Financial Statement Analysis Comprehensive Project OBJECTIVE Financial Statement Analysis project involve students analyzing financial statements of an S&P 500 Company and prepare a written analysis as well as recommendations. ADDITIONAL RESOURCES In addition to these guidelines, additional information is provided on the company's Web site, library databases and the textbook including: formulas and guidelines for calculations. DESCRIPTION The student will be analyzing a company's annual report which serves as a "rsume" of a corporation. The Generally Accepted Accounting Principles (GAAP) and the Securities and Exchange Commission (SEC) provide much of the information in corporate annual reports and in the 10-K, Specifically, GAAP requires annual reports to disclose four financial statements: a Balance Sheet, a Statement of Cash Flows, an Income Statement and a Statement of Retained Earnings. FINANCIAL STATEMENT ANALYSIS PROJECT Spring 2021 FORMAT FOR PROJECT: TITLE PAGE The first page of the project is the title page, which lists the following: Spring 2021 FORMAT FOR PROJECT: TITLE PAGE The first page of the project is the title page, which lists the following: FINANCIAL STATEMENT ANALYSIS PROJECT Analyst Date The body of the project must consist of the following six (5) sections - clearly marked. SECTION 1: EXECUTIVE SUMMARY In this section provide a brief overview of the corporation you have choosen. Participants are not limited but, at a minimum, should provide the following information for the company: . Official name of the corporation Location of the corporate headquarters The state in which the company is incorporated Company Internet address Stock symbol of the corporation and the exchange on which it is traded Fiscal year-end of the corporation Date of the 10-K filing according to the financial statements provided The company's independent accountant/auditor The primary products(s) and/or services (s) of the corporation - in detail . The mission of the company SECTION 2: BALANCE SHEET ANALYSIS 1. Using elements listed on your company's balance sheet calculate the increase or decrease in dollars and percent between the years using the following format. (Year to Year Change Analysis) COMPANY #1 Account Current Year Prior Year +- 5%Current Prior Year +- 5% Year Year 2. Using elements listed on your company's balance sheet, prepare a common size balance sheet using the following format. (Vertical Analysis) COMPANY #1 Account Current Year Prior Year %. Prior Year 2% 3. Using elements listed on your company's balance sheet calculate the current and prior years percentage using two years prior as the base year (100%) using the following format. Your answers should all be in percentages (Horizontal Analysis). COMPANY #1 Account Current Year Base Prior Year/Base Prior Year 100% 4. In thoughtful, well-organized paragraphs comment on changes you see in the balance sheet with regards to the company over the three-year period. Among the items to consider: Comment on any significant changes in the company's assets and liabilities. Explain. b. Comment on any significant changes in the company's composition of current assets and current liabilities. Explain c. Which assets in the company have the most significant investment? Why? i. Is the company financed primarily with debt or equity? Why? c. Is the debt primarily short-term or long-term? Why? SECTION 3: INCOME STATEMENT 1. Using elements listed on your companies' income statement calculate the increase or decrease in dollars and percent between the years using the following format. (Year to Year Change Analysis) Company #1 Account Current Year Prior Year-%Current Prior Year 1-5% Year #2 2. Using elements listed on your companies' income statement, prepare a common size income statement using the following format. (Vertical Analysis) Company #1 Account Current Year % Prior Year Two Years Ago 3 Using elentenis riSTEUU your company's income 2. Using elements listed on your companies' income statement, prepare a common size income statement using the following format. (Vertical Analysis) Company #1 Account Current Year % Prior Year Two Years Ago % 3. Using elements listed on your company's income statement calculate the percent change amounts using two years prior as the base year (100%) using the following format. Your answers should all be in percentages. (Horizontal Analysis) Company #1 Account Current Year/BasePrior Year BaseTwo years ago Base 100% 4. In thoughtful, well-organized paragraphs comment on changes you see in the income statements for the company over the three-year period. Among the items to consider: a. What is the trend in total revenues over the three years? Explain. b. What is the trend in gross profit over the three years? Explain. c. What is the trend in net income over the three years? Explain. . d. d. What is the trend in profit margin over the three years? Explain. e. Comment on any significant changes in revenues or expenses, negative and positive changes for the company. Explain. SECTION 4: RATIO ANALYSIS Compute the ratios for the most current year in following