• Review the meaning of the different types of businesses: service, merchandising, and manufacturing. Understand the different nature of these business. Be aware that a lot of larger corporations are combinations of these types of businesses. For example, Tesla manufactures their electronic cars, sells the cars, and also does all the servicing of the cars.
• Pick a service, merchandising, manufacturing or hybrid publicly traded company. You may pick one that was mentioned in the textbook. The following list of companies have been mentioned one way of another in the chapters that we studied.

• Twitter
• Starbucks
• Delta Air Lines
• The Walt Disney Company
• Wal-Mart
• Amazon
• Ford Motor

…

• Google to find the link to your chosen company’s most recent fiscal year annual report. Say, if you picked Starbucks, you will visit Starbucks 2019 Fiscal Annual Report. Note you don’t have to pick Starbucks as your company, I am just using Starbucks as an example.
• Study the audit opinion (labeled “Report of Independent Registered Public Accounting Firm”) of Starbucks Corporation and the Starbucks Corporation financial statements. Answer the following questions about the company:

Part I Requirements:

• What is the name of the company’s outside auditing firm (independent registered public accounting firm)? What office of this firm signed the audit report? How long after the Starbucks year-end did the auditors issue their opinion?

• Who bears primary responsibility for maintaining effective internal control over financial reporting? How can you tell?

• Does it appear that the corporation’s internal controls are adequate? How can you tell?

• What standard of auditing did the outside auditors use in examining the company’s financial statements?

• By how much did the company’s cash balance (including cash equivalents) change during the most current fiscal year end? What were the beginning and ending cash balances?

• Review the notes to the consolidated financial statements, specifically Note 1 dealing with Cash and Cash Equivalents. What type of instruments does the company consider to be cash equivalents?

• Determine the corporation’s cash ratios (Cash ratio = (Cash + Marketable Securities)/Current Liabilities) as of its past 2 fiscal year ends. Then, select one of the corporation’s competitor and calculate its competitor’s cash ratios. For example, one of Pandora Media, Inc’s competitor is Spotify and one of Apple’s competitor is Samsung. How do the company’s cash ratios compare with its competitor’s cash ratios? Explain.

Part II Requirements: Use the company’s most current Annual Report and the “Allowance for Doubtful Accounts” note to financial report to answer the following questions.

• How much accounts receivables did the company report as of its fiscal year end? As of its prior fiscal year end?

• Refer to Note, “Allowance for Doubtful Accounts.” How does the company calculate allowance for doubtful accounts? What was the amount of the account as of its past 2 fiscal year ends?

• Compute the company’s quick/acid-test ratio ((current assets-inventory)/current liabilities)at the end of its fiscal year. If all the current liabilities came due immediately, could the company pay them?

• Compute the company’s accounts receivable turnover at its fiscal year end. Use total net revenues.

• Compute the company’s days’ sales in receivables at the current fiscal year end.
For all questions requiring a calculation of a ratio, please show your work to receive full credit.

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• Analyzing Financial Data