Project #159726 - Cisco and Ericsson Financial Statement Analysis

Business Tutors

Subject Business
Due By (Pacific Time) 12/11/2016 12:59 pm

!!!First thing first, please contact me only if you are(were) an accounting major since this project needs to be written really detailed and specifically related with accounting knowledge and backgound.!!!

          Based on Cisco company and Ericsson company's financial statement data, in particular, the most recent annual report, and 10-K, and quarterly reports and proxy statements. Your research task and objective is to analyze a firm’s financial reporting information and formulate, using that analysis, and other information available in the public domain, a quantitative assessment of value. Also answer these two questions below by using the knowledge from the book called Financial Reporting, Fianacial Statement Analysis, and Valuation by Wahlen, Baginski and Bradshaw. Answer these two questions in one page correct format and double spaced.

 

1.     Next reverse engineer the models, using the market price at the time the financial reports you are using were published (about two months after the fiscal year-end) as a constant. Then solve for your input variables. For example, assuming your output forecasts align with market consensus, what discount rate is implied by the current market price? Alternatively, assuming your discount rate is correct, what must investors be projecting in terms of growth of expected future cash flows and/or earnings?

2.     Finally, test your valuation for sensitivity to changing conditions. For example, what if a recession or industry slowdown comes that causes a 20% decline in sales volume, product prices and/or earnings for 2 years? What if perceived risk increases by 20%? These are just examples- you don’t have to use these exact scenarios. But consider at least two plausible changes that might help you determine the degree of price sensitivity to potential, and realistic, changes in conditions.

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