The data analytics which you will complete using the Tableau software with fundamental knowledge of company financial statement analysis. The purpose of financial statements is to provide financial information to decision-makers, including our CS investors. Investors can use the information contained in financial statements to better understand company performance so they can make better investment decisions.I will introduce you the DuPont Method (often known as DuPont Analysis, DuPont Model) for this work.
For this case, please ensure you have the following (1) first understand and leverage the ratios involved in the DuPont Method and (2) use the DuPont Method to perform data analytics and data visualization analysis. For this work package, please implement an analytics model by comparing our target client companies within given sectors using the accounting ratios from the DuPont method. Your work is very important for us to develop an investment portfolio for our Investment Banking Division capital market investor.
Before you start, you will need to form an understanding of a few financial ratios, which will help you to develop the right questions about the companies you are analyzing. In Part 2 you will load the data into Tableau, perform tests to verify that you have loaded it correctly, analyze the data, finally, you will develop a recommendation for investor, and finally, leverage the power of data visualization to present the data so that it can be easily interpreted and understood by your investor.
TableauProject Part 1 Understand Ratios
What is DuPont Analysis
DuPont start from a company called E. I. du Pont de Nemours and Company, and it is the oldest stock in the current Dow Jones Industrial Index. Started in July 1802, the company originally focused on producing gunpowder. Present, this company makes chemicals from food ingredients, dietary supplements to pharmaceuticals and fabrics.
In addition to developing chemicals, the company has been a pioneer with respect to management financial accounting systems. The company developed the original accounting ratio of return on equity (ROE) and then in 1912, Donaldson Brown decomposed ROE into additional ratios. ROE measures a company's profitability as a percentage of shareholder's equity (i.e., how profitable a company can be using shareholders' investments.) If ROE is unsatisfactory, the DuPont analysis can identify the aspect of the business that is underperforming.
DuPont used this formula for managing its business. In 1914 DuPont invested in General Motors (GM), and using the same basic management accounting formulas, led that company to become the world’s largest automobile company. In 1957, DuPont divested its ownership in General Motors because of antitrust laws. After having been highly useful for both General Motors and DuPont, the basic DuPont Method has been extended and used by many to understand investing and managing businesses.
You are first require to download the financial statement data for approximately 10 companies for each of six different sector groups (total sample size of almost 60 companies) for fiscal years 2015-2018. Please note, these companies are all publicly traded on the NASDAQ stock exchange.
Below is some key item you should understand from financial statement.
► Industry: One of six industry groupings as defined by Nasdaq.com.1 Industries included in the sample are capital goods, consumer services, finance, public utilities, technology, and transportation.
► Name: The name of the company for each line of data.
► Net income: The bottom line number on the income statement. This is the final net income number of the company for the fiscal year.
► Total Sales: The top line number on the income statement. This represents total revenues (less a few items that you can ignore for this case) earned by the company in the fiscal year.
► Ticker: The code used to identify each company on the NASDAQ stock exchange. Each company has their own unique ticker symbol.
► Total assets: The total assets of a company at the end of the fiscal year. This number appears on the balance sheet.
► Total shareholder equity: The total shareholder equity of a company at the end of the fiscal year. This
number appears on the balance sheet and also can be called stockholder’s equity.
► Year: The fiscal year being reported on the financial statements. For example, a year of 2015, means the balance sheet of the company is as of the last day of their fiscal year in 2015.
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