Suppose You are an investment analyst working in the corpora

Suppose You are an investment analyst working in the corporate business development department of a private equity company. You have been tasked with identifying acquisition opportunities in the US market. You are required to pick a company listed in the New York Stock exchange and analyze its income statement for the past 2 years (use the techniques mentioned in chapter 14, I have attached some slides to help you focus at the end). After which write a report to give your opinion on whither to invest in it or not. Paper Structure 1. Cover page stating clearly the company name, group member nameslisted in alphabetical order, course title and code, academic semester, name of instructor and date. 2. Table of contents 3. Introduction 4. Horizontal analysis of the company\'s income statement. 5 statement (minimum 3 ratios) 7. Your recommendation. 8. References (use APA style Format The paper should be written in Times New Roman, size 11, double spaced. The references, and the appendices. Use graphs and tables to illustrate and enhance your Vertical analysis of the company\'s income statement. 6. Profitability analysis of the income citations). 9. Appendices (Financial statements and any other relevant materials) Paper number of pages should be between 5-7pages excluding the cover page, table of content, Horizontal Analysis

Solution

                                      

                                                              ALCOA CORPORATION

DETAILS OF MEMBERS:

                                                           TABLE OF CONENTS

PROFIT & LOSS

BALANCE SHEET

                                                      INTRODUCTION

ALCOA CORPORATION IS AN AMERICAN INDUSTRIAL CORPORATION. IT IS THE WORLDS’ 6^TH LARGEST PRODUCER OF ALUMINIUM.

ALCOA IS MAJOR PRODUCER OF PRIMARY ALUMINIUM, FABRICATED ALUMINIUM AND ALUMINA COMBINED, THROUGH ITS ACTIVE AND GROWING PARTICIPATION IN ALL MAJOR ASPECTS OF THE INDUSTRY :

IT CONDUCTS OPERATION IN 10 COUNTRIES.

THE POLITICAL ECONOMY RESEARCH INSTITUTE RANKS ALCOA 15^TH AMONG CORPORATIONS EMITTING AIRBORNE POLLUTANTS IN THE US.

IN APRIL 2003, ALCOA INC. AGREED TO SPEND $330 MILLION TO INSTALL A NEW COAL-FIRED POWER PLANT WITH STATE OF THE ART POLLUTION CONTROLS TO ELIMINATE HARMFUL EMISSIONS FROM THE POWER PLANT.

ALCOA ALSO MAINTAINS SEVERAL R&D CENTRES IN THE US. THE LARGEST ONE, ALCOA TECHNICAL CENTER, IS LOCATED EAST OF ITS PITTSBURGH HEADQUARTERS AT ALCOA CENTER, PENNSYLVANIA.

ALCOA BECAME ONE OF THE SAFEST COMPANIES IN THE WORLD, DESPITE THE ALUMINUIM INDUSTRY’S INERENT RISKS.

FY

2017

2016

2015

TOTAL REVENUE

11652

9318

11199

COST OF REVENUE

9072

7898

9039

GROSS PROFIT

2580

1420

2160

OPERATING EXPENSES

R&D

32

33

69

SALES, GENERAL ADMIN

284

359

353

NON-RECURRING ITEMS

309

318

983

OTHER OP. ITEMS

750

718

780

OPEARTING INCOME

1205

(8)

(25)

ADD’L INCOME EXP. ITEMS

58

89

(42)

EBIT

1263

81

(67)

INTEREST EXPENSE

104

243

270

EBT

1159

(162)

(337)

INCOME TAX

600

184

402

MINORITY INTEREST

(342)

(54)

(124)

NET INCOME

217

(400)

(863)

ANNUAL INCOME STATEMENT (VALUES IN ‘000,000)                                        (FIGURES IN $)

PROFITABILITY ANALYSIS OF INCOME STATEMENT

RATIOS

2017

2016

2015

GROSS PROFIT MARGIN=GROSS PROFIT/REVENUE

0.22

0.15

0.19

OP. PROFIT MARGIN=OP. PROFIT/REVENUE

0.10

-0.0008

-0.002

NET PROFIT MARGIN= NET PROFIT/REVENUE

0.019

-0.043

-0.077

RECOMMENDATION –

THE COMPANY SEEMS TO BE GROWING. WHEN LOOKED UPON AT RATIOS, PAST YEARS HAVE BEEN A TOUGHER TIME FOR ALCOA CORP. THE EXPENSES WERE DIFFICULT TO BEAR AND SHAREHOLDERS HAD NO PROFIT IN HANDS.

MOVING TO NEXT YR, 2016THE IT HAS REDUCED LOSS BY MORE THAN 50% AND SURVIVED WELL. AND LAST YEAR, FINALLY THE CO. WAS ABLE TO RETAIN PROFITS FOR ITS SHAREHOLDERS AFTER PAYING THE EXPENSES AND ARREARS.

THE COMPANY IS EXPECTED TO ARISE IN NEAR FUTURE AND PROVIDE A GOOD RETURN.

REFERNCES:

APPENDICES:

PROFIT AND LOSS

PERIOD

2017

2016

2015

SALES

4469

3507

4119

COGS

3781

2844

3209

INCOME (LOSS) BEFORE TAXES

132

85

125

NET (LOSS)/INCOME

82

21

43

EQUITY IN NET (LOSS) INCOME

52

25

60

OTHER

10

3

(7)

CO.’S EQUITY IN NET (LOSS)INCOME

62

28

53

BALANCE SHEET

PERIOD

2017

2016

CURRENT ASSETS

1862

1396

NON CURRENT ASSETS

11015

11454

CURRENT LIABILITIES

1699

1767

NON CURRENT LIABILITIES

6751

6777

(1) The amounts included in this column represent the combined financial information related to Ma’aden     Aluminum Company, Ma’aden Bauxite and Alumina Company, and Ma’aden Rolling Company.

(2) AofA sold its interest in the DBNGP Trust in April 2016.

FY	2017	2016	2015
TOTAL REVENUE	11652	9318	11199
COST OF REVENUE	9072	7898	9039
GROSS PROFIT	2580	1420	2160
OPERATING EXPENSES
R&D	32	33	69
SALES, GENERAL ADMIN	284	359	353
NON-RECURRING ITEMS	309	318	983
OTHER OP. ITEMS	750	718	780
OPEARTING INCOME	1205	(8)	(25)
ADD’L INCOME EXP. ITEMS	58	89	(42)
EBIT	1263	81	(67)
INTEREST EXPENSE	104	243	270
EBT	1159	(162)	(337)
INCOME TAX	600	184	402
MINORITY INTEREST	(342)	(54)	(124)
NET INCOME	217	(400)	(863)