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Take your time and do a great job please For the final project, you will submit an investment analysis report for a hypothetical company, based on provided constraints and research of market and industry trends. You will need to utilize the topics covered throughout the course in order to demonstrate mastery of the knowledge and skill required of a corporate investment manager. Through research and calculations, you will be analyzing the company’s place in the financial market, constructing a portfolio, and compiling your findings in an executive summary to justify your investment strategies and decisions, along with evaluating the investment performances. As a corporate investment manager, it is your responsibility to construct an investment portfolio that will generate the maximum rate of return within a given risk class. In order to be successful in this, you need to synthesize your knowledge of your company’s industry and its place in the wider financial markets and of the modern portfolio theory, along with utilizing both qualitative and quantitative skills. Prompt You are a new investment manager of XYZ Tech Company. The CEO has asked you to produce an investment analysis report. Using the provided information and investment parameters for the company along with your own financial database research, prepare an investment analysis report for the company. Your analysis report should include compiled data spreadsheets, a complete portfolio, and a justification of your investment strategies in an executive summary. Specifically, the following critical elements must be addressed: I. Company and Market Analysis: In this section, you will analyze the company and its position in the financial markets. A. Financial Markets i. Analyze the five-year performance of the domestic economy relative to the financial markets. ii. Explain specific market performance data based on compiled asset valuation model inputs supported by database research of five-year sector and industry performance and current trends. iii. Evaluate the impact of the five-year and current macroeconomic data on asset prices. B. Company Valuation i. Analyze the company’s financial items and key ratios in order to demonstrate a comparison to peers and industry. ii. Determine the intrinsic value of assets by inputting data into the various asset valuation models, and explain how each model was applied. C. Industry Trends i. Compile historic industry microeconomic data from database research for relative comparisons and inputs into asset valuation models. ii. Analyze quantitative data across sectors and industries to measure absolute and relative performance. D. Stakeholders i. Identify five key stakeholders and their needs in relation to the company’s portfolio. ii. Identify the common stockholders’ primary objective and their required return on equity. II. Portfolio: With your company and market analysis in mind, construct a complete portfolio that includes the following: A. Assets i. Explain the inclusion of specific asset classes for the portfolio, considering the portfolio's risk/return trade-offs and the company’s investment objectives. ii. Apply the asset allocation weightings across asset classes, sectors, and industries. B. Securities i. Analyze the company’s historical revenue and earnings growth in order to demonstrate a comparison to that of peers in the industry. ii. Determine the intrinsic value of assets utilizing the asset valuation models. C. Rates of Return i. Analyze the assets’ historical risk and rates of return, utilizing a comparison of the assets’ rates of return to similar securities or benchmarks for support. ii. Calculate required rates of return, utilizing various asset valuation models (e.g. stock valuation models, bond valuation models, real estate valuation models, etc.). D. Compare the risk/return trade-off on the investments. III. Executive Summary: Justify your investment strategies in a summary, utilizing your company and market analysis and portfolio for support. Include the following in your justification: A. Describe how making these investments will position the company within its industry in the market. Support with examples. B. Explain the benefits of the investments to stakeholders. C. Assess investment