Industry and company overview Write a 200 400 word paragraph including general facts about the industry in which your compankes operate. Also summarize each company you selected (in your own words) from reading the Form 10-K. Each company description should be 200-300 words in length. Do not copy and paste information; put the information in your own words. Cash 1. On what financial statement(s) do you find "Cash and cash equivalents (or similarly-named account)? On what page number are these financial statements? 2 How much cash does the company have at the end of each of the most recent three years 3. Comparing the most current two yea he financial statements, has the company's cash increased or rs in t decreased? Short-term investments 1. What type(s) of short-term investments does the company have? On what financial statement do find short-term investments in the company's Form 10-K? List the page number(s) 2. Does the company have any unrealized gains or losses? What do these mean? On what financial statement would you find unrealized gains and losses? Receivables 1. Look in the Notes to the Financial Statements What type of receivables does this company have? 2. Imagine that this company makes a sale of its product. Describe a possible sales transaction and list the journal entry that the company would make to recognize the sale (assume the sale is on account.) For this assignment, ignore the cost of goods sold entry 3. What do you know about the company's Allowance for Uncollectible Accounts? What name does the mpany call its allowance? Where in your company's 10-K do you find this information? What is the gross amount of the Calculate and interpret these ratios for two years (show your calculations) company's receivables? What percentage of this gross is its allowance? 4. 5. 1. Current ratio 2. Quick ratio 3. Average daily sales (Net sales 365 days) 4. Days' sales outstanding (Average net receivables/Average daily sales) (Note:You will need to use some balance sheet balances from three years, even though the balance sheet only includes two years of balances. To find one year earlier than the two years presented on the balance sheet, find the Form 10-K for the earlier year.) Inventory u find Inventory? List the page number from the most recent found Inventory for your company. How much does the company have in Inventory at 10-K where you the end of the most recent fiscal year? Is this inventory dollar amount in thousands, millions, or billions? 2. On which financial statement do you find Cost of goods sold (or Cost of sales)? List the page number from the most recent Form 1 of Goods Sold for the most recent year? Is this Cost of Goods Sold dollar amount in thousands, millions or billions? 3. What cost flow assumption method(s) does the company use for its inventories? Where did you finc information? What do you know about the lower of cost or market related to inventories at the company? Calculate the gross profit percentage for the company for the three most recent years. What does ratio mean? Calculate and interpret the inventory turnover ratio for the most recent fiscal year 4. 5. this 6. property, Plant and Equipment 1. On which financial statement do you find Property, Plant and Equipment? List the page number from the most recent Form 10-K where you find PP&E for your company. What does account title does your company use for its PP&E? What types of Property, Plant and Equipment are listed on the financial statement? How much does the company have in PP&.E at the end of the most recent fiscal year? In Accumulated Depreciation? Now refer to the notes to the financial statements. Locate the notes that are related to specific categories or types of PP&E does the company have? (Usually in the statements, more information is given than provided on the face of the financial statements) 2. notes to the financial 3. What depreciation method(s) does the company use? 4. Over what range of useful lives does the company depreciate its various types of plant assets? 5. Calculate and interpret the Return on Assets (ROA) for the company for the most recent year 6. What type of intangible assets (if any) does the company have? How does it account for each of these intangible assets over the asset's life? Current liabilities 1. On which financial statement do you find current liabilities? List the page number from the most recent 2. Locate information about the company's contingent liabilities in the notes to the financial statements Long-term liabilities Form 10-K where you found current liabilities for your company. What types of current liabilities does the company have? Summarize each of the company's contingent liabilities disclosed in the notes 1. On which financial statement do you find long-term liabilities? List the page number from the most 2. What information is provided in the notes to the financial statement with respect to the company's long- 3. Calculate and interpret the debt ratio for the most recent two years recent Form 10-K where you found long-term liabilities for your company. What types of long-term liabilities does the company have? term liabilities? Give a summary; you do not need to go into depth. Calculate and interpret the times-interest-earned ratio for the two most recent years 4. Stockholders' equity 1. Locate the stockholders' equity section on the balance sheet List the page number from the most recent Form 10-K where you found it. Describe the type(s) of stock that the company has authorized and/or issued. How many shares of each type of stock has the company issued as of its most recent balance sheet date? How many shares of each type of stock are outstanding as of the most recent balance sheet date? Are these numbers in thousands 2. or millions or billions? Now locate the statement of stockholders' equity. List the page number from the most recent Form 10-K where you found it. What is the title of this statement for the company? How many shares (if any) did the company purchase during the most recent year? What was the cost of the treasury stock? How much per share? Did the company issue any new shares of stock during the most recent year? How many shares? How much did it receive for the stock issuance? 