finance-for-the-cfo-project-choose-a-company-from-the-fortune-500-list

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CFOPROJECT

For the CFO project, choose a company from the Fortune
500 list (at
.cnn.com/magazines/fortune/fortune500/%29″>http://money.cnn.com/magazines/fortune/fortune500/)as the subject of your analysis and report.
Choose a company, such that:

It
is not a Fortune 100 company

It is not a bank or financial services company (including
brokers and investment banks)
It is not a conglomerate (multi-industry holding companies)

Your mission is to develop a comprehensive report to your
CEO based on the topics covered in the course. Your task is to
analyze the company in this context and provide recommendations. You decide how
each topic should be addressed, and
include research to make/support your strategy/policy recommendations. Your
report should include an assessment of
your company’s corporate governance “readiness” and provide suitable
recommendations to ensure compliance with the Sarbanes-Oxley Act of
2002, the Dodd-Frank Act of 2010, and new regulations promulgated by the
regulatory bodies.

In
the spirit of aForensic
Financial Analysis,
You
should conduct an analysis of the firm’s financial statements and policies as a
risk management exercise for the benefit of the company CEO. Look for any
“bodies” buried in the statements
and associated notes, as well as the types of information disclosed to the
public (e.g., pro forma earnings). Your
goal here is to identify any areas where the firm is vulnerable to SEC action
(fraud or otherwise) and report these to the CEO as a preemptive risk
mitigation action. The authors of the text,Financial Shenanigans, provide useful guidance in this
area. I recognize this is a difficult task, given the short exposure to
forensics financial analysis and the restricted information available to you.
Do the best job you can.

For your Corporate Governance
Assessment,
you
are should assess the integrity and rigor of the firm’s corporate governance structure
(Board, Audit Committee, stock options policies, pension fund policy, etc.) to
identify any weaknesses you can find and provide recommendations to strengthen
governance policy. The corporate governance readings and recommended text,Building Public Trust: The Future of
Corporate Reporting
provide
a good framework for your analysis and
research. I recognize this is a tall order, given the complexity of the task
and your limited access to relevant information; however there are a
number of databases UM UC subscribes to that can be of use to you. I n addition
to the article databases, such as ABI/INFORM and Business Source Complete, we
have:

  1. D
    & B Key Business Ratios
    provides business ratios for
    industries in areas of solvency, efficiency and profitability searchable
    by industry name and SIC code with reports that can by printed in
    spreadsheet format.
  1. Business and Company Resource
    Center
    has
    industry rankings, financial data, and investment reports including company profiles, products and brand information,
    investment reports, statistics, company financial overviews, financial
    ratios, and business events and trends. Some sources from 1985 to the
    present.
  1. Business and Industryhas business, finance,
    strategy, planning, marketing, and international business journal articles
    from 1994 to the present.
  1. Mergent Onlinehas directory data, financial
    information from 1991 to the present, histories for companies worldwide,
    and industry reports for the North American, Asian, and European regions
    from 2003 to the present. Corporate and
    municipal bond, UIT, and dividend information. Comparative industry
    financial information and ratios.

CFO Paper: Additional Notes

I have two
sets of comments, one on content, the other on writing papers.

Content

You are a
new CFO in your first quarter of service. You want to understand where the
corporate “bodies” might be buried in terms of accounting and
governance. What you bring up now you can blame on your predecessors; delay and
you own any problems that turn up. The assignment is to do a forensic analysis
(NOT the same as a financial analysis) and governance analysis of your new
company.

Since you
will no doubt be reviewing annual reports (and 10-Ks), I’ve attached a couple
of articles from Kiplinger’s on reading and interpreting these reports.

Writing
Papers

I’ve started to get questions about how to write a
medium-length (15-20) page paper. So, let me give you some process suggestions,
which actually apply regardless of assigned length. Since each paper is, in
fact, unique, I don’t try to give samples.

  • Step one: ignore the assigned
    length; that question is relevant to writing, not research.
  • Step two: decide what the
    assignment entails.
  • Step three: set up a working
    outline to fill in with research. There’s nothing set in stone here — as
    you learn, revise at will. (Word is pretty good for this.)
  • Step four: fill in the blanks
    — in doing so, you are starting to draft the paper.
  • Step five: edit and adjust for
    length; I may have suggested some length, but I consider whether you’ve
    addressed the topic appropriately rather than a specified length.

In terms
of presentation, use subheadings freely (look at Lecture Notes, for example).
It’s useful to focus a reader’s attention in this manner.

Finally,
if you haven’t done a project of this scope before, it’s about time you did so!
You’ll be prepared when you get a work assignment.

*****************************************************************************

Sources
of Financial Data

Sources of
Financial Data on the Internet

Here are some data
sources. Typically, you will have to register for them (although they are
free). In no order of priority:

  • Yahoo:.yahoo.com/”>http://finance.yahoo.com;
  • Reuters (Yahoo will
    refer you here):.reuters.com/”>www.reuters.com;
  • Edgar (SEC source of
    10-K and other required financial reports; this is my saved
    “Favorite”):.sec.gov/cgi-bin/srch-edgar”>www.sec.gov/cgi-bin/srch-edgar;
  • Hoovers (general
    company information):.hoovers.com/”>www.hoovers.com;
  • Bloomberg (a good
    source of interest rate data):.com/markets/rates/index.html”>http://bloomberg.com/markets/rates/index.html;
  • Wall
    Street Journal
    free site:.wsj.com/mdc/page/marketsdata.html”>http://online.wsj.com/mdc/page/marketsdata.html;
  • Moody’s (bond ratings):
    .moodys.com/”>www.moodys.com;
  • Mergent
    Online: good company data available through the UMUC library or at.umuc.edu/library/resources/?cmd=writeAlphabeticDatabaseList#M”>http://www.umuc.edu/library/resources/?cmd=writeAlphabeticDatabaseList#M;
  • Standard and Poors
    (bond ratings):.standardandpoors.com/”>http://www2.standardandpoors.com;
  • New York Stock
    Exchange:.nyse.com/”>http://www.nyse.com/;
  • Bondpage (bond
    information):.bondpage.com/”>www.bondpage.com;
  • Federal Reserve (interest
    rates):.federalreserve.gov/releases/h15/update/”>http://www.federalreserve.gov/releases/h15/update/;
  • Vanguard bond yield
    site:.vanguard.com/VGApp/hnw/FundsBondsMarketSummaryTable”>http://flagship2.vanguard.com/VGApp/hnw/FundsBondsMarketSummaryTable; and
  • Bond Marketing
    Association (trade group) site:.investingbonds.com/”>http://www.investingbonds.com
  • Reuters bond spread
    site (looks very good):.bridge.com/publicspreads.cgi?Financials”>http://bondchannel.bridge.com/publicspreads.cgi?Financials

If you have a stock
brokerage account (I have Schwab), the broker’s site may have useful
information.

In addition, many
people like the Motley Fool,.motleyfool.com/”>www.fool.com.

More to explorer

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