performance utilizing specific performance measurements. D. Assess investment performance based on risk/return metrics, citing specific examples. E. Explain how the strategies implemented in the portfolio meet the company’s investment objectives. APA Format 9-12 Pages Apple (AAPL) Apple (AAPL) Stock 2016 2017 2018 2019 2020 2021 Revenues 0 0 0 0 0 0 Cost of Goods Sold 0 0 0 0 0 0 Selling, General & Administrative Expenses 0 0 0 0 0 0 Research and development 0 0 0 0 0 0 Operating Income 0 0 0 0 0 0 Net Interest Expenditure 0 0 0 0 0 0 Pre-Tax Income 0 0 0 0 0 0 Taxes 0 0 0 0 0 0 Net Income 0 0 0 0 0 0 Earnings Per Share ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! Shares Outstanding 0 0 0 0 0 0 Apple (AAPL) Bond Firm Ind Avg Debt & Coverage Ratios Debt/Assets Debt/Equity Current Assets/Current Liability EBITDA/Interest Debt/EBITDA Cash Flow Ops/Total Debt Caterpillar (CAT) Caterpillar (CAT) Stock 2016 2017 2018 2019 2020 2021 Revenues 0 0 0 0 0 0 Cost of Goods Sold 0 0 0 0 0 0 Selling, General & Administrative Expenses 0 0 0 0 0 0 Research and development 0 0 0 0 0 0 Operating Income 0 0 0 0 0 0 Net Interest Expenditure 0 0 0 0 0 0 Pre-Tax Income 0 0 0 0 0 0 Taxes 0 0 0 0 0 0 Net Income 0 0 0 0 0 0 Earnings Per Share ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! Shares Outstanding 0 0 0 0 0 0 Caterpillar (CAT) Bond Firm Ind Avg Debt & Coverage Ratios Debt/Assets Debt/Equity Current Assets/Current Liability EBITDA/Interest Debt/EBITDA Cash Flow Ops/Total Debt Consolidated Edison (ED) Consolidated Edison (ED) Stock 2016 2017 2018 2019 2020 2021 Revenues 0 0 0 0 0 0 Cost of Goods Sold 0 0 0 0 0 0 Selling, General & Administrative Expenses 0 0 0 0 0 0 Research and development 0 0 0 0 0 0 Operating Income 0 0 0 0 0 0 Net Interest Expenditure 0 0 0 0 0 0 Pre-Tax Income 0 0 0 0 0 0 Taxes 0 0 0 0 0 0 Net Income 0 0 0 0 0 0 Earnings Per Share ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! Shares Outstanding 0 0 0 0 0 0 Consolidated Edison (ED) Bond Firm Ind Avg Debt & Coverage Ratios Debt/Assets Debt/Equity Current Assets/Current Liability EBITDA/Interest Debt/EBITDA Cash Flow Ops/Total Debt Northern Trust (NTRS) Northern Trust (NTRS) Stock 2016 2017 2018 2019 2020 2021 Revenues 0 0 0 0 0 0 Cost of Goods Sold 0 0 0 0 0 0 Selling, General & Administrative Expenses 0 0 0 0 0 0 Research and development 0 0 0 0 0 0 Operating Income 0 0 0 0 0 0 Net Interest Expenditure 0 0 0 0 0 0 Pre-Tax Income 0 0 0 0 0 0 Taxes 0 0 0 0 0 0 Net Income 0 0 0 0 0 0 Earnings Per Share ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! Shares Outstanding 0 0 0 0 0 0 Northern Trust (NTRS) Bond Firm Ind Avg Debt & Coverage Ratios Debt/Assets Debt/Equity Current Assets/Current Liability EBITDA/Interest Debt/EBITDA Cash Flow Ops/Total Debt Macy's (M) Macy's (M) Stock 2016 2017 2018 2019 2020 2021 Revenues 0 0 0 0 0 0 Cost of Goods Sold 0 0 0 0 0 0 Selling, General & Administrative Expenses 0 0 0 0 0 0 Research and development 0 0 0 0 0 0 Operating Income 0 0 0 0 0 0 Net Interest Expenditure 0 0 0 0 0 0 Pre-Tax Income 0 0 0 0 0 0 Taxes 0 0 0 0 0 0 Net Income 0 0 0 0 0 0 Earnings Per Share ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! Shares Outstanding 0 0 0 0 0 0 Northern Trust (NTRS) Bond Firm Ind Avg Debt & Coverage Ratios Debt/Assets Debt/Equity Current Assets/Current Liability EBITDA/Interest Debt/EBITDA Cash Flow Ops/Total Debt For the final project, you will submit an investment analysis report for a hypothetical company, based on provided constraints and research of market and industry trends. You will need to utilize the topics covered throughout the course in order to demonstrate mastery of the knowledge and skill required of a corporate investment manager. Through research and calculations, you will be analyzing the company’s place in the financial market, constructing a portfolio, and compiling your findings in an executive summary to justify your investment strategies and decisions, along with evaluating the investment performances. As a corporate investment manager, it is your responsibility to construct an investment portfolio that will generate the maximum rate of return within a given risk class. In order to be successful in this, you need to synthesize your knowledge of your company’s industry and its place in the wider financial