Dow Chemical Case Study

Assignment #1 Understanding your company (8 marks)

1.        Read your company’s annual report, review its website, and other sources of information about the company and answer the following questions:

        (a)        Describe your company’s primary products and/or services.

        (b)        What is the geographic presence of your company in this industry (e.g, local, regional, international)?

        (c)        Who are the company’s primary competitors?

        (d)        What is the relative size and significance of your company in its industry or region?

        (e)        Is your company owned by another company and/or does it own any other companies itself? If so, please identify the ownership structure, including percentage ownership.

        (f)        What is your company’s outlook for the next financial year.

        (g)         Have there been any significant news releases, after the most recent year-end, that you should be aware of in your analysis of your company?

        (h)        Identify any significant economic factors (e.g., regulation, price pressures, changing demand or supply, etc.) that affected this industry during your periods of analysis, or are anticipated to affect it in future.

Assignment #2 Common Size Analysis (10 marks)

1.        Review the common-size analyses (vertical and horizontal) of your company’s statement of comprehensive income and statement of financial position for the three most recent years. Briefly summarize the key changes over the three-year period. What supporting information can you find in your review of the company’s annual report or other sources to help explain the reason behind these changes?

2.        Review your company’s statement of cash flows for the three most recent years.

        (a)        Record turnover (revenue), operating profit, profit, and net cash from operating activities in the table below. All four measures should be trending in approximately the same direction. Are they? If one or more are going in a different direction, or appear random, then explain why you believe this is happening.

        (b)        Identify the primary source of cash outflows or inflows from investing activities over the last three years. Is your company adding or selling assets?

        (c)        Identify the primary source of cash outflows or inflows from financing activities over the last three years. How is your company primarily being financed—through debt or equity? Can you determine which is growing faster and why?

3.        From your review of the statement of comprehensive income, statement of financial position, and statement of cash flows in 1 and 2 above, identify the most significant issue(s) that your company is currently facing.