Case 2 ACC-201 Intermediate Accounting 1 Financial Statement Project

Point Value: 100 points Due Date: Friday, November 20, 2020

In this case you will examine the Annual Report, Form 10-K, and the Proxy Statement of The J. M. Smucker Company and answer a series of questions regarding information contained in those reports. All financial reports for the company are posted in the Case 2 folder. Answers should be based on the current year only (unless otherwise specified). The grading rubric is at the end of the case.

Instructions:

Create either a Word document or Excel worksheet for your answers. Make sure your name is on your case document(s)/worksheet(s).

Many companies show amounts in the thousands or millions please state dollar amounts as shown on the financial statements. Do not add zeros.

Please show your work for all calculations.

Calculate each ratio to two decimal places.

Include the page number(s) of the annual report/Form 10-K/proxy statement in which you found your answer.

Many of the questions have multiple parts. Please make sure to answer each part of a question.

Question

Answer (show any calculations) Sample numbers are not from this company

Page you found your answer

10

The net earnings are $1,430 million. This represents a dollar decrease of $352 million (1,752-1,430) and a percentage decrease of 20% (352/1752) from last year.

108

Final Note: Points will be awarded based on the completeness and accuracy of the information provided. Please follow the above directions carefully to avoid losing points.

Part I - Overview of the Company (19 points):

1. What is the company's main product lines?

2. What is the year-end of the company?

3. Read the Annual Report and summarize three key points included in the report.

4. Who is the Chief Executive Officer and what was his/her annual compensation?

5. Who is the Chief Financial Officer and what was his/her annual compensation?

6. Name the auditing firm used by the company.

7. Read the auditors report on the consolidated financial statements. Summarize in your own words the type of opinion and any matters discussed in the report.

8. Read and summarize in your words the Report of Management on Responsibility for Financial Reporting.

Part II - Income Statement, Comprehensive Income, and Statement of Shareholders Equity (21 points):

9. Review the consolidated Income Statement and discuss any unusual/infrequent revenue/expense or gains/losses shown on the statement.

10. What is the net earnings/income/loss for the current year? Did it increase or decrease from last year? Give your answer in both dollar amount and percentage change.

11. What is the earnings per share on common stock for the current year? (Your answer should not assume dilution). How does this compare to last year? Include in your answer: increase or decrease; dollar amount of change; and percentage change.

12. Review the Statements of Consolidated Comprehensive Income. What is the ending balance of comprehensive income for the current year? Summarize the changes to comprehensive income for the current year, including the type of change and dollar amount.

13. Review the Statements of Consolidated Shareholders Equity. What is beginning and ending retained earnings balances for the current year? Were there any adjustments to beginning retained earnings (a prior period adjustment)? If yes, how much and what was the change?

14. Did the company pay any dividends? If yes, how much? Show your answer in total and per share. If no, does the report state why no dividends were paid?

15. What is the average number of common shares outstanding? Compare to last year. (Hint: you will find this answer in Note 6 to the financial statements.)

Part III. Balance Sheet and Notes to Financial Statements (46 points):

16. Did the company have an increase or /decrease in cash from the previous year? What was the dollar amount and percentage change? Refer to Note 1: Accounting Policies and summarize the information regarding Cash and Cash Equivalents.

17. a) What is the Trade Receivables balance for the current year? Compare to last year, including increase or decrease; dollar amount of change; and percentage change. Refer to Note 1: Accounting Policies and summarize the information regarding Trade Receivables, including the balance in the Allowance for Doubtful Accounts. b) Calculate the following ratios for the current year and discuss the liquidity of accounts receivable.

Accounts Receivable Turnover

Average Days to Collect Receivables

18. a) What is Total Inventory for the current year? Compare to last year, including increase or decrease; dollar amount of change; and percentage change. Summarize the major inventory classifications. Refer to Note 1: Accounting Policies and summarize the information regarding Inventories.

b) Calculate the following ratios for the current year and discuss the liquidity of inventories.

Inventory Turnover

Average Days to Sell Inventory

19. a) What is Total Property, Plant and Equipment for the current year? Compare to last year, including increase or decrease; dollar amount of change; and percentage change. Summarize the major classifications of Property, Plant and Equipment.

Refer to Note 1: Accounting Policies and summarize the information regarding Property, Plant and Equipment. b) Calculate the following ratios for the current year and discuss what these ratios tell you about the company.

Asset Turnover

Profit Margin on Sales

Return on Assets

20. What is the total of Other Noncurrent Assets for the current year? Compare to last year, including increase or decrease; dollar amount of change; and percentage change. Summarize the major classifications of Other Noncurrent Assets. Refer to Note 1: Accounting Policies and summarize the information regarding Goodwill and Other Intangible Assets.

21. What is the total of Current Liabilities for the current year? Compare to last year, including increase or decrease; dollar amount of change; and percentage change. What are the two major types of current liabilities?

22. What is the company's current ratio? Is this a favorable ratio? Why or why not?

23. Does the company have any contingent liabilities? If yes, what are they?

Part IV - Notes to Financial Statements (6 points):

Note 1: Accounting Policies: Select TWO policies not previously covered in the above questions and write a summary of each of the policies selected. The summaries must be in your own words.

Part V - Summary Analysis (6 points): Based on your answers to the above questions, write a brief summary of your analysis of the company, including its strengths and weaknesses. Your answer should be at least 5-6 sentences and include specific reasons for your answer.