categories. The calculations used to determine the answers for the ratio analysis must be included in an appendix. Liquidity Ratios Company Current Ratio Acid (Quick) Ratio Working Capital Accounts Receivable Turnover Accounts Reccivable Turnover in Days Inventory Turnover rem? Inventory Turnover in Days Operating Cycle Solvency Ratios Company Times Interest Earncel Debt Rutin Debt / Equity Ratio Operating Cash Flow / Total Debt Liquidity Ratios ompany Current Ratio Acid (Quick) Ratio Working Capital Accounts Reccivable Turnover Accounts Reccivable Turnover in Days Inventory Turnover my moves Inventory Turnover in Days Operating Cycle Solvency Ratios Company Times Interest Eurned Debt Rutin Dell / Equity Ratio Operating Cash Flow / Total Debt Profitability Ratios Company Net Profit Margin Total Asset turnover Return on Assets Return on Total Equity Return on Common Equity Gross Profit Margin Investor Ratios Company EPS - Basic EPS - Diluted Price/ Earnings Ratio Dividend Payout Dividend Yield Book Value For each group of ratios, comment on: 1. As a category, what is being measured? 2. What is the relative position of the corporation? Explain in detail 3. Who are the use IV. bypain in detail. Profitability Ratios Company Net Profit Margin Totul Asset turnover Return on Asweg Return on Toral Fquiry Return on Common Equity Gross Profit Margin Investor Raties Company EPS - Basic EPS - Diluted Price Earnings Ratio Dividend Payout Dividend Yield Book Value For each group of ratios, comment on: 1. As a category, what is being measured? 2. What is the relative position of the corporation? Explain in detail 3. Who are the users of this information? Explain in detail. SECTION 5: CONCLUSIONS/RECOMMENDATIONS Draw conclusions from the data that was gathered in the previous sections and determine the relevant position of the corporation in all of the analyses. The conclusions/recommendations must address the following questions about the company. The thoughtfulness of the analysis will be the most important factor in the evaluation of this section. 1. What are the overall strengths and weaknesses of the company? 2. Do the financial analysis results demonstrate achievement of the company's main goals and objectives? Explain. 3. What recommendation would you make to current and potential private or organizational investors in the company? Discuss. 4. What recommendation would you make to lenders regarding the credit-worthiness of the company? Discuss. 5. If you had the opportunity, would you work for this company? Why or why not? Financial Statement Analysis Comprehensive Project OBJECTIVE Financial Statement Analysis project involve students analyzing financial statements of an S&P 500 Company and prepare a written analysis as well as recommendations. ADDITIONAL RESOURCES In addition to these guidelines, additional information is provided on the company's Web site, library databases and the textbook including: formulas and guidelines for calculations. DESCRIPTION The student will be analyzing a company's annual report which serves as a "rsume" of a corporation. The Generally Accepted Accounting Principles (GAAP) and the Securities and Exchange Commission (SEC) provide much of the information in corporate annual reports and in the 10-K, Specifically, GAAP requires annual reports to disclose four financial statements: a Balance Sheet, a Statement of Cash Flows, an Income Statement and a Statement of Retained Earnings. FINANCIAL STATEMENT ANALYSIS PROJECT Spring 2021 FORMAT FOR PROJECT: TITLE PAGE The first page of the project is the title page, which lists the following: Spring 2021 FORMAT FOR PROJECT: TITLE PAGE The first page of the project is the title page, which lists the following: FINANCIAL STATEMENT ANALYSIS PROJECT Analyst Date The body of the project must consist of the following six (5) sections - clearly marked. SECTION 1: EXECUTIVE SUMMARY In this section provide a brief overview of the corporation you have choosen. Participants are not limited but, at a minimum, should provide the following information for the company: . Official name of the corporation Location of the corporate headquarters The state in which the company is incorporated Company Internet address Stock symbol of the corporation and the exchange on which it is traded Fiscal year-end of the corporation Date of the 10-K filing according to the financial statements provided The company's independent accountant/auditor The primary products(s) and/or services (s) of the corporation - in detail . The mission of the company SECTION 2: BALANCE SHEET ANALYSIS 1. Using elements listed on your company's balance sheet calculate the increase or decrease in dollars and percent between the years using the following format. (Year to Year Change Analysis) COMPANY #1 Account Current Year Prior Year +- 5%Current Prior Year +- 5% Year Year 2. Using elements listed on your company's balance sheet, prepare a common size balance sheet using the following format. (Vertical Analysis) COMPANY #1 Account Current Year Prior Year %. Prior Year 2% 3. Using elements listed on your company's