IMPORTANT: answer only the following questions. The required template has questions for the entire semester. Also, the template has row titles and not the complete question.

An important part of learning is application. To learn accounting, we must practice the skills taught and apply those skills to real-world problems. To that end, we have designed a project to reinforce the lessons in each module and apply them to real companies. The goal of this project is to complete a comprehensive analysis of two (or more) companies in the same industry. We will then create a set of forecasted financial statements and a valuation of the companies equity. This is essentially what financial analysts and many creditors do. We might not aspire to be an analyst or creditor, but by completing a project of this magnitude, we will have mastered financial reporting at a sufficient level to be able to step into any role in an organization. The goal is to obtain and begin to explore the financial reports for two publicly traded companies that compete with each other. Select two publicly traded companies that compete with each other. They must be publicly traded, as private company financial statements will not be publicly available. While the two companies do not need to be head-to-head competitors, their main lines of business should broadly overlap.

Download the annual reports for each company and peruse them. At this stage, choose companies that are profitable (net income is positive) and that have positive retained earnings and stockholders equity. Select companies whose financial statements are not overly complicated. (Probably avoid the automotive, banking, insurance, and financial services industries. Automotive companies have large financial services subsidiaries that act like banks for customers, which complicates the analysis. Banking, insurance, and financial services have operations that differ drastically from the usual industrial companies common in practice. While these companies can be analyzed, they present challenges for the beginning analyst.)

Use the SEC EDGAR website to locate the recent Form 10-K (or other annual report such as 20-F or 40-F) (www.sec.gov). Download a spreadsheet version of financial statements. Use Appendix 1A as a guide.

Explore the financial statements, and familiarize yourself with the company basics. The following give an indication of some questions that guide us as we look for answers. What accounting standards are used, U.S. GAAP, IFRS, or other? What is the date of the most recent fiscal year-end? what are the total of short- and long-term assets in $? What are the total liabilities and equity in $? Calculate the return on assets (ROA) for the most recent year. Find the companies audit reports. Who are the auditors? Are any concerns raised in the reports?

Balance Sheet Analysis What are the companys largest assets? Largest liabilities? List both account name and dollar amount. What proportion of total assets is financed by owners? (Hint: Compare with total equity.) What proportion of total assets is financed by nonowners?

Income Statement Analysis What are the major expenses? Are there any unusual or discontinued items? Are they large in magnitude? Was the company more or less profitable when compared with the prior year? Statement of Cash Flows Analysis

What were the cash flows from operations? Were they positive? Were operating cash flows smaller or larger than net income? Did the company generate or use cash from investing activities? Did the company generate or use cash from financing activities?