3. 4. Did the company declare any dividends in the most recent year? What type of dividends? What was the dollar value of the dividends declared? 5. late the return on equity for the company for the most recent year Auditor's letter 1. Give an example of an internal control that this company may have in place in some part of the organization. (You can use your imagination.) Be specific; discuss the department, the process, and any other details you could imagine about this internal control process in place at the company Locate the auditor's report on internal controls. Does the auditor think that the company's system of internal controls is adequate? Summarize the report in a paragraph. Do not copy and paste exact put it in your own words 2. words Statement of cash flows 1. Now locate the statement of cash flows. List the page number from the most recent Form 10-K where 2. Which method (direct or indirect) does the company use to report cash flows from operations? How do 3. Did the company buy or sell more plant assets in the most recent year as compared to the prior two 4. Did the company buy back any of its own stock? Did it pay any dividends? you found it. you know? years? What type of activity (operating, financing, or investing) in total generated the most cash flows for the S. company in the most recent year? What conclusions can you draw? Ratio analysis Calculate and interpret the following ratios and measures. 1. Measuri ng ability to pay current liabilities (Liquidity analysis): Calculate the current ratio and the quick ratio for both com obligations? Which company is more liquid? panies for the latest year presented. How easily can the companies meet their current uring turnover and cash conversion cycle: Evaluate the ability to sell inventory, collect receivables manage payments. Which company appears to be the most efficient with managing its cash and conversion cycle? (Note:You will need to use some balance sheet balances from three years, even though the balance sheet only includes two years of balances. To find one year earlier than t years presented on the balance sheet, find the Form 10-K for the earlier year.) Measuring leverage (overall ability to pay debts): Calcul ratio for the latest year presented. How easily can the company meet its long-term obligations? he two late the debt ratio and the times-interest-earned 3. 4. Measuring profitability: Calculate or list the followi income ratio, and Earnings per share. How profitable are the companies? Calculate Return on Assets for the two most recent years. What is the trend? (Note ing ratios for the latest year presented: Gross margin ratio, Operating - need to use some balance sheet balances from three years, even though the balance sheet only two years of balances. To find one year earlier than the two years presented on the includes balance sheet, find the Form 10-K for the earlier year.) stock as an investment: Calculate the following ratios for the latest year presented: Price- tio and dividend yield ratio. How does the stock market view the company's future earnings potential? Corporate social responsibility (CSR) aluate and compare your companies' corporate social responsibility performance, you will have to urces other than the companies Form 10-Ks. CSR reporting is not unito uniform, so you will information from have to closely analyze what you do find. through the Form 10-k for each company for the terms "corporate social responsibility sustainabili Loo inability," or other similar heading. if you cannot find any information in the Form 1o-k( entirely possible,) go to the company's website and look for information there. Also eva articles regarding CSR topics for each of your companies. Summarize your findings Describe the information source you are using for each of your companies. How reliable do you think the CSR information you have for each company is? Explain your opinion of the information reliability for each of your companies. 2. Perform an online search for CSR issues in the industry in which your companies operate. Does the 3. company appear to be addressing the sustainability issues in its industry? Explain. 4. What is your overall sense of each company's commitment to sustainability from everything you have evaluated? Be specific and give details to justify your response Overall analysis This section is the overall analysis of your two companies. Which company do you believe is healthier? Which company would you be more likely to invest in? Why? Be specific in your reasoning Be sure to fully support your conclusion of which company is healthier. Be sure to include a variety of measures, not just one measure of financial health. Industry and company overview Write a 200 400 word paragraph including general facts about the industry in which your compankes operate. Also summarize each company you selected (in your own words) from reading the Form 10-K. Each company description should be 200-300 words in length. Do not copy and paste information; put the information in your own words. Cash 1. On what financial statement(s) do you find "Cash and cash equivalents (or similarly-named account)? On what page number are these financial statements? 