Dunkin Donuts The objective of this assignment is

Dunkin Donuts The objective of this assignment is

Dunkin Donuts The objective of this assignment is to integrate your knowledge of financial analysis and valuation concepts. Your ability to access relevant information about a specific industry and company on the internet. Here are some of the questions you can address in your report: 1. To which industry/sector does this company belong? (check Yahoo!Finance profile tab for the company). What are the major issues facing this industry? (consider using Porters Five Forces framework, see for example http://www.quickmba.com/strategy/porter.shtml). Is your company a dominant player in the industry? 2. Locate the companys most recent annual report, usually available on the companys website, the SEC site, or at www.annualreports.com. Read the Management Discussion & Analysis (MDA) section to determine significant events, trends and developments affecting the firm from the viewpoint of top management. Also, read at least two recent articles in the financial press about the company. Summarize and cite your findings. 3. Calculate the companys financial ratios for the two most recent years, using the ratios introduced in Chapter 3, and addressing the companys liquidity, operating efficiency, debt, profitability, and valuation. Are there significant trends or changes in any of the ratios? To what do you attribute these trends or changes? 4. Look at the similar comparative ratios for your company at http://www.reuters.com under the Financials tab. How do your companys financials measure up against the industry? 5. Review your companys statement of cash flows for the past two years. Compare the cash flow from operating activities to the income from continuing operations. By how much do they differ, and why do they differ? 6. Compare your companys required return based on the Security Market Line (per Chapter 11) with the expected return based on the analysts mean target price and expected dividends (per Chapter 7). Hints: use the beta from Yahoos key statistics page. For the risk-free rate, use the 10-year Treasury bond yield from Yahoos Investing/Bonds page. For the market return use a return 6 percent higher than the rate you found for the T-bond (i.e. this is the market risk premium or equity risk premium). Get the analysts mean target price from Yahoos analysts opinion tab. Do you expect the company to deliver value for an investor over the next year? 7. Check the companys corporate governance profile at http://finance.yahoo.com under the Profile tab: Audit risk, Board risk, Compensation risk, and Shareholder rights. Look at the composition of the companys Board of Directors at http://www.reuters.com under the People tab. How large is the board and what proportion are independent directors versus insiders? What is the gender balance of the board? See if you can determine whether independent directors chair the Audit and Compensation Committees. 8. Summarize: Do you still want to invest in this company? Why or why not?


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