Case Study #2- Financial Statement Analysis

PURPOSE:

The purpose of this individual analysis and oral presentation assignment is to help students gain a deeper understanding of the basic financial statements and learn to conduct an evaluation of business operations through the analysis of these statements.

FORMAT AND LENGTH:

Obtain the most recent annual report of a publicly traded company online. This can be a company that you want to work for in the future, or a company whose products you use regularly. Company annual reports are normally posted under the Investor Relations tab of their web sites. Alternatively, you can obtain annual reports of publicly traded companies through the Security and Exchange Commission (SEC) website. If you use the SEC site, go to Fillings/Company Fillings and search there. Annual reports are listed under the 10K category.

Complete the following analysis. Submit your analysis as a PowerPoint file and be ready to present your findings at the next class.

Research the industry that your company is in. Name one competitor. Obtain the competitors annual reports. Complete the following analysis. Submit your analysis through Canvas as a PowerPoint file and be ready to present your findings at the next class.

Calculate the following ratios for your company and its competitor. Describe what each ratio means. Compare the different types of ratios, and determine which company is in a better financial condition.

I. Ratios that measure ability to pay current liabilities:

1) Working Capital

2) Current Ratio

3) Quick Ratio

II. Ratios that measure leverage (ability to pay debt):

1) Debt Ratio

III Ratios that measure profitability

1) Gross Margin or Operating Income Percentage

2) Asset Turnover

3) Leverage Ratio