Unit 5-1: Financial Statement Analysis of Two Competitive Companies

Financial Statement Analysis of Two Competitive Companies:

(Approximately 750 to 1,250 words in APA format. You may embed Excel worksheets, charts, graphs, tables, and figures in your Word document.)

Please refer to the suggested content of Sections VI and VII in Table 1 below. In addition to Chapters 10 through 15 of the textbook, you may find some of the ?Supplemental Online Resources? under the ?Learning Resources and Related Documents? section to be very helpful in completing this assignment.

Table 1 Section Suggested section heading (you may rename it) Companies and Industry Information Suggested content of section (you may enrich the content as appropriate) Identify the companies' strategies and the economics of the industry in which they operate. Discuss the major components of offerings, target market segments, strategy for sustaining its competitiveness, internal and external risks. II Review of Income Statements III Review of Balance Sheets IV Review of Cash Flow Statements V Application of Financial Analysis Techniques Assess the profitability of each company for the past two (2) years based on the comparative income statements. Identify and explain the significant year-to-year variances in sales, gross profit, operating expenses. Assess any noteworthy balance sheet items for the past two (2) years. Perform common size analysis of the balance sheet, including the computation of any relevant balance sheet ratios. Identify and explain any significant year-to-year variances. Assess the operating, investing and financing cash flows of each company for the past two (2) years based on the comparative statements of cash flows. Identify and explain any noticeable trends. Apply the applicable analysis tools and techniques covered in Chapter 7 of the textbook. Present at least two types of analysis (e.g. ratio analysis, equity analysis, credit analysis) for each company under evaluation. Interpret the results in an understandable and meaningful fashion. I Swiss Management Center AG 1 VI Assessment of Specific Financial Compare and contrast the quality of both companies' financial Statement Items reporting, including major accounting policy differences and the quality of disclosure in the Notes to Consolidated Financial Statements section. Limit your discussion to any three of the following six items that are of interest to you and based on your reading of Chapters 10 to 15 of the textbook: VII Recommendations Swiss Management Center AG a. Inventories - Discuss the inventory valuation method and inventory management system used, and the efficiency of such method and system, including the inventory ratios. b. Long-lived Assets - Discuss the tangible and intangible long-lived assets owned, their depreciation and amortization, as well as the disposal and impairment of long-lived assets, if any. c. Income taxes - Discuss the income tax expenses, components of deferred taxes, the effective tax rate, and the temporary and permanent differences between accounting profits and taxable income. d. Long-term Liabilities and Leases - Discuss the significant long-term liabilities (e.g. bonds, debt/equity financing), contingent liabilities, as well as the minimum lease payments under both operating and capital leases, if any and the NPV of the lease payments. e. Employee Compensation: Postretirement and ShareBased - Discuss the defined-benefits pension plans and other postretirement benefits in place, including PBO contribution, value of the plan assets, rate of return, and the sufficiency in funding. Also comment on any share-based compensation, such as stock grants and stock options. f. Inter-corporate Investments - Discuss the investment categories, such as minority investments, joint venture controlling interest investments. Assuming you are an expert financial Analyst, synthesize the information gathered and analyses performed in the previous sections by providing at least two (2) recommendations for each company under evaluation. Justify how your recommendations will likely enhance the current or future operations of the companies. 2