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I. INTRODUCTION AND PURPOSE

This article illustrates a systematic approach for teaching fundamental investment analysis.
Students analyze the investment potential of a publicly traded corporation. The semester project
consists of three parts: a complete ratio and DuPont analysis to determine the current financial
position of the company, a strategic analysis to determine the major strengths and weaknesses of
the company, and a forecast of the future performance and discounted future cash flow analysis
to determine the company's intrinsic investment value.

II. THE IMPORTANCE OF HISTORIC RATIO ANALYSIS
At the core of fundamental investment analysis is the ability to calculate, analyze, and
interpret the meaning of financial ratios to determine the financial position of the firm. Ratios
are used to discern changing patterns and potential trouble spots that may arise in the future
business life of a firm. They allow the analyst to standardize key financial variables from th...