markets and of the modern portfolio theory, along with utilizing both qualitative and quantitative skills. Prompt You are a new investment manager of XYZ Tech Company. The CEO has asked you to produce an investment analysis report. Using the provided information and investment parameters for the company along with your own financial database research, prepare an investment analysis report for the company. Your analysis report should include compiled data spreadsheets, a complete portfolio, and a justification of your investment strategies in an executive summary. Specifically, the following critical elements must be addressed: I. Company and Market Analysis: In this section, you will analyze the company and its position in the financial markets. A. Financial Markets i. Analyze the five-year performance of the domestic economy relative to the financial markets. ii. Explain specific market performance data based on compiled asset valuation model inputs supported by database research of five-year sector and industry performance and current trends. iii. Evaluate the impact of the five-year and current macroeconomic data on asset prices. B. Company Valuation i. Analyze the company’s financial items and key ratios in order to demonstrate a comparison to peers and industry. ii. Determine the intrinsic value of assets by inputting data into the various asset valuation models, and explain how each model was applied. C. Industry Trends i. Compile historic industry microeconomic data from database research for relative comparisons and inputs into asset valuation models. ii. Analyze quantitative data across sectors and industries to measure absolute and relative performance. D. Stakeholders i. Identify five key stakeholders and their needs in relation to the company’s portfolio. ii. Identify the common stockholders’ primary objective and their required return on equity. II. Portfolio: With your company and market analysis in mind, construct a complete portfolio that includes the following: A. Assets i. Explain the inclusion of specific asset classes for the portfolio, considering the portfolio's risk/return trade-offs and the company’s investment objectives. ii. Apply the asset allocation weightings across asset classes, sectors, and industries. B. Securities i. Analyze the company’s historical revenue and earnings growth in order to demonstrate a comparison to that of peers in the industry. ii. Determine the intrinsic value of assets utilizing the asset valuation models. C. Rates of Return i. Analyze the assets’ historical risk and rates of return, utilizing a comparison of the assets’ rates of return to similar securities or benchmarks for support. ii. Calculate required rates of return, utilizing various asset valuation models (e.g. stock valuation models, bond valuation models, real estate valuation models, etc.). D. Compare the risk/return trade-off on the investments. III. Executive Summary: Justify your investment strategies in a summary, utilizing your company and market analysis and portfolio for support. Include the following in your justification: A. Describe how making these investments will position the company within its industry in the market. Support with examples. B. Explain the benefits of the investments to stakeholders. C. Assess investment performance utilizing specific performance measurements. D. Assess investment performance based on risk/return metrics, citing specific examples. E. Explain how the strategies implemented in the portfolio meet the company’s investment objectives. APA Format 9-12 Pages FOR THE EXCEL TEMPLATE!!!!!! Do not use the formulas in the revenues (1.04) and Cost of Goods Sold (0.70) cells! They are only examples in the spreadsheets that have absolutely nothing to do with the five companies! You need to review the Morningstar and Value Line company reports to analyze each company's historical revenues and earnings growth. The historical data provides you with estimates for each company's future revenues and earnings growth to be used in the MS Excel spreadsheets.   