Team Project: Analyzing Financial Statements

* Acquire the financial statements of a large manufacturing _J company, such as General Motors, a large electric or gas util-

~ ity company, such as Duke Energy Corporation or Ameren Corporation (previously Union Electric Company), and a large bank, such as Wells Fargo & Company. For each company, examine the balance sheet, income statement, statement of cash flows, and notes to the financial statements.

Prepare a short report in which you include the following:

a. Compute the proportion of total assets represented by inventory and property, plant, and equipment. Which company has the greatest percentage of each of these two asset categories? Explain how these percentages are related to the type of company.

b. Which companies have inventories? What methods are used in valuing and accounting for the inventories? Did any of the companies change inventory methods during the year? If so, evaluate the rationale given for the change.

c. For the manufacturing company, what was the total cost of goods sold for the most recent period? What was the amount of gross margin? What was the gross margin percentage? What was the inventory turnover ratio for the most recent period?

d. Can amounts comparable to those computed for the manufacturing company be computed for the utility company? If not, what profitability or efficiency ratios can be substituted?

e. How would you determine if the measures computed in parts c and d are reasonable? From a library or database find appropriate data to use for comparative purposes. Include in your report why your comparisons are appropriate, and discuss how the companies you have chosen have performed in relation to your comparative data.