As a team, select an industry to analyze. A list of companies classified by industry can be obtained by accessing www.fpinfomart.ca and then choosing "Companies by Industry." You can also find a list of industries and companies with each industry via http://ea.finance.yahoo. com/investing (click on "Annual Reports" under "Tools"). Each team member should acquire the annual report for one publicly traded company in the industry, with each member selecting a different company. (Library files, the SEDAR service at www.sedar.com, or the company websites are good sources.)

Required:

On an individual basis, each team member should then write a short report answering the following questions about the selected company. Discuss any patterns across the companies that you as a team observe. Then, as a group, write a short report comparing and contrasting your companies.
1. If your company lists inventories on its statement of financial position, what percentage is this asset of total assets for each of the last three years? If your company does not list inventories, discuss why this is so.
2. If your company lists inventories, what inventory costing method does it use? What do you think motivated this choice?
3. Ratio analysis:

a. What does the inventory turnover ratio measure in general?

b. If your company reports inventories, compute the ratio for the last three years.

c. What do your results suggest about the company?

d. If available, find the industry ratio for the most recent year, compare it to your results, and discuss why you believe your company differs or is similar to the industry ratio.
4. What is the effect of the change in inventories on cash flows from operations for the most recent year; that is, did the change increase or decrease operating cash flows? Explain your answer.