Accounting financial report project

the data are in Word and the question are in excel. Accounting 221

FINANCIAL REPORTING PROJECT ACCOUNTING 221 Spring 2016 Introduction and purpose The financial reporting project (FRP) for this term requires that you explore and analyze the annual report and other financial information for two major corporations. This semester we will focus on the 2014 annual reports for Abercrombie & Fitch Co. and American Eagle Outfitters, Inc. companies. The main purpose of the FRP is for you to be exposed to "live" financial information in its most accessible formats. You will immediately notice that the terminology and presentation styles vary from company to company. You will have an opportunity to recognize, utilize, and apply the accounting concepts you have learned in class and from what you have read from your book. A second purpose of the FRP is to give you the opportunity to explore some of the financial and business resources that are readily available to the public. Because of the nature of this course, the FRP has been designed to take advantage of Internet resources. You can try and request some copies of printed annual reports to get a sense of what the printed material looks like. Annual reports have personalities- and I think that shows through more clearly in the printed material. A company may mail you a copy, free of charge (not as common today, since you can get it online). Use the resources discussed below to get the investor relations telephone number or email address. You may want to request hard copies- they are not necessary but can be very convenient. How to do well... START EARLY!! This way you can ask questions when you are unsure. The answers are either right or wrong on this assignment. A poor grade will surely hurt your overall FRP total. The First FRP is worth 40 points, the second is 60 for a total of 100 points and 5% of your grade!! Procedural Matters The company websites are listed below. Please note- NOTHING that is required for this project requires that you pay money or join anything. You are in the wrong place or looking for the wrong thing if you need a credit card!!! As you access different resources, you will often need to search for a particular company. Usually it is easiest to search by "stock ticker." A stock ticker is an abbreviation used by stock exchanges for the company. It is a unique identifier whereas the name may be similar to other entities. The tickers can usually be found easily at one of the research sites listed below. Abercrombie & Fitch Co is \"ANF\" and American Eagle Outfitters, Inc. is \"AEO\". The worksheets for the project are based on these annual reports and, where specifically prompted, other internet resources. Unless I specifically state otherwise, only use the 2014 annual report for Abercrombie & Fitch Co. and American Eagle Outfitters, Inc. As an introduction to the project, visit the corporate website for each of the companies used in this semester's Financial Reporting Project to find the annual report. The direct link is located here, but check out the main web page as well. Download the annual report PDF to your computer. Sometimes this report or link is not available (especially if many students are trying to log in at the same time, say right before the FRP project is due). 1. Abercrombie & Fitch Co: go to http://www.abercrombie.com/shop/us? cmp=PDS:ANF_US_GGL_BRD_General-Brand&gclid=CjwKEAiAgKu2BRDu1OGw3KXokwSJAB_Yy2Qv8GzoprdjDHjeKRAfaI5EhzgohxvF17hWhTwT9sxxoClDbw_wcB&kid=6a407abd-1d88-b108-a222-00000addb7b3 and click investors at the very bottom of the page, then select Financial Statements and the 2014 Annual Report. 2. American Eagle Outfitters, Inc.: go to https://www.ae.com/web/corp/index.jsp? navdetail=footer:c2:p6 and at the top of the page click AE Investment Info.and then SEC filings, 10-K (which is the annual report). Look at the types of information available at each website. You can easily get to the annual reports by looking through the websites (see above for both American Eagle. and Abercrombie). Look for investor information or shareholder information and reports or annual reports. View each company's interactive annual report. READ THROUGH IT and save the PDF to your computer!! Visit a few of the websites that provide useful summary information on corporations, and search for information on our companies (It is usually easiest to search by the stock tickers provided above). Get a sense of what type of information is available for free. (Do not subscribe to anything!) http://www.hoovers.com http://finance.yahoo.com/lookup http://www.reuters.com/finance/stocks The worksheets are on Moodle. They are due IN LAB according to the dates on the class website/lab assignment due date. NAME:_______________________________________________________________________ TA:__________________________________________________________________________ Financial Reporting Project #2 READ ALL THE INSTRUCTIONS_ FAILURE TO DO SO MAY COST YOU POINTS!! Use the instructions from the first FRP. For Abercrombie and American Eagle, you will need the 2014 and 2013 annual reports. For the 2013 annual report you will only use the 2012 year (since the 2014 report has the 14 and 13 