B$.$ Industry Situation and Company Plans

Describe the industry and its outlook; then summarize the company$$s future plans based on your research and on reading the annual report. Be sure to read the letter to the stockholders. Include relevant information about the company$$s plans from that discussion. Be sure that you provide citation for all your sources.

C$.$ Financial Statements

Income Statement: Is the format most like a single$-$step or multistep format? Determine gross margin, income from operations, and net income for the last two years; comment on the increases or decreases in these amounts.

Balance Sheet: Show that Assets $=$ Liabilities $+$ Stockholders$$ Equity for the past two years.

Statement of Cash Flows: Are cash flows from operations more or less than net income for the past two years? Is the company expanding through investing activities? What is the company$$s most important source of financing? Overall, has cash increased or decreased over the past two years?

D$.$ Accounting Policies

What are the significant accounting policies, if any, relating to revenue recognition, cash, short$-$term investments, merchandise inventories, and property and equipment?

E$.$ Financial Analysis

For the past two years, calculate and discuss the significance of the following ratios:

Liquidity Ratios

Working capital

Current ratio

Receivable turnover

Average days$$ sales uncollected

Inventory turnover

Average days$$ inventory on hand

Payables turnover

Average days$$ payable

Operating cycle

Financing period

Profitability Ratios

Profit margin

Asset turnover

Return on assets

Return on equity

Long$-$Term Solvency Ratios

Debt$-$to$-$equity

Interest coverage

Cash Flow Adequacy

Cash flow yield

Cash flows to sales

Cash flows to assets

Free cash flow

Market Strength Ratios

Price$/$earnings per share

Dividends yield