INTERMEDIATE ACCOUNTING 1 CASE STUDY 2 REQUIRED: Examine the annual report and proxy statement of The J. M. Smucker Company for fiscal year 2018 and answer the following questions for the current year only (unless otherwise specified). (The grading rubric is at the end of the case information.) Instructions: Create either a Word document or Excel spreadsheet for your answers. Make sure your name is on your case. Many companies show amounts in the thousands or millions please state dollar amounts as shown on the financial statements. Do not add zeros. Please show your work for all calculations. Calculate each ratio to two decimal places. Include the page number of the annual report/proxy statement in which you found your answer. Your answers should be in complete sentences and presented in the following format: Question Answer (show any calculations) Sample numbers are not from this company Page you found your answer 7 The net earnings are $1,430 million. This represents a dollar decrease of $352 million (1,752-1,430) and a percentage decrease of 20% (352/1752) from last year. 108 General Information (2 points each): 1. What is the company's product or service? 2. What is the year-end of the company? 3. Who is the Chief Executive Officer and what was his/her annual compensation? 4. Who is the Chief Financial Officer and what was his/her annual compensation? 5. What auditing firm was used? 6. Summarize the kind of opinion that was given from the auditors. Income Statement/Statement of Shareholders Equity/ Notes to Financial Statements (varies - 3/4 points each): 7. What is the net earnings/income/loss for the year? Did it increase or decrease from last year? Give your answer in dollar and percentage change. 8. What is the earnings per share on common stock? (Your answer should not assume dilution). How does this compare to last year (increase/decrease; dollar and percentage change). 9. Did the company pay any dividends? If yes, how much? Show your answer in total and per share. If no, does the report state why no dividends were paid? 10. What is the average number of common shares outstanding? Compare to last year. (Hint: you will find this answer in Note 6 to the financial statements.) 11. What is beginning and ending retained earnings balances for the current year? Were there any adjustments to beginning retained earnings (a prior period adjustment)? If yes, how much and what was the change? 12. Is the income statement presented in multiple-step format or single step format? 13. What is the amount of Total Other Comprehensive Income for the current year? 14. What types of items are included in the other comprehensive income (loss) for the current year? Balance Sheet/Statement of Cash Flows/Notes to Financial Statements (varies - 3 to 5 points each): 15. Did the company have an increase/decrease in cash? What was the dollar and percentage change? Name the major three reasons that contributed to the cash increase/decrease. 16. What is the Accounts Receivable account balance for the current year? What is the Allowance for Doubtful Accounts balance for the current year? Read Note 1 of the financial report and summarize any policies related to Accounts Receivable. Discuss the change from prior year (dollar and percentage change) for both Accounts Receivable and Allowance for Doubtful Accounts. List possible reasons for the change. Calculate the following ratios for the current year and discuss the liquidity of accounts receivable. Accounts Receivable Turnover Average Days to Collect Receivables 17. What is Total Inventory for the current year? Summarize the major inventory classifications and any policies related to Inventories (see Note 1). Discuss the change from prior year (dollar and percentage change). List possible reasons for the change. Calculate the following ratios for the current year and discuss the liquidity of inventories. Inventory Turnover Average Days to Sell Inventory 18. What is Total Property, Plant and Equipment for the current year? Summarize the major classifications and any policies related to Property, Plant and Equipment (see Note 1). Discuss the change from prior year (dollar and percentage change). List possible reasons for the change. 19. Does the company have any Other Noncurrent Assets? Summarize the major classifications and any policies related to Other Noncurrent Assets (see Notes 1 and 7). Discuss the change from prior year (dollar and percentage change). List possible reasons for the change. 20. What is the company's Asset Turnover? What is the company's Profit Margin on Sales? What is the company's Return on Assets? Discuss what these ratios tell you about the company. 21. What is the total of current liabilities for the current year? Discuss the change from prior year (dollar and percentage change). What is the total of noncurrent liabilities for the current year? Discuss the change from prior year (dollar and percentage change). What are the two major types of Current liabilities? Of noncurrent liabilities? 22. What is the company's current ratio? Is this a favorable ratio? Why or why not? 23. Are there any contingent liabilities? If yes, what are they? Notes to Financial Statements (8 points) Note 1 Summary of Significant Accounting Policies: Select TWO policies not previously covered in the above questions and write a summary of each of the policies. The summary should be in your own words. Final Analysis (8 points): If you had money to invest in this company, would you? Elaborate and support your decision based upon answers to the above questions. Your answer should be at least 5-6 sentences and include specific reasons for your answer.