balance sheet calculate the current and prior years percentage using two years prior as the base year (100%) using the following format. Your answers should all be in percentages (Horizontal Analysis). COMPANY #1 Account Current Year Base Prior Year/Base Prior Year 100% 4. In thoughtful, well-organized paragraphs comment on changes you see in the balance sheet with regards to the company over the three-year period. Among the items to consider: Comment on any significant changes in the company's assets and liabilities. Explain. b. Comment on any significant changes in the company's composition of current assets and current liabilities. Explain c. Which assets in the company have the most significant investment? Why? i. Is the company financed primarily with debt or equity? Why? c. Is the debt primarily short-term or long-term? Why? SECTION 3: INCOME STATEMENT 1. Using elements listed on your companies' income statement calculate the increase or decrease in dollars and percent between the years using the following format. (Year to Year Change Analysis) Company #1 Account Current Year Prior Year-%Current Prior Year 1-5% Year #2 2. Using elements listed on your companies' income statement, prepare a common size income statement using the following format. (Vertical Analysis) Company #1 Account Current Year % Prior Year Two Years Ago 3 Using elentenis riSTEUU your company's income 2. Using elements listed on your companies' income statement, prepare a common size income statement using the following format. (Vertical Analysis) Company #1 Account Current Year % Prior Year Two Years Ago % 3. Using elements listed on your company's income statement calculate the percent change amounts using two years prior as the base year (100%) using the following format. Your answers should all be in percentages. (Horizontal Analysis) Company #1 Account Current Year/BasePrior Year BaseTwo years ago Base 100% 4. In thoughtful, well-organized paragraphs comment on changes you see in the income statements for the company over the three-year period. Among the items to consider: a. What is the trend in total revenues over the three years? Explain. b. What is the trend in gross profit over the three years? Explain. c. What is the trend in net income over the three years? Explain. . d. d. What is the trend in profit margin over the three years? Explain. e. Comment on any significant changes in revenues or expenses, negative and positive changes for the company. Explain. SECTION 4: RATIO ANALYSIS Compute the ratios for the most current year in following categories. The calculations used to determine the answers for the ratio analysis must be included in an appendix. Liquidity Ratios Company Current Ratio Acid (Quick) Ratio Working Capital Accounts Receivable Turnover Accounts Reccivable Turnover in Days Inventory Turnover rem? Inventory Turnover in Days Operating Cycle Solvency Ratios Company Times Interest Earncel Debt Rutin Debt / Equity Ratio Operating Cash Flow / Total Debt Liquidity Ratios ompany Current Ratio Acid (Quick) Ratio Working Capital Accounts Reccivable Turnover Accounts Reccivable Turnover in Days Inventory Turnover my moves Inventory Turnover in Days Operating Cycle Solvency Ratios Company Times Interest Eurned Debt Rutin Dell / Equity Ratio Operating Cash Flow / Total Debt Profitability Ratios Company Net Profit Margin Total Asset turnover Return on Assets Return on Total Equity Return on Common Equity Gross Profit Margin Investor Ratios Company EPS - Basic EPS - Diluted Price/ Earnings Ratio Dividend Payout Dividend Yield Book Value For each group of ratios, comment on: 1. As a category, what is being measured? 2. What is the relative position of the corporation? Explain in detail 3. Who are the use IV. bypain in detail. Profitability Ratios Company Net Profit Margin Totul Asset turnover Return on Asweg Return on Toral Fquiry Return on Common Equity Gross Profit Margin Investor Raties Company EPS - Basic EPS - Diluted Price Earnings Ratio Dividend Payout Dividend Yield Book Value For each group of ratios, comment on: 1. As a category, what is being measured? 2. What is the relative position of the corporation? Explain in detail 3. Who are the users of this information? Explain in detail. SECTION 5: CONCLUSIONS/RECOMMENDATIONS Draw conclusions from the data that was gathered in the previous sections and determine the relevant position of the corporation in all of the analyses. The conclusions/recommendations must address the following questions about the company. The thoughtfulness of the analysis will be the most important factor in the evaluation of this section. 1. What are the overall strengths and weaknesses of the company? 2. Do the financial analysis results demonstrate achievement of the company's main goals and objectives? Explain. 3. What recommendation would you make to current and potential private or organizational investors in the company? Discuss. 4. What recommendation would you make to lenders regarding the credit-worthiness of the company? Discuss. 5. If you had the opportunity, would you work for this company? Why or why not