her Financial Statement Information 37. Some balance sheet information is shown here (all values in millions of dollars): a. What change in the book value of the company's equity took place at the end of 2018 ? b. s the company's market-to-book ratio meaningful? Is its book debtequity ratio meaningful? Explain. c. Find the company's other financial statements from that time online. What was the cause of the change to its book value of equity at the end of 2018 ? d. Does the company's book value of equity in 2019 imply that it is unprofitable? Explain. Assets Current Assets Cash and cash equivalents 293 300 255 232 Net receivables 401 362 385 460 Inventory 374 342 437 306 Other current assets 60 53 45 Total Current Assets 1,128 1,047 1,130 1,043 Long-term investments 128 97 200 Property, plant, and equipment 979 991 995 1.052 Goodwill 744 748 736 742 Other assets 777 797 Total Assets \begin{tabular}{llll} 3,756 & 3,710 & 3,772 & 3,834 \\ \hline \end{tabular} Liabilities Current Liabilities Accounts payable Short/current long-term debt 8764101,4672922173980288 Other current liabilities Total Current Liabilities Long-term debt Other liabilities 1,286 1,469 2,381 2,124 435 574 4,102 4,167 2,128 2,294 Total Liabilities 346457 1,644 1,540 Total Stockholder Equity Financial Reporting in Practice 38. Find online the annual 10K report for Costco Wholesale Corporation (COST) for fiscal year 2018 (filed in October 2018). a. Which auditing firm certified the financial statements? b. Which officers of Costco certified the financial statements? This is your second interview with a prestigious brokerage firm for a job as an equity analyst. You survived the morning interviews with the department manager and the vice president of equity. Everything has gone so well that they want to test your ability as an analyst. You are seated in a room with a computer and a list with the names of two companies-Ford (F) and Microsoft (MSFT). You have 90 minutes to complete the following tasks: 1. Download the annual income statements, balance sheets, and cash flow statements for the last four fiscal years from Morningstar (www.morningstar.com). Enter each company's stock symbol and then go to "financials." Copy and paste the financial statements into Excel. 2. Find historical stock prices for each firm from Yahoo! Finance (finance.yahoo.com). Enter the stock symbol, click "Historical Prices" in the left column, and enter the proper date range to cover the last day of the month corresponding to the date of each financial statement. Use the closing stock prices (not the adjusted close). To calculate the firm's market capitalization at each date, multiply the number of shares outstanding by the firm's historic stock price. You can find the number of shares by using "Basic" under "Weighted average shares outstanding" at the bottom of the Income Statement. 3. For each of the four years of statements, compute the following ratios for each firm: Valuation Ratios Price-earnings ratio (for EPS use diluted EPS total) Market-to-book ratio Enterprise value-to-EBITDA (For debt, include long-term and short-term debt; for cash, include marketable securities.) Profitability Ratios Operating margin Net profit margin Return on equity Financial Strength Ratios Current ratio Book debt-equity ratio Market debt-equity ratio Interest coverage ratio (EBIT interest expense) 4. Obtain industry averages for each firm from Reuters (www.reuters.com/finance/stocks). Enter the stock symbol at the top of the page in the "Symbol lookup" and then click the "Financials" button, and then click "Search." a. Scroll down to "Valuation Ratios," and compare each firm's ratios to the available industry ratios for the most recent year. (Ignore the "Company" column as your calculations will be different.) b. Analyze the performance of each firm versus the industry and comment on any trends in each individual firm's performance. Identify any strengths or weaknesses you find in each firm. 5. Examine the market-to-book ratios you calculated for each firm. Which, if either, of the two firms can be considered "growth firms" and which, if either, can be considered "value firms"? 6. Compare the valuation ratios across the two firms. How do you interpret the difference between them? 7. Consider the enterprise value of both firms for each of the four years. How have the values of both firms changed over the time period? Note: This is not Total Liabil 1 INSERT TESLA INCOME STATEMENT AS OBIGINALLY AEPORTLD IELOW 211 22 (23) 25 26 (2) 20 20 30 31 32 73 14 35 36 37 4 Pletim on Equity Financial Strength Curtert Paito Dook Deterequitr Mer Debt Equaty intecet Coverine Enterprise Value Queition 46