2 How much cash does the company have at the end of each of the most recent three years 3. Comparing the most current two yea he financial statements, has the company's cash increased or rs in t decreased? Short-term investments 1. What type(s) of short-term investments does the company have? On what financial statement do find short-term investments in the company's Form 10-K? List the page number(s) 2. Does the company have any unrealized gains or losses? What do these mean? On what financial statement would you find unrealized gains and losses? Receivables 1. Look in the Notes to the Financial Statements What type of receivables does this company have? 2. Imagine that this company makes a sale of its product. Describe a possible sales transaction and list the journal entry that the company would make to recognize the sale (assume the sale is on account.) For this assignment, ignore the cost of goods sold entry 3. What do you know about the company's Allowance for Uncollectible Accounts? What name does the mpany call its allowance? Where in your company's 10-K do you find this information? What is the gross amount of the Calculate and interpret these ratios for two years (show your calculations) company's receivables? What percentage of this gross is its allowance? 4. 5. 1. Current ratio 2. Quick ratio 3. Average daily sales (Net sales 365 days) 4. Days' sales outstanding (Average net receivables/Average daily sales) (Note:You will need to use some balance sheet balances from three years, even though the balance sheet only includes two years of balances. To find one year earlier than the two years presented on the balance sheet, find the Form 10-K for the earlier year.) Inventory u find Inventory? List the page number from the most recent found Inventory for your company. How much does the company have in Inventory at 10-K where you the end of the most recent fiscal year? Is this inventory dollar amount in thousands, millions, or billions? 2. On which financial statement do you find Cost of goods sold (or Cost of sales)? List the page number from the most recent Form 1 of Goods Sold for the most recent year? Is this Cost of Goods Sold dollar amount in thousands, millions or billions? 3. What cost flow assumption method(s) does the company use for its inventories? Where did you finc information? What do you know about the lower of cost or market related to inventories at the company? Calculate the gross profit percentage for the company for the three most recent years. What does ratio mean? Calculate and interpret the inventory turnover ratio for the most recent fiscal year 4. 5. this 6. property, Plant and Equipment 1. On which financial statement do you find Property, Plant and Equipment? List the page number from the most recent Form 10-K where you find PP&E for your company. What does account title does your company use for its PP&E? What types of Property, Plant and Equipment are listed on the financial statement? How much does the company have in PP&.E at the end of the most recent fiscal year? In Accumulated Depreciation? Now refer to the notes to the financial statements. Locate the notes that are related to specific categories or types of PP&E does the company have? (Usually in the statements, more information is given than provided on the face of the financial statements) 2. notes to the financial 3. What depreciation method(s) does the company use? 4. Over what range of useful lives does the company depreciate its various types of plant assets? 5. Calculate and interpret the Return on Assets (ROA) for the company for the most recent year 6. What type of intangible assets (if any) does the company have? How does it account for each of these intangible assets over the asset's life? Current liabilities 1. On which financial statement do you find current liabilities? List the page number from the most recent 2. Locate information about the company's contingent liabilities in the notes to the financial statements Long-term liabilities Form 10-K where you found current liabilities for your company. What types of current liabilities does the company have? Summarize each of the company's contingent liabilities disclosed in the notes 1. On which financial statement do you find long-term liabilities? List the page number from the most 2. What information is provided in the notes to the financial statement with respect to the company's long- 3. Calculate and interpret the debt ratio for the most recent two years recent Form 10-K where you found long-term liabilities for your company. What types of long-term liabilities does the company have? term liabilities? Give a summary; you do not need to go into depth. Calculate and interpret the times-interest-earned ratio for the two most recent years 4. Stockholders' equity 1. Locate the stockholders' equity section on the balance sheet List the page number from the most recent Form 10-K where you found it. Describe the type(s) of stock that the company has authorized and/or issued. How many shares of each type of stock has the company issued as of its most recent balance sheet date? How many shares of each type of stock are outstanding as of the most recent balance sheet date? Are these numbers in thousands 2. or millions or billions? Now locate the statement of stockholders' equity. List the page number from the most recent Form 10-K where you found it. What is the title of this statement for the company? How many shares (if any) did the company purchase during the most recent year? What was the cost of the treasury stock? How much per share? Did the company issue any new shares of stock during the most recent year? How many shares? How much did it receive for the stock issuance? 