Adairs Limited (ADH), as if you were investment analysts making a recommendation

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AdairsLimited (ADH), as if you were investment analysts making a recommendation on whether yourclients should invest in it.6. Prospective Analysis, including:Forecasting income statement• Forecast key elements of income statements for the company for the next THREEfinancial years.• Present the key ratios (in a table format) used to forecast key income statement items inthe report.• Present these income statements (key elements only, in a table format) in the report.• Provide justifications of forecast assumptions for each key forecast item. Thejustifications should be the company’s environment, business operation and strategydiscussed in your group report.Forecasting balance sheet• Forecast key elements of balance sheets for the company for the next THREE financialyears.• Present the key ratios (in a table format) used to forecast key balance sheet items in thereport.• Present these balance sheets (key elements only, in a table format) in the report.• Provide justifications of forecast assumptions for each key forecast item. Thejustifications should be the company’s environment, business operation and strategydiscussed in your group report.Valuations• Value the company using two different methods. The discounted cash flow model mustbe used together with an alternative valuation model of your choice.• Discuss how to estimate the parameters used in the valuation models. For example, justifyyour choice of terminal growth rate. Why is the rate appropriate for the company?• Present sensitivity analysis for different economic scenarios. Discuss these economicscenarios in which a downside or upside growth rate is applied.• Calculate estimated value per share.7. Recommendation for the clients, drawing on the whole analysis of the company included inthe group and individual reports, and including:• Compare the estimated value per share with the market value and make an investmentrecommendation based on this.• Justify the investment recommendation by providing supportive arguments fromenvironment, strategy, accounting, or financial analyses of the group report.The individual report should be word-processed and professionally presented. It is to beapproximately 5 – 10 pages (with 1.5-lines spacing and 12 font size), excluding references and