S&P Projects

DuPont Ratio (Chapter 2)
Using Barrick Gold Corp. (ABX) and Placer Dome Inc. (PDG), calculate all three components of the Dupont ratio for the past three years using the annual financial statements for these companies. Comment on the reasons why ROE is different for the two companies and why ROE has changed for each company over the past three years.

Statement of Changes in Financial Position (Chapter 2)
Choose a company and using the four most recent quarterly financial records, construct a statement of changes in financial position (a cash flow statement) for each quarter. Is there any apparent trend in cash flow changes over the one-year period? What does this indicate?

Inventory Turnover (Chapter 2)
Using the annual financial statements, calculate the inventory turnover for Corel Corp. (CORL) and Air Canada (ACNAF) for the past five years. What do you notice about the difference in the inventory turnover for these two companies? Is there a reason why the inventory turnover is lower for Air Canada? What does this tell you about comparing ratios across industries?

Valuation Ratio Analysis (Chapter 2)
Pick two companies in the same industry. Examine the valuation ratios for the trailing twelve months on the Financial Highlights page. How do the companies compare to each other and the industry? If you were to invest in one of these two companies, which would it be? Why?

Profitability Ratio Analysis (Chapter 2)
Pick two companies in the same industry. Examine the profitability ratios for the trailing twelve months on the Financial Highlights page. Which company has generated greater profits? How do the companies compare to the industry?

Equity Multiplier (Chapter 2)
Calculate the equity multiplier for Brascan Corp. (BNN), Ipsco (IPS), Alberta Energy Company (AOG) and Sun Life Financial (SLC) using the most recent annual balance sheet. Comment on any similarities or differences between these companies and explain how they might affect the Equity Multiplier.

Cash Flow Identity (Chapter 2)
Using the most recent annual balance sheet and income statement for Canadian National Railways (CNI), calculate the cash flow identity. Include in your calculations the operating cash flow, net capital spending, change in net working capital, cash flow to creditors and cash flow to stockholders.

Common Size Financial Statements (Chapter 2)
Pick two companies in the same industry and calculate the common size income statement and balance sheet using the most recent quarterly information. Comment on any similarities and differences in your calculations.

Stock Pricing (Chapter 5)
Petro-Canada (PCZ) is a dividend paying company. Using the historical dividends (at least five years of data) available, calculate the average growth rate in dividends for Petro-Canada. If this growth rate is applied to the dividend discount model, is the stock priced correctly? What growth rate is necessary given the most recent stock price in the data? How do you reconcile your answers?

Growth Rate 1 (Chapter 5)
Consider Petro-Canada again. Using at least five years of historical data, calculate the growth rate based on the formula: g = Retention ratio x Return on Retained earnings. As a proxy for Return on Retained Earnings, use Return on Equity (ROE). Does your conclusion regarding the estimate of the growth rate differ substantially from the one you obtained when you used dividends? Why do you think that this difference exists?

Growth Rate 2 (Chapter 5)
Repeat the last exercise using BCE Inc. (BCE) data instead to compute the growth rate. Compare the two growth rate estimates. Do your growth rate estimates for these two companies surprise you? Why or why not?

Calculating Average Returns and Standard Deviation (Chapter 10)
Using the monthly closing prices on a company's stock, calculate the return each month for the past year. What is the average monthly return for this company over the past year? What is the standard deviation of monthly returns for this stock?

Correlation and Diversification (Chapter 10)
Using the monthly closing price, pick two companies in the same industry and calculate the correlation between their returns. Using one of these companies, calculate the correlation between that company and a company in another industry. Is the benefit of diversification greater between the companies within the same industry or companies in different industries? Why?

Correlation and International Diversification (Chapter 10)
Choose three Canadian companies in the same industry. Choose three U.S. companies in the same industry as the Canadian industry previously chosen. Compute the nine, paired correlations of thirty-day returns between each Canadian firm and each U.S. firm. Compute the average of these correlations. Now compute the three, paired correlations between the Canadian firms and then compute the average of these. Which average correlation is lower? What does this suggest about the merits of international investing?

Minimum Variance Portfolio (Chapter 10)
Using the monthly closing prices for Premium Brands Inc. (FLCHF)) and Big Rock Brewery Ltd. (BEERF) over the past twelve months, calculate the average return, standard deviation and correlation between the two securities. Is there a minimum variance portfolio with non-negative weights in each of these two securities? Why or why not?

Technical Analysis (Chapter 13)
Using the weekly closing price for a company, construct a stock price chart with a 4-week and 8-week moving average. Interpret your results.

Short Sale Returns (Chapter 21)
You shorted 500 shares of Nortel Networks Corp. (NT) twelve months ago at the closing price. If the initial margin was 50%, what was your return for the year? Ignore interest on the margin loan.

Cash Cycle and Operating Cycle (Chapter 27)
Using the most recent four quarterly income statements and balance sheets for Thomson Corp. (6079B) calculate the cash cycle and operating cycle for each quarter. Comment on any changes or similarities you see between the quarterly calculations.