numbers). Sometimes prior year numbers are corrected in current year reports, so use the correct reports. Use formulas where you can. This must be turned in using excel and typed. Print to 3 pages only. Please note that I have provided some answers to help you figure out the rest. 1. Compute the following ratios or % for the companies below ---------. Show the components of the numerator and denominator of your calculation and carry your answer out to 1/10th of a %, or 3 decimal points. (example: 2,300/3,400=.676 or 67.6%. This is just to show style and not actual formulas). Liquidity is an important factor for companies to monitor... think about why that is and do the following. Ratio Company/Year Abercrombie 2014 Current Ratio Company/Year Abercrombie 2013 = Company/Year Abercrombie 2012 #DIV/0! #DIV/0! = #DIV/0! 1,141,800 = 2.619 (See page 729 of your book) Ratio Company/Year American Eagle 2014 Current Ratio Company/Year American Eagle 2013 = #DIV/0! Company/Year American Eagle 2012 = #DIV/0! 435,902 Company/Year Abercrombie 2014 Gross Margin % Company/Year Abercrombie 2013 = #DIV/0! Company/Year American Eagle 2014 Gross Margin % Company/Year Abercrombie 2012 #DIV/0! Company/Year American Eagle 2013 = #DIV/0! Company/Year American Eagle 2012 = #DIV/0! Use your book to get more info on these ratio's. 2. Answer the following: 2014 Which company is more liquid in each year? (use the current ratio) P. 765-67 tells what a good current ratio is 2013 3. A current ratio of less than one indicates which of the following (circle the best answer)? a) The company will have a hard time paying current debt. b) The company will have an easier time paying current debt. #DIV/0! 2012 = #DIV/0! 4-6: Perform horizontal (time period to time period) analysis for the report year 2014 on key lines of the income statement. (See last page for how to do this). Carry your analysis out to 1/10th of a percentage. Show your work and results. Use formulas where you can. Abercrombie American Eagle 4. Find the percent change in sales (total): = Abercrombie American Eagle Abercrombie American Eagle 5. Find the percent change in Gross Margin (total): Do not use GM %, find the change. 6. Find the percent change in net income: Based on 4-6 which company is doing better- give your reasons why: Review the Balance Sheet and Footnotes for both companies then answer the following set of questions: ONLY USE THE 2014 Annual Report for these next questions!!! 7. Estimates- What does each company say about estimates and name at least one account each company has that would use estimates . Abercrombie Page # ______ American Eagle Page #______ 8. Locate the cost of goods sold footnote, what is included in costs for each? Just list some of the items. Abercrombie American Eagle 9. What is the advertising/marketing expense for each company AND what type of advertising do the companies do? Abercrombie Page #______ American Eagle Page #______ 10. What method(s) of depreciation does the company use for financial statement purposes? (Answer for both companies). Abercrombie American Eagle 11. Locate the inventory footnote. What method do they use to account for inventory costs? (note: retail is a form of LIFO) Abercrombie American Eagle 12. Using the cash flow statement, please tell me how much each company invested in Property, Plant and Equipment for the year 2014 (this is sometimes referred to as Capital Expenditures). Remember, numbers are truncated, so tell me the actual amount. Do not include equipment leased to others. Abercrombie American Eagle 13. For each company, locate the footnote disclosure for commitments/contingencies/leases/rent, and briefly explain what a contingency is (asset or liability) and summarize the footnote, with page number. Abercrombie Page #______ American Eagle Page #______ 14. Quarterly financial data helps readers determine the seasonality of the company's operations. Locate the quarterly data in the annual report and tell me if there any major seasonal fluctuations (which quarters have the highest sales). If not, please note that they are not seasonal. (Google seasonality for more info) Abercrombie Page #______ American Eagle Page #______ 15. Complete the following reconciliation for the current annual report year 2014 (this is just for the Retained Earnings section, not for total stockholders equity). Show beginning bal and then list all other activity in R/E and then show the ending balance, key numbers have been given for you in American Eagle. List the description of each item involved- this should not be difficult: Beginning Bal. in RE +Plus Less Dividends +/- Other Abercrombie 2,556,270,000 =Ending Balance in RE 2,556,270,000 American Eagle - Horizontal Analysis Info: It is a technique for evaluating a series of financial statement data over a period of time. The purpose of a horizontal analysis is to express the changes in an item in percentages, based on a specific past year chosen as the base year. In this project the fiscal year 2013 is the base year, since we want to compare how much we have changed in 2014 compared with 2013. To calculate this we use the following formula: Current year (2014) - Base year (2013) Base year (2013) A negative signs means it was a decrease