FINANCIAL REPORT ON the Companies WAYFAIR AND CHEWY

1. Locate and download (optional) WAYFAIR and Chewys form 10-K. The 10-K is an annual filing required by the Securities and Exchange Commission of all U.S. publicly traded companies. Among other things, the 10-K includes a public companys financial statements under Item 8 in the table of contents. They are available at sec.gov. We will have a class session that walks you through locating form 10-K. WARNING: 10-Ks may be HUNDREDS of pages long. You will only need to print a few selected pages from each item. Be careful before you hit Print.

2. You will need the income statements and balance sheets for each of your companies for the most recent years available. Enter the income statements and balance sheets for your companies in an Excel spreadsheet. Use a separate worksheet for each company but only one workbook.

3. Complete the following financial analysis tools with each clearly labeled as noted below in your Excel document:

Perform a vertical analysis of each company for both years.

Perform a horizontal analysis of each company for the most recent year.

Obtain earnings per share (EPS) - EPS is the amount of net income earned per share of the companys common stock. You will not have to calculate EPS figures because they are provided at the end of the companys income statement. Use the figures identified as Basic EPS for all operations.

Calculate the price earnings (PE) ratio for the most recent two years. To do this, go to Google Finance and search for historical stock prices for your company. Use the closing date for the company (such as December 31, 2020). If the closing date is not a day when markets are open, use the first day available before the closing date. The information on calculating and analyzing the PE ratio is on page 426 and 504 of your text.

Current ratio Calculate the current ratio for each company for both years. The current ratio measures a companys liquidity. It is a proportion of current assets to current liabilities. Your book offers information about the current ratio on page 109 as well as on page 500. As is shown on page 109, be sure to provide the results of your calculations to two places after the decimal point. This is not a percentage.

Calculate the acid-test ratio for each company for both years. Similar to the current ratio, the acid test ratio also measures a companys liquidity. This is not a percentage and should be expressed two places after the decimal place. EXAMPLE: current year for Nike would be 1.80.

Calculate the debt ratio for each company for each year. The debt ratio reflects a companys ability to meet its long-term obligations. NOTE: The example shows a result of .60 for the current year. That figure is really a percentage and should be reported with two places after the decimal point (69.51%). Be sure to report your debt ratio results in this format.

Calculate return on assets (ROA) for each company for the most recent year. ROA is a measure of how well a company uses its assets to produce profit. Again, be sure to report your results to two places after the decimal point. The result of the calculation shown on Page 19 is 18.99%.

Calculate return on equity (ROE) for each company for the most recent year. ROE is a measure of the companys return for investors. Return on (common stockholders) equity is discussed on page 504 in your text. This should be presented as a percentage to two decimal places such as 10.25%.

4. Prepare your financial report in Word.

First, introduce your companies and their industry or sector. Explain why you chose the CHEWY and WAYFAIR

In the body of your paper, one by one, discuss each item, what it means, and describe how each of your companies performed regarding that measure. The financial items may be discussed in the same order as listed. Reference each companys actual ratio or analysis tool result. For the vertical and horizontal analyses, discuss the items you believe to be significant.

Once all eight calculations and financial measures and the companies results have been discussed, determine which company would be a better investment and why using the results of your analysis. Your reasoning does not have to be limited to the financial information discussed in your report. You may address other financial or non-financial factors. However, you must include a discussion of the eight measures.

Include references