Evaluation of Corporate Performance


The Final Paper will involve applying the concepts learned in class to an analysis of a company using data from its annual report. Using the concepts from this course, you will analyze the strengths and weaknesses of the company and write a report either recommending or not recommending purchase of the company stock.
Research Tip: The “Mergent” database in the Ashford University Library contains company profiles and financial information for publicly traded companies and their competitors. To access this database enter the Ashford Library and select “Find Articles and More” in the top menu panel. Next, select “Databases A-Z” and go to section “M” for “Mergent”. For help with using Mergent, use Mergent Online Quick Tips.
For help with reading an annual report access this handy guide from Money Chimp.
The completed report should include:
An introduction to the company, including background information.
A complete and thorough financial statement review.
Pro Forma financial statements (Balance Sheet and Income Statement) for the next fiscal year, assuming a 10 percent growth rate in sales and Cost of Goods Sold (COGS) for the next year.
Complete ratio analysis for the last fiscal year using at least two ratios from each of the following categories:
Liquidity
Financial leverage
Asset management
Profitability
Market value
Debt
Per-Share
Measures of relative value (P/E, P/B)
Activity
Cash Flow
A calculation of Return on Equity (ROE) using the DuPont system.
Assessment of management performance by calculating Economic Value Added (EVA).
A synopsis of your findings, including your recommendations and rationale for whether or not to purchase stock from this company.
Evaluate the financial risks associated with operating internationally. If your chosen company does not operate internationally, evaluate what the financial risks could be if they were to expand internationally.

ANSWER

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Diageo plc is a company that deals with production and distribution of alcoholic beverages. This paper seeks to explain the background information of the company, perform a comprehensive financial statement review and ratio analysis for the last financial year ending 2017. In addition, a pro forma income statement and balance is provided assuming there is a 10% increase in both sales and cost of goods sold. The final section evaluates management performance through economic value added.

            Diageo plc is a British multinational alcoholic beverages company that was incorporated in 1886. The company has its headquarters located in London, England. Diageo has been the world largest distiller over many decades though China’s Kweichow Moutai overtook it in 2017 (Diageo, 2017). The company operates in both beer and spirits markets with its geographic market segments including North American, European, Russia, African, South American and Asian countries. The company’s’ brands consist of Johnnie Walker, Smirnoff, Captain Morgan, Tanqueray baileys and Guinness. The principal products supplied by the company range from whisky from Scotland and America, Gin, Vodka, Rum, Beer products such as malt and lite, Cream Liqueur, Whisky from Canada, Brandy, Cachacha, Tequila, Raki, Adult Beverages and Ready to Drink (RTD) brands such as Alvaro and Guarana (Diageo, 2017). Diageo company has established production plants in various locations across the world. The production facilities are grouped…

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