3. 4. Did the company declare any dividends in the most recent year? What type of dividends? What was the dollar value of the dividends declared? 5. late the return on equity for the company for the most recent year Auditor's letter 1. Give an example of an internal control that this company may have in place in some part of the organization. (You can use your imagination.) Be specific; discuss the department, the process, and any other details you could imagine about this internal control process in place at the company Locate the auditor's report on internal controls. Does the auditor think that the company's system of internal controls is adequate? Summarize the report in a paragraph. Do not copy and paste exact put it in your own words 2. words Statement of cash flows 1. Now locate the statement of cash flows. List the page number from the most recent Form 10-K where 2. Which method (direct or indirect) does the company use to report cash flows from operations? How do 3. Did the company buy or sell more plant assets in the most recent year as compared to the prior two 4. Did the company buy back any of its own stock? Did it pay any dividends? you found it. you know? years? What type of activity (operating, financing, or investing) in total generated the most cash flows for the S. company in the most recent year? What conclusions can you draw? Ratio analysis Calculate and interpret the following ratios and measures. 1. Measuri ng ability to pay current liabilities (Liquidity analysis): Calculate the current ratio and the quick ratio for both com obligations? Which company is more liquid? panies for the latest year presented. How easily can the companies meet their current uring turnover and cash conversion cycle: Evaluate the ability to sell inventory, collect receivables manage payments. Which company appears to be the most efficient with managing its cash and conversion cycle? (Note:You will need to use some balance sheet balances from three years, even though the balance sheet only includes two years of balances. To find one year earlier than t years presented on the balance sheet, find the Form 10-K for the earlier year.) Measuring leverage (overall ability to pay debts): Calcul ratio for the latest year presented. How easily can the company meet its long-term obligations? he two late the debt ratio and the times-interest-earned 3. 4. Measuring profitability: Calculate or list the followi income ratio, and Earnings per share. How profitable are the companies? Calculate Return on Assets for the two most recent years. What is the trend? (Note ing ratios for the latest year presented: Gross margin ratio, Operating - need to use some balance sheet balances from three years, even though the balance sheet only two years of balances. To find one year earlier than the two years presented on the includes balance sheet, find the Form 10-K for the earlier year.) stock as an investment: Calculate the following ratios for the latest year presented: Price- tio and dividend yield ratio. How does the stock market view the company's future earnings potential? Corporate social responsibility (CSR) aluate and compare your companies' corporate social responsibility performance, you will have to urces other than the companies Form 10-Ks. CSR reporting is not unito uniform, so you will information from have to closely analyze what you do find. through the Form 10-k for each company for the terms "corporate social responsibility sustainabili Loo inability," or other similar heading. if you cannot find any information in the Form 1o-k( entirely possible,) go to the company's website and look for information there. Also eva articles regarding CSR topics for each of your companies. Summarize your findings Describe the information source you are using for each of your companies. How reliable do you think the CSR information you have for each company is? Explain your opinion of the information reliability for each of your companies. 2. Perform an online search for CSR issues in the industry in which your companies operate. Does the 3. company appear to be addressing the sustainability issues in its industry? Explain. 4. What is your overall sense of each company's commitment to sustainability from everything you have evaluated? Be specific and give details to justify your response Overall analysis This section is the overall analysis of your two companies. Which company do you believe is healthier? Which company would you be more likely to invest in? Why? Be specific in your reasoning Be sure to fully support your conclusion of which company is healthier. Be sure to include a variety of measures, not just one measure of financial health