Please note the importance of calculating your revenues/earnings predictions as I am unaware of any equity analysts that "consistently" predict a public corporation's future outlook. They come close often but not all the time. You are to analyze a company's historical revenues and earnings performance/growth and use the data to calculate and apply what you consider reasonable forecasts/estimates for future growth. The first step is to review the corporations' recent annual reports to study their historical revenues/earnings growth. As we all know, predictions of performance in "any" endeavor (economy, business, sports, etc.) are primarily based on analyzing historical data/information, so do not think too much on your future revenues/earnings estimates.   The data/estimates in the spreadsheets' cells are only "examples" of how to calculate the financial ratios in a company's financial report. Please disregard the specific data in the function cells. You need to input data based on the companies' historical performance. For example, the 4% revenue growth (1.04) and cost of goods sold (.70) in the function cells are only examples. Your estimates are based on the company's historical performance found in the income statements of the respective annual reports and the research reports (Morningstar, Value Line, MarketWatch.com, Zacks, etc.). The current inputs/data examples should be changed to your estimates starting with revenues (top line) down to net income (bottom line). You are the analyst and your future expectations could be higher/lower based on historical and current expectations. Feel free to change the years in the spreadsheet; however I believe 2017 is a good starting point for the calendar or fiscal year. A five-year forecast is practically the norm in equity research.   1 Running Head: COMPANY AND MARKET ANALYSIS 2 Company and Market Analysis Company and Market Analysis The financial market plays a huge role in enabling the smooth running of capitalist economies as it allocates resources and creates liquidity for entrepreneurs and businesses. The financial market usually eases trading of financial holdings for sellers and buyers. The financial market usually creates security products that offer a return to creditors and investors and avail funds to borrowers (Delen, Kuzey, & Uyar, 2013). These markets embody trading various types of investments, such as bonds, equities, derivatives, and currencies. They are dependent on information transparency to guarantee efficiency and appropriateness in setting prices. There are various forms of financial markets, including the bond market, derivative market, and stock market, among others. The XYZ company will concentrate on the stock market by focusing on five stocks; Apple, Caterpillar. Macy’s, Northern Trust, and Consolidated Edison stocks (Hult et al., 2012). The stock market is affected by macroeconomic factors, including inflation rate interest rates, economic growth, and unemployment rate. Notably, financial markets root for rapid economic growth and lower interest rates since they imply more returns for firms and increased stock values. Decreasing interest rates usually have a definite sway on the market movements since they are viewed as a herald for the growth of the economy (Faello, 2015). Similarly, the high inflation rate has a detrimental effect on the stock market since it signifies a potential increase in the interest rates in the future, which, in turn, slows down economic growth. Also, the increasing rate of unemployment foretells a declining growth in the economy, while a falling rate of unemployment foretells future growth (Hult et al., 2012). The graph shows the effect of the macroeconomic factors on returns in the financial market for the past five years. The chart above shows that high inflation and interest rates have harmed the stock market returns., for the past few months, the movement in interest rates and inflation concerning stock market return has been the same due to the impact of COVID-19 pandemic (Hult et al., 2012). Company Valuation Apple Inc. Apple Inc. engages in the design, manufacture, and sale of personal computers, smartphones, wearables, tablets, accessories, and related services globally. The technology provides its customers with the iPhone series, Mac computers, iPods, AirPods, Beat products, iPod touch, wearables, Apple Watch, and Apple TV, among another vast array of products. The company also offers digital streaming services and content stores, iCloud services that offer the storage of digital