Project: Financial Analysis for Janella

What is a Case Study and What Are the Main Components Used for the RTSWS Case Study?:

(14 minutes)

Talk About It:

Ask the students if they have ever completed a case study for their other classes.

If so, what was the topic or focus?

Have any of the volunteers completed a case study before? What for?

As a group, talk through the different components that make up a case study.

Company Background

Discussion tips:

• The type of industry a company is in might determine its future performance potential (Example: entertainment streaming industry vs video rentals)

• Strong management can be a key criteria for stock selection. In analyzing companies, one may consider if the companies have had frequent turnover in their management or have remained stable.

Revenue

Discussion tips:

• What are the primary ways the company makes money?

• How stable are these revenue sources?

• Is the company’s product or service considered a luxury or a necessity?

Expenses

Discussion tips and examples:

• Payroll and employee benefits • Rent and facilities • Utilities or overhead costs • Insurance • Equipment • Software • Advertising and marketing costs

Profit

Discussion tips:

• How do companies’ sources of revenue compare in value to their amount of expenses?

Earnings Per Share (EPS)

Discussion Tips:

• A company’s earnings per share is reported 4x per year.

• Publicly traded companies in the U.S. are required by law to report their financial results on a quarterly basis.

• The higher the EPS, the better the company’s profitability.

• When looking at any financial metrics, it is always important to compare against competitor metrics, companies of the same industry or across a period of time.

Price to Earnings (P/E) Ratio

Discussion Tips:

• Analysts and investors review a company’s P/E ratio to determine if the share price accurately represents the projected earnings per share.

• Since stock prices fluctuate constantly, the P/E ratio for stocks and indexes will change daily.

• During their financial analysis for Janella, students will be recording the P/E ratio of the 2 companies they are researching during each session.