Part 1.    Company selection:

Select a publicly-traded company that has an inventory account on its balance sheet.  This means that you cannot pick a financial institution or a company that is a service business.  It should be a merchandising or manufacturing business.  The company must be headquartered in Pakistan and must be listed on the  foreign (non-U.S.) stock exchange.  The company must prepare its financial statements using financial reporting standards other than US GAAP.

 

THE COMPANY: https://dps.psx.com.pk/company/PACE

Pace (Pakistan) Limited

 

 

 

 

Part 2. 

1. The name of the foreign Stock Exchange on which its shares are traded, the most recent stock price on that exchange, the currency in which it is quoted, and the company’s Ticker symbol on that exchange. (So don’t say NYSE or NASDAQ. If you don’t know what a ticker symbol is, look it up.)

 

2. The date of the company’s most recent published annual report and a URL where I can see the full report. (You will need the full audited annual report issued by the company itself. Make sure you have access to the full report, complete with the Independent Auditor’s Report, the Management Discussion and Analysis, and all the Notes to the Financial Statements. Don’t use quarterly reports; they aren’t audited.  I can read it in English, French, or Spanish – but my knowledge of other languages is extremely limited, so stick with one of the above.)

 

3. The value of the company’s ending inventory as shown on the most recent year-end balance sheet and the value of its total assets.

 

4. The currency used in the financial statements and the April 1, 2020 exchange rate for that currency with the US dollar.

 

5. Identify the accounting standards used for the company’s annual report.  Quote the sentence(s) in the annual report you used to determine this and give the page number in the report.

 

6. From reading the Notes to the Financial Statements and/or the Management’s Discussion and Analysis, identify the following:

a. The method used to depreciate Fixed Assets (Property, Plant and Equipment.)

b. The definition the company uses for Cash and Cash Equivalents on the Balance Sheet  

c. The company’s basis for Revenue Recognition

d. The method used for valuing Inventory.

 

For each of the above 4 items, provide a direct quotation from the annual report and cite its source with the page and paragraph number.

 

7. Assess the company’s Quality of Earnings as described in Chapter 10 of Breitner/Anthony: Essentials of Accounting”, 11/E by Leslie Breitner and Robert. Make your assessment using the five exhibits, A thru E, in the text.  Explain, in words understandable to a non-accountant, how you came to your assessment and what numbers you have used. Identify any of the quality related “red flags.”

 

8. Locate the Independent Auditor’s Report in the annual report.  Did the auditors give a qualified or unqualified opinion on management’s financial statements?  Quote the paragraph from the auditor.  (Note: Don’t refer to the report on the company’s system of internal controls.  I want the report on the financial statements. The company may issue two Independent Auditor’s Reports: one on the financial statement presentation, one on the system of internal controls. Sometimes a company’s auditor combines the two reports in a single letter to the stockholders.)

 

9. Calculate all 15 of the financial ratios shown in Exhibit 14 of the Breitner workbook.

 

 

Present the ratios in tabular form, under the following three column headings:

Ratio Name and Value	Numerator	Denominator
For example:
Gross Margin %	Gross Profit	Net Sales
20%	€200,000	€1,000,000

10. In addition, show the Dividend Yield for the year. (For the P/E ratio, use the share price on the day before you submit your project.)

You should only use financial data from the four main financial statements for your analysis, except for the share price, which you must research.)