media, documents, mail, and contacts; and Apple care services and related support. Caterpillar, Inc Caterpillar Inc. engages in manufacturing and selling mining and construction equipment, natural gas, diesel, and industrial gas turbines. The company’s construction industries department provides cold planes, compactors, asphalt pavers, and utility vehicles, among other offerings. The Resource Industries division offers hydraulic shovels and electric rope, rotary drills, and machinery components among a wide array of other products. The financial product segments offer financing and operating leases, working capital loans, insurance, and risk products, and wholesale financing. The company also produces filters and fluids, precision seals, fluid transfer products, among others. The company has its headquarters in Illinois. Consolidated Edison Consolidated Edison provides gas, regulated electric, and steam delivery business operations in the US. The company provides electric services to about 3.5 million consumers in the NYC and Westchester county, gas to intimately 1.1 million consumers in Manhattan, parts of Queens, the Bronx, and Westchester county. The company operations are predominantly in the US. In addition to running 543 circuit miles of transmission lines, 64 distribution substations, 15 transmission substations, and 3,745 pole miles of overhead distribution lines, among others, the company operates a renewable energy infrastructure project. The company markets industrial to electricity, residential, commercial, and government consumers. Northern Trust Northern Trust is a financial holding firm which engages in providing asset servicing, wealth management, asset management, and banking solution to families, institution, corporations, and individuals globally. It also provides employee benefit services, foreign exchange, securities lending, transition management services, treasury management, brokerage services, cash management services, and banking. It also offers financial consulting, family business consulting, guardianship and estate administration, brokerage services, family financial education, and business and private banking services. The firm also offers asset management services, cash management, and multimanager advisory products and services, among others. The company is headquartered in Chicago (Macrotrends, 2020). Macy’s Macy’s is an omnichannel retail firm that operates stores, mobile applications, and websites. The company markets a range of merchandise such as accessories for women, men, and children, home furnishings, and cosmetics, among other products. The company currently runs about 680 departmental stores, 190 specialty stores, among others. The company also operates bluemercury.com, macys.com, and bloomingsdales.com. Additionally, the company provides licenses and operates spa retailers and beauty products. The company is headquartered in New York. Stakeholders Portfolio Executive Summary References Elton, E. J., Gruber, M. J., Brown, S. J., & Goetzmann, W. N. (2014). Modern portfolio theory and investment analysis (9th ed.). New York: Wiley Custom. Faello, J. (2015). Understanding the limitations of financial ratios. Academy of Accounting and Financial Studies Journal, 19(3), 75. Delen, D., Kuzey, C., & Uyar, A. (2013). Measuring firm performance using financial ratios: A decision tree approach. Expert Systems with Applications, 40(10), 3970-3983. Hult, H., Lindskog, F., Hammarlid, O., & Rehn, C. J. (2012). Risk and portfolio analysis: Principles and methods. Springer Science & Business Media. Macrotrends.net (2020). Macy's Financial Ratios for Analysis 2005-2020 | M. Macrotrends.net. Retrieved from https://www.macrotrends.net/stocks/charts/M/macys/financial-ratios. Macrotrends.net. (2020). Apple Financial Ratios for Analysis 2005-2020 | AAPL. Macrotrends.net. Retrieved 29 April 2020, from https://www.macrotrends.net/stocks/charts/AAPL/apple/financial-ratios. Macrotrends.net. (2020). Northern Trust Financial Ratios for Analysis 2005-2020 | NTRS. Macrotrends.net. Retrieved 29 April 2020, from https://www.macrotrends.net/stocks/charts/NTRS/northern-trust/financial-ratios. Effects of macroenonmic factors on stock market Interest rates 42125 42156 42186 42217 42248 42278 42309 42339 42370 42401 42430 42461 42491 42522 42552 42583 