part 7-10 are required from the financial statement of Target Corp.

ANNUAL REPORT PROJECT: INTRODUCTION The key learning objective for this project is becoming comfortable locating financial information in a company's annual report. Throughout the quarter, students will analyze a company (Target, Walmart, or Costco). The project consists of 10 parts generally corresponding to the topics covered in class. Each assignment is worth 5 points. The project represents 5% of the overall course grade. Project due dates are as follows: Assignment Part: Parts 1-3 Part 4-6 Parts 7-10 Due Date Oct. 23 Nov. 6 Nov. 27 Students have been assigned their company in Canvas as well as a group. Each student must turn in their own work. The purpose of the groups is to facilitate sharing of ideas and assisting one another in locating and formulating the correct responses on each part of the assignment. Demonstrations on how to locate information will also be provided in class throughout the course. NOTE: Tutorials on how to use the Mergent Online database to locate annual reports and other financial data needed for this assignment can be found as separate PDF documents on Canvas under the file Annual Report Project. Page 1 of 12 Name: ___________________________________________ Company: ________________________________________ PART 1: 1. What is the industry classification (SIC) and (NAICS) codes for the company? 2. What is the address of the company's corporate headquarters? 3. What is the address of the company's website? 4. What were the company's revenues for the most recent fiscal year? 5. Who is the CEO? 6. On what stock exchange is the company's stock traded? 7. What is the ticker symbol for the company? 8. What were the highest and lowest prices during the past 52 weeks? 52-week low__________ 52-week high___________ Page 2 of 12 PART 2: Review the annual report. It will be organized in several sections. Identify the page number on which the information is located. 1. FINANCIAL HIGHLIGHTS. This section provides a summary of selected financial results over a number of years. You may find two schedules providing highlights: one brief summary near the front of the annual report and a more detailed summary in the financial section. This schedule may be called Five-Year Summary of Selected Financial Data. Page(s)_______________ 2. MANAGEMENT DISCUSSION AND ANALYSIS. This section discusses operating results, industries in which the company operates, financing and investing activities, significant events, trends and developments. Page(s)_______________ 3. THE INDEPENDENT AUDITOR'S REPORT. Locate the independent auditor's report. This report should be found either immediately before the financial statements or immediately after the notes to the financial statements. Page________________ a. Who is the audit firm? b. According to the audit report, what is the auditor's opinion on the financial statements? 4. THE FINANCIAL STATEMENTS AND NOTES TO THE FINANCIAL STATEMENTS. This section contains the balance sheet, income statement, and/or retained earnings statement/statement of stockholders' equity and statement of cash flows. The accompanying notes, as indicated at the bottom of each of the above statements, are an integral part of the financial statements. The financial statements cannot be understood without reference to the notes. Balance sheet. Income statement. Retained Earnings Statement or Statement of stockholders' equity. Statement of cash flows. Page______ Page______ Page______ Page______ Page______ Page 3 of 12 5. NOTES TO FINANCIAL STATEMENTS: Summary of significant accounting policies Inventories Property, Plant & Equipment Long-term debt Income taxes Commitments and contingencies Note #_____ Note #_____ Note #_____ Note #_____ Note #_____ Note #_____ Page_____ Page_____ Page_____ Page_____ Page_____ Page_____ Page 4 of 12 PART 3: THE INCOME STATEMENT 1. What is the period covered by the income statement? _______________________ 2. Does the format of the statement more closely follow a single-step or a multiplestep format? _______________________________________________________ THE BALANCE SHEET 3. What is the balance sheet date: _______________ 4. The accounting equation is Assets = Liabilities + Stockholders' Equity. Replacing the words in the accounting equation with dollar amounts; give the company's accounting equation at the end of the current and prior years. Assets = Liabilities + Stockholder Equity This year ____________ ____________ _______________ Last year ____________ ____________ _______________ Page 5 of 12 PART 4 CURRENT ASSETS Refer to the notes to the financial statements. The first note, \"Summary of Significant Accounting Policies,\" should provide information about the company's accounts receivables, inventory costing methods and other accounting procedures. You will also need to refer to the other notes to the financial statements and to the financial statements themselves in order to answer the following questions. ACCOUNTS RECEIVABLE 1. What is the amount of the company's net accounts receivable? This year $ ______________ Last year $______________ 2. What is the amount of the allowances for doubtful accounts? This year $_____________ Last year $_______________ INVENTORIES AND COST OF GOODS SOLD 3. What is the amount of company's merchandise inventory? This year $______________ Last year $______________ 4. What is the amount of cost of goods sold? This year $_______________ Last year $_______________ 5. What inventory costing method has the company chosen? Page 6 of 12 PART 5 LONG-LIVED ASSETS Refer to the notes to the financial statements. The first note, \"Summary of Significant Accounting Policies,\" should provide information about the company's depreciation and amortization methods. You will also need to refer to the other notes to the financial statements and to the financial statements themselves in order to answer the following questions. PLANT, PROPERTY & EQUIPMENT 1. What is the amount of the company's plant, property and equipment? 2. What depreciation method(s) does the company use (if not detailed out on the income statement, see the operating section of the Cash Flow Statement)? 