-book ratio)
  • Operating margin
  • Net profit margin
  • Return on equity
  • Current ratio
  • Quick ratio
  • Debt-to-equity (for debt, use long-term debt)

• Obtain industry averages for each company by going to Reuters (http://www.reuters.com/finance/markets).Click the magnifying glass search icon, enter each company’s name,click on Companies, select each company, and then the Financials tab.Scroll down under Valuation Ratios and each ratio you calculated to theindustry (ignore the current company ratios as these are not the same asyou calculated).

2. Analyze the performance of each firm versus the industry, and comment on what you find in terms of strengths and weaknesses.

3. Compare and contrast the ratios for F and MSFT.

1. What might explain the differences between them?
2. Would you recommend investors buy, hold, or sell F and MSFT, based on your analysis?

Your assignment must follow these formatting requirements:

• This course requires the use of new Strayer Writing Standards (SWS).The format is different than other Strayer University courses. Pleasetake a moment to review the SWS documentation for details.
• Typed, double spaced, Times New Roman font (size 12), one-inch margins on all sides, SWS format.
• Use headers for each of the subjects being covered, followed by your response.
• In addition to the four to five pages required, a title page isto be included. The title page is to contain the title of theassignment, your name, the instructor’s name, the course title, and thedate.

The specific course learning outcomes associated with this assignment are:

• Formulate approaches to current asset management, capital budgeting,financial structure, dividend policy, long-term financing, and mergers.
• Analyze approaches to current asset management, capitalbudgeting, financial structure, dividend policy, long-term financing,and mergers.
• Write clearly and concisely about financial management using proper writing mechanics.