42614 42644 42675 42705 42736 42767 42795 42826 42856 42887 42917 42948 42979 43009 43040 43070 43101 43132 43160 43191 43221 43252 43282 43313 43344 43374 43405 43435 43466 43497 43525 43556 43586 43617 43647 43678 43709 43739 43770 43800 43831 43862 43891 0.12466666666666666 0.12322580645161291 0.129 0.13032258064516128 0.13806451612903226 0.13600000000000001 0.1235483870967742 0.11766666666666667 0.24064516129032257 0.34290322580645161 0.37517241379310345 0.36225806451612902 0.36533333333333334 0.36516129032258066 0.37766666666666665 0.39161290322580644 0.39677419354838711 0.39633333333333332 0.39645161290322578 0.40666666666666668 0.54 0.64967741935483869 0.65678571428571431 0.78612903225806452 0.89600000000000002 0.90741935483870972 1.04 1.1506451612903226 1.1570967741935485 1.1533333333333333 1.1538709677419354 1.157 1.3016129032258066 1.4145161290322581 1.4175 1.5061290322580645 1.6923333333333332 1.7 1.8196666666666668 1.91 1.9148387096774193 1.9546666666666668 2.1877419354838712 2.1976666666666667 2.274193548387097 2.4 2.4 2.4051612903225807 2.4236666666666666 2.390967741935484 2.3776666666666668 2.4029032258064515 2.1258064516129034 2.0430000000000001 1.8296774193548386 1.5533333333333332 1.5509677419354839 1.5506451612903227 1.5831034482758621 inflation rate 42125 42156 42186 42217 42248 42278 42309 42339 42370 42401 42430 42461 42491 42522 42552 42583 42614 42644 42675 42705 42736 42767 42795 42826 42856 42887 42917 42948 42979 43009 43040 43070 43101 43132 43160 43191 43221 43252 43282 43313 43344 43374 43405 43435 43466 43497 43525 43556 43586 43617 43647 43678 43709 43739 43770 43800 43831 43862 43891 0.33200000000000002 0.49772727272727274 0.50363636363636366 0.55571428571428572 0.65 0.5714285714285714 0.69263157894736838 0.72772727272727278 0.66526315789473689 0.47199999999999998 0.33727272727272728 0.19047619047619047 0.2119047619047619 0.1740909090909091 3.85E-2 8.8260869565217392E-2 0.11571428571428571 9.7500000000000003E-2 0.32 0.55619047619047624 0.42099999999999999 0.4 0.48565217391304349 0.39105263157894737 0.4668181818181818 0.45818181818181819 0.54600000000000004 0.4334782608695652 0.36799999999999999 0.49809523809523809 0.49571428571428572 0.503 0.54 0.75736842105263158 0.75190476190476185 0.74142857142857144 0.83590909090909093 0.79476190476190478 0.77476190476190476 0.79 0.88105263157894742 1.040909090909091 1.113 1.0163157894736843 0.92 0.79947368421052634 0.65809523809523807 0.59571428571428575 0.56863636363636361 0.374 0.30636363636363634 0.04 0.1125 0.1459090909090909 0.17157894736842105 0.14476190476190476 3.6666666666666667E-2 -0.11157894736842106 -0.1168 1818181818182 S & P 500 returns 42125 42156 42186 42217 42248 42278 42309 42339 42370 42401 42430 42461 42491 42522 42552 42583 42614 42644 42675 42705 42736 42767 42795 42826 42856 42887 42917 42948 42979 43009 43040 43070 43101 43132 43160 43191 43221 43252 43282 43313 43344 43374 43405 43435 43466 43497 43525 43556 43586 43617 43647 43678 43709 43739 43770 43800 43831 43862 43891 -0.28461931170502031 -2.1011672375900514E-2 1.9742029696721453E-2 -6.2580818167202845E-2 -2.6442831573227132E-2 8.2983117760394132E-2 5.0486926072412786E-4 -1.7530185176314439E-2 -5.073532197294639E-2 -4.1283604302990717E-3 6.5991114577365062E-2 2.6993984808731941E-3 1.5324602357572603E-2 9.1092112097812539E-4 3.5609801125254359E-2 -1.2192431360480427E-3 -1.2344508443253854E-3 -1.9425679279557517E-2 3.4174522187570444E-2 1.8200762196895148E-2 1.7884358171464498E-2 3.7198160337279074E-2 -3.8919718808450021E-4 9.0912085493182193E-3 1.157625139134133E-2 4.8137750908554544E-3 1.9348826118030571E-2 5.4643281108557318E-4 1.9302978533243698E-2 2.218813533034969E-2 3.7200430103365711E-3 3.4342557364422932E-2 5.6178704444133087E-2 -3.8947372061896912E-2 -2.6884498624825115E-2 2.718775131643536E-3 2.1608341965291933E-2 4.8424360241865472E-3 3.6021556221367268E-2 3.0263211466054596E-2 4.2942871026614426E-3 -6.9403356024429486E-2 1.7859356788848979E-2 -9.1776894596563907E-2 7.8684401655036762E-2 2.9728889126352298E-2 1.7924256211817147E-2 3.9313498395682656E-2 -6.577773118928687E-2 6.8930163925612131E-2 1.3128152149977756E-2 -1.8091627281326739E-2 1.7181177829208583E-2 2.0431770730503063E-2 3.4047037421886195E-2 2.8589818964716907E-2 -1.6280925822201864E-3 -8.411048367946572E-2 -0.12511928245982329