Wm Wrigley Jr. Company Equity Valuation and Analysis Valued November 1, 2007 Dr. MEM Analysts Alan Inman
[email protected] Jonathan Haralson
[email protected] Mark Leonard
[email protected] Pete Nash
[email protected] Shane Nowak
[email protected] 1 Table of Contents Executive Summary 5 Business & Industry Analysis 10 Company Overview 10 Industry Overview 11 Five Forces Model 13 Competitive Force One – Rivalry Among Existing Firms 13 Competitive Force Two – Threat of New Entrants 18 Competitive Force Three – Threat of Substitute Products 20 Competitive Force Four – Bargaining Power of Buyers 21 Competitive Force Five – Bargaining Power of Suppliers 23 Value Chain Analysis 24 Firm Competitive Analysis 27 Accounting Analysis 30 Key Accounting Policies 30 Potential Accounting Flexibility 35 Actual Accounting Strategy 37 Quality of Disclosure 39 Sales Manipulation Diagnostics 41 2 Expense Manipulation Diagnostics 46 Potential Red Flags 53 Undo Accounting Distortions 54 Financial Analysis 55 Liquidity Ratio Analysis 55 Profitability Analysis 64 Capital Structure Analysis 71 IGR and SGR Analysis 76 Financial Statement Forecasting 78 Income Statement Analysis 78 Forecasted Income Statement 80 Common Size Income Statement 80 Balance Sheet Analysis 81 Forecasted Balance Sheet 84 Common Size Balance Sheet 86 Forecasted Statement of Retained Earnings 87 Statement of Cash Flows Analysis 88 Forecasted Statement of Cash Flows 89 Common Size Statement of Cash Flows 90 Cost of Equity 91 Regression Analysis 92 Cost of Debt 93 Weighted Average