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Project 2

The CFO of Quest Diagnostics Inc. has assigned you to evaluate the company's financial performance and viability over the next 2-3 years. Your assignment is to: 1) Perform a ratio analysis of Quest Diagnostics' liquidity, operating performance, profitability, leverage, and return on investment for the past 3 years and compare to a major competitor. 2) Analyze the ratio results and make recommendations on Quest Diagnostics' financial strength and steps needed to improve stability. 3) Reflect on what you learned and how you could apply it in your role. The paper should follow guidelines for formatting, citations, and include an introduction, ratio tables/graphs, analysis, recommendation

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39 views4 pages

Project 2

The CFO of Quest Diagnostics Inc. has assigned you to evaluate the company's financial performance and viability over the next 2-3 years. Your assignment is to: 1) Perform a ratio analysis of Quest Diagnostics' liquidity, operating performance, profitability, leverage, and return on investment for the past 3 years and compare to a major competitor. 2) Analyze the ratio results and make recommendations on Quest Diagnostics' financial strength and steps needed to improve stability. 3) Reflect on what you learned and how you could apply it in your role. The paper should follow guidelines for formatting, citations, and include an introduction, ratio tables/graphs, analysis, recommendation

Uploaded by

kipkemei ezekiel
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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THE COMPANY TO BE USED: Quest Diagnostics Inc.

(DGX)

Research Project report should be about 4-5 pages or more double-spaced


typewritten pages (without tables and graphs). The assignments for both parts
include suitable comparative, quantitative and qualitative analyses and
conclude with a specific and supported recommendation and reflection.

OBJECTIVE

You are to assume you have been recently hired by Quest Diagnostics Inc.
(DGX) and have been assigned to a team that reports to the CEO of THE
COMPANY Quest Diagnostics Inc. (DGX). The head of your team is the CFO
who is concerned about Quest Diagnostics Inc. (DGX) current financial
performance and comparison against major competitors in the industry
and the impact that may have on the firm’s stock price. The CFO would
like your team to provide insights that will help them to project future
financial performance. Specifically, the primary question to answer is:
will Quest Diagnostics Inc. (DGX) be financially viable over the next two to
three years, and which steps should be done to improve its financial
stability?

YOUR SPECIFIC ASSIGNMENT


Using the information from the websites the students will develop
evaluation of the financial performance for THE COMPANY Quest
Diagnostics Inc. (DGX). (The evaluation portion will total 85% of the
assignment grade)  

-1—Introduction (5% of the project grade)- The paper should begin with


a short introduction, explains the purpose of the paper, and provides an
overview of the contents that follow (one short paragraph). 

-2— Ratio analysis. (60% of the project grade)

In this part of the project you will complete ratio analysis of THE
COMPANY. Please remember that you are the financial analyst of THE
COMPANY and should prepare the report to be read by the chairman
(CEO) of THE COMPANY. The ratio analysis should be completed from
the point of view of THE COMPANY’s the management.

a. Collect the following ratios for your COMPANY for the last 3
years. Present the ratios as the table(s) in your project.
Create graphs for some ratios on your choice to show trends. If you
use published ratios you must cite the source.

 Liquidity (current ratio, quick ratio)


 Operating performance ratio (Days of Sales in Inventory, Days of
Sales Outstanding, Days of Payables Outstanding), Receivables
Turnover, Inventory Turnover, Fixed Assets Turnover, Total Assets
Turnover)
 Profitability ratios (Gross Profit Margin, Operating Profit Margin,
Net Profit Margin)
 Debt/Equity and Financial Leverage ratios
 Return on Investment ratios (ROA, ROE)

Liquidity ratios and Debt/Equity and Financial Leverage ratios are


available on www.morningstar.com > type the stock symbol in
the Search window to get into the company’s page. Click on Valuation
and scroll down to Key Statistics > choose Financial Health tab.

Operating Performance ratios, Profitability ratios, and Return on


Investment ratios are available on www.morningstar.com > type the
stock symbol in the Search window to get into the company’s page. Click
on Valuation and scroll down to Key Statistics > choose Operating and
Efficiency tab.

Some ratios are also available in Operating Performance section.

Please note that you don’t need to sign up for any premiums or to pay for
any information for the project.

b) Collect ROE, Net profit margin (listed as net margin), asset turnover,
financial leverage, debt/equity ratios for the last year for the major
competitor. Present the ratios as the table in your project.
c) Write 2-3 pages (or more) of analysis of the ratio results that you
found. In your analysis you should answer the following questions:

 How liquid is the company?


 Analyze operating performance ratios. What important information
does this analysis provide?
 Is management generating a substantial profit on the company’s
assets?
 How is the company financing its assets? Discuss how much risk is
associated with the financial structure the company.
 Have the company’s ROA and ROE changed over the last three
years? What was the main factor that influenced this change? To
answer this question, apply DuPont analysis and three factors of
the DuPont formula: Net profit margin, asset turnover, financial
leverage. What ratio(s) has (have) been changed mostly over these
three years and why?
 Compare the ratios of you company to the peer competitor. If the
management of the company would like to improve the company’s
return on equity, what should the management of the company
do? 

-3- Develop a specific recommendation, with supporting rationale, as to


whether the assigned company's recent results in financial performance
is of sufficient financial strength, will THE COMPANY be financially
sustainable over the next two to three years, and which steps should be
done to improve its financial stability? If the management of the company
would like to improve the company’s financial performance, what should
the management of THE COMPANY do? Your recommendations should
be based on the results of your analysis in the project. (About 1 page)
(15% of the project grade).

-4- Reflection – the student should write a paragraph in their own words


reflecting on specifically what they learned from the assignment and how
they think they could apply what they learned in the workplace. (5% of
the project grade)

PRESENTATION OF PAPER AND WRITING (15%) of the project grade):


-Organization, Format and Presentation of Paper including the Title page,
Introduction, Body, and Summary. Each section of the paper must begin
with sub-headings.  Please use the sub-headings included in the
assignment. Please use double space, with one-inch margins, and use 12-
point Times New Roman font. (4% of the project grade)

Use of Tables, Figures and Other Graphics to Summarize and Support


Analysis Presented in the Paper. All tables and charts should have the
numbering system, like “Table 1…”, the title, and foot/end note to
reference the source of the information. (3% of the project grade)

Logical and Smooth Flowing Transitions and Relationships among


Sections of the Written Report (3% of the project grade)

Research Sources and Significance of Research Information and Data,


Use of APA Citation Methodology (5% of the project grade)

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