Data Analytics Assignment

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Data Analytics Assignment

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Acct 3120-001 Intermediate II
Fall 2018
Data Analytics Assignment

Accounting for stock options requires that employee stock options be valued with a model that includes six parameters. The company used in chapter 19 to illustrate options was Pepsi. From chapter 19, here is the relevant information that Pepsi disclosed:

 

Required:

  1. In 2016, Pepsi changed three of the parameters used to estimate the option values. Evaluating each of these changes independently, indicate the effect of Pepsi’s change in 2016 on the estimated value of the option.
Parameter Effect of change on estimated option value
 

Expected Life

 

  
 

Risk-free interest rate

 

  
 

Expected volatility

 

  

 

 

 

 

  1. There are two files available for this assignment. Each file is set up similarly. The two files have information for the years 2015 and 2016. Each file contains the following information:
  • Identifying company information
    • Global Company Key which is an identifying code that the data source uses
    • Ticker
    • CUSIP is an acronym for Committee on Uniform Securities Information Procedures and is used when securities are traded in the US and Canada.
    • Company name
    • Fiscal Year-end Month
    • SIC code is the Standard Industrial Classification code and indicates the firm’s primary line of business.
  • Date of fiscal year end that parameter estimates were reported
    • Data date
    • Data Year – fiscal
    • Fiscal Year-end Month
  • Parameter Estimates
    • Dividend rate
    • Life of Options
    • Risk Free Rate
    • Volatility

 

Indicate:

  1. How many unique companies are included in the files for each year? Describe the process you used to determine that.
  2. How many estimates are there for each of the parameters? Again, describe the process you used to determine that.

 

 

  1. Now analyze whether the parameter changes were justified using the data provided in the data files provided. You can think about this from the perspective of management planning the changes or as the auditors evaluating the changes.

 

Your analysis should include:

  1. A table summarizing relevant information from the file. Summarize what the information in your table indicates.
  2. At least one graph with information from the file. Summarize what the information in your chart indicates.
  3. For each of the three parameters that changed, indicate whether or not your analysis supports the change and how your analysis led to that conclusion.
  4. Is there other data that would have been useful in your analysis?