Case 2 ACC-201 Intermediate Accounting 1 Financial Statement Project Point Value: 100 points Due Date: Friday, November 20, 2020 In this case you will examine the Annual Report, Form 10-K, and the Proxy Statement of The J. M. Smucker Company and answer a series of questions regarding information contained in those reports. All financial reports for the company are posted in the Case 2 folder. Answers should be based on the current year only (unless otherwise specified). The grading rubric is at the end of the case. Instructions: Create either a Word document or Excel worksheet for your answers. Make sure your name is on your case document(s)/worksheet(s). Many companies show amounts in the thousands or millions please state dollar amounts as shown on the financial statements. Do not add zeros. Please show your work for all calculations. Calculate each ratio to two decimal places. Include the page number(s) of the annual report/Form 10-K/proxy statement in which you found your answer. Many of the questions have multiple parts. Please make sure to answer each part of a question. Question Answer (show any calculations) Sample numbers are not from this company Page you found your answer 10 The net earnings are $1,430 million. This represents a dollar decrease of $352 million (1,752-1,430) and a percentage decrease of 20% (352/1752) from last year. 108 Final Note: Points will be awarded based on the completeness and accuracy of the information provided. Please follow the above directions carefully to avoid losing points. Part I - Overview of the Company (19 points): 1. What is the company's main product lines? 2. What is the year-end of the company? 3. Read the Annual Report and summarize three key points included in the report. 4. Who is the Chief Executive Officer and what was his/her annual compensation? 5. Who is the Chief Financial Officer and what was his/her annual compensation? 6. Name the auditing firm used by the company. 7. Read the auditors report on the consolidated financial statements. Summarize in your own words the type of opinion and any matters discussed in the report. 8. Read and summarize in your words the Report of Management on Responsibility for Financial Reporting. Part II - Income Statement, Comprehensive Income, and Statement of Shareholders Equity (21 points): 9. Review the consolidated Income Statement and discuss any unusual/infrequent revenue/expense or gains/losses shown on the statement. 10. What is the net earnings/income/loss for the current year? Did it increase or decrease from last year? Give your answer in both dollar amount and percentage change. 11. What is the earnings per share on common stock for the current year? (Your answer should not assume dilution). How does this compare to last year? Include in your answer: increase or decrease; dollar amount of change; and percentage change. 12. Review the Statements of Consolidated Comprehensive Income. What is the ending balance of comprehensive income for the current year? Summarize the changes to comprehensive income for the current year, including the type of change and dollar amount. 13. Review the Statements of Consolidated Shareholders Equity. What is beginning and ending retained earnings balances for the current year? Were there any adjustments to beginning retained earnings (a prior period adjustment)? If yes, how much and what was the change? 14. Did the company pay any dividends? If yes, how much? Show your answer in total and per share. If no, does the report state why no dividends were paid? 15. What is the average number of common shares outstanding? Compare to last year. (Hint: you will find this answer in Note 6 to the financial statements.) Part III. Balance Sheet and Notes to Financial Statements (46 points): 16. Did the company have an increase or /decrease in cash from the previous year? What was the dollar amount and percentage change? Refer to Note 1: Accounting Policies and summarize the information regarding Cash and Cash Equivalents. 17. a) What is the Trade Receivables balance for the current year? Compare to last year, including increase or decrease; dollar amount of change; and percentage change. Refer to Note 1: Accounting Policies and summarize the information regarding Trade Receivables, including the balance in the Allowance for Doubtful Accounts. b) Calculate the following ratios for the current year and discuss the liquidity of accounts receivable. Accounts Receivable Turnover Average Days to Collect Receivables 18. a) What is Total Inventory for the current year? Compare to last year, including increase or decrease; dollar amount of change; and percentage change. Summarize the major inventory classifications. Refer to Note 1: Accounting Policies and summarize the information regarding Inventories. b) Calculate the following ratios for the current year and discuss the liquidity of inventories. Inventory Turnover Average Days to Sell Inventory 19. a) What is Total Property, Plant and Equipment for the current year? Compare to last year, including increase or decrease; dollar amount of change; and percentage change. Summarize the major classifications of Property, Plant and Equipment. Refer to Note 1: Accounting Policies and summarize the information regarding Property, Plant and Equipment. b) Calculate the following ratios for the current year and discuss what these ratios tell you about the company. Asset Turnover Profit Margin on Sales Return on Assets 20. What is the total of Other Noncurrent Assets for the current year? Compare to last year, including increase or decrease; dollar amount of change; and percentage change. Summarize the major classifications of Other Noncurrent Assets. Refer to Note 1: Accounting Policies and summarize the information regarding Goodwill and Other Intangible Assets. 21. What is the total of Current Liabilities for the current year? Compare to last year, including increase or decrease; dollar amount of change; and percentage change. What are the two major types of current liabilities? 22. What is the company's current ratio? Is this a favorable ratio? Why or why not? 23. Does the company have any contingent liabilities? If yes, what are they? Part IV - Notes to Financial Statements (6 points): Note 1: Accounting Policies: Select TWO policies not previously covered in the above questions and write a summary of each of the policies selected. The summaries must be in your own words. Part V - Summary Analysis (6 points): Based on your answers to the above questions, write a brief summary of your analysis of the company, including its strengths and weaknesses. Your answer should be at least 5-6 sentences and include specific reasons for your answer.