Target Corporation

The group project aims to provide you with an understanding of the annual reports. You should be able to critically analyze and evaluate various aspects of the financial statements, with emphasis on (but not limited to) the topics discussed in the course. Your group will assume the role of a financial analyst and conduct research for a client (e.g., an individual investor). Your client has asked you to analyze the financial statements of one company and its two competitors - you may choose its two major competitors from the same industry. Your analysis should focus on the chosen company. However, you need to compare its performance with those of other two companies in the same industry. Assessment and Submission The group project report carries 6% of the total marks of the course. It will be graded on the quality of the analyses. The due date and time for submission is fom on May 8. 2020 (Friday). Late submission will be marked as zero. Company Selection Each group must select a company from the list which will be provided later. Format . Ten pages maximum (excluding a cover page and appendix.) - Your report should include supporting analyses as appendices in addition to ten-page main report (There is no page limit for the appendix). Your data should cover three years of latest annual financial reports. Content . The final report must include 1) a cover page. 2) executive summary. 3) analyses, and 4) conclusions. You are required to address all questions with (*) listed below. Feel free to address other listed questions in your report. Workings, if any, must be shown. You may use other sources of information (e.g. company's website, press release, newspaper clippings, etc.) but they must be properly sourced and noted. Your report should not be just a "bullet point" list of answers. It must show a coherent flow and exhibit a cohesive examination of the company. You must discuss the subject firms* profitability (including quality and persistence of earnings), effectiveness of asset utilization. debt servicing (liquidity, solvency assessment), cash flows management, and overall performance where they are applicable. Company and Industry Overview (*) What are the principal activities of the company? What is the geographical coverage of the company? (") What are the major trends in the industry? Who are the companies' major competitors? Have any significant events happened at your companies that will be important to consider as you analyze their results? ACC2070 -Financial Accounting for Decision Making (Spring 2020) - Dr. Joonko LeeIncome Statement Discussions (*)What were the company's total revenues for the year under review? State the composition of the revenues of the company, allocate according to products, locations, activities, etc. where possible. (*)What are the bases of revenue recognition adopted by the company? Are they appropriate? (*)Looking at the revenue and net income in the three years presented in the annual report, would you say the company has had a good year? Provide evidence to justify your conclusion. (*)Draw up a common-size income statement (refer to the Ch.13 of the textbook about the common-size income statement). Comment on the result. Current Assets and Current Liabilities (*)If your company has inventory, state which inventory cost flow assumption is used. State the composition of current assets and current liabilities for each year. (*)If your company has allowance for doubtful accounts, show how this allowance is determined. . Long-Term Assets List by types and amounts the property, plant and equipment of the company. (*)What depreciation method does the company use for financial reporting? Is it appropriate? Long Term Debt and Equity Financing State the nature and amount of each liability in the long-term liabilities section of the balance sheet (*)Considering your company's operating circumstances, which do you think is the best way to finance its purchase of long-term assets; through internally generated funds, shareholders' contributions, or through long-term borrowings? Statement of Cash Flows (*)Compare the company's cash position for the year under review with that of the previous year. Comment on the improvement or deterioration of the company's cash position. (*) Which method (direct or indirect) did the company use in the preparation of its statement of cash flows? (*)State the main sources of cash inflow during the year and the main uses to which cash has been used. Financial Statements Analyses (*)Calculate and comment on the Liquidity/Efficiency ratios, Solvency ratios, Profitability ratios, and the Market prospects (refer to textbook page 565) for ratio definitions