3. What is the amount of depreciation expense for the current year? INTANGIBLE ASSETS 4. Does the company have any intangible assets? If so, what are they? 5. Does the company report any goodwill? If so, what is the amount? CASH FLOW STATEMENT a. What was the amount spent to purchase property and equipment? Current year $_______________ Last year $_____________ b. What was the amount received (proceeds) from the sale of property and equipment? Current year $______________ Last year $____________ c. Did these activities result in net increase or decrease in the company's cash balance? Page 7 of 12 PART 6: LONG-TERM LIABILITIES & BONDS PAYABLE Refer to the financial statements and notes to the financial statements. The first note, \"Summary of Significant Accounting Policies,\" should provide information about the company's accounting methods. You will also need to refer to the other notes to the financial statements and to the financial statements themselves in order to answer the following questions. 1. What is the amount of the company's long-term liabilities? This year $ ___________________ Last year $ _____________________ 2. Refer to the financial statements. Are there any contingent liabilities? If yes, provide a description of at least one contingency discussed. 3. Refer to the financing activities section of the company's cash flow statement. a. What was the amount of new borrowings during the current and last year? Current year $____________ Last year$_________________ b. What was the amount of debt repaid during the current and last year? Current year $_____________ Last year$_________________ c. Did these activities result in a net increase or decrease in the company's cash Balance? Page 8 of 12 PART 7: STOCKHOLDERS' EQUITY Refer to the financial statements and notes to the financial statements. The first note, \"Summary of Significant Accounting Policies,\" should provide information about the company's accounting methods. You will also need to refer to the other notes to the financial statements and to the financial statements themselves in order to answer the following questions. 1. How many shares of common stock have been issued? How many shares are outstanding? If these numbers differ, explain why. 2. Does the company have any preferred stock outstanding? If so, how many shares, what is their par value, and what is the dividend rate? 3. Does the company report any stockholders' equity accounts other than contributed capital (capital stock), paid-in capital in excess of par (additional paid in capital), and retained earnings (e.g., treasury stock, subscriptions receivable, unrealized gains or losses on securities, etc.)? List these accounts and their amounts. 4. Refer to the financial activities section of the company's cash flow statement. a. What amount, if any, was received from common stock issued in each of the years presented? b. What amount, if any, was paid to purchase treasury stock in each of the years presented? Page 9 of 12 PART 8: THE STATEMENT OF CASH FLOWS 1. What was the ending balance of cash and cash equivalents? 2. Does this agree with the ending balance of cash and cash equivalents reported on the balance sheet? 3. Did the company use the direct or indirect method in calculating net cash flows? How can you tell? 4. What was the net cash flow from operating activities? Was it an inflow or an outflow of cash? 5. What was the net cash flow from investing activities? Was it an inflow or an outflow of cash? 6. What activity accounted for the largest cash flow from investing activities? Was this activity an inflow or an outflow of cash? 7. What was the net cash flow from financing activities? Was it an inflow or an outflow of cash? 8. What activity accounted for the largest cash flow from financing activities? Was it an inflow or an outflow of cash? Page 10 of 12 PART 9: INCOME STATEMENT ANALYSIS Prepare horizontal and vertical analyses of the income statement for the most recent two years provided on the income statement. For the vertical analysis, express each income statement item as a percentage of total sales. For the horizontal analysis, again use the most recent two years provided, express the change in each income statement item as a percentage of the base period (the older of the two years). 1. Comment on the trend in total revenue. Is it increasing or decreasing during the reporting period? 2. Comment on the overall trend in net income as a percent of sales over the two-year period. 3. What individual revenue and individual expense item had the most significant percentage change over the two-year period? Indicate the percentage change. BALANCE SHEET ANALYSIS Prepare horizontal and vertical analyses of the balance sheet. For the vertical analysis, express each balance sheet item as a percentage of total assets. For the horizontal analysis, express the change in each balance sheet item as a percentage of the base year. 4. In which assets does the company have the most significant investment? 5. Which assets had the most significant increase/decrease during the two-year period? 6. Are the company's liabilities primarily short-term or long-term? 7. Did the company increase or decrease its total liabilities during the two-year period? What was the amount of the change (dollars and percentage)? Page 11 of 12 PART 10: OVERALL EVALUATION AND RECOMMENDATION Suppose that a friend has just inherited some money and is considering investing in this company. Use your familiarity with this company's annual report, your knowledge of ratios gained during this course, and the tools provided by Mergent Online to provide a recommendation. Support your recommendation with the following: Compare at least two of your company's ratios with competitors. Explain at least two trends found in the vertical and horizontal analyses you did in Part 9. Point to at least one piece of information provided in the Management Discussion and Analysis section or other supplementary information in the company's annual report that supports your conclusion. Page 12 of 12