Choose financial statements from one publicly-traded company to be the source for your review. While a wide range of companies will be appropriate for this project, since the class will not spend time on financial services companies, it will be better to remain with a manufacturing, merchandising (wholesale or retail), or service (other than banking or insurance) company. Develop insights and analysis from the financial statements of the company. This analysis should probe into topics as covered in the course. Your review can include:
- How large is the business in terms of revenues, assets and income? Is it growing or contracting?
- What are the sources of businesses? How is this broken out?
- How profitable is the business? (Use more than one measure.)
- What are the most significant cost areas of the business? Is the business investing for the future? What costs are increasing/declining relative to revenues?
- Does the business have high financing costs?
- How effectively are the assets of the business utilized?
- How is the liquidity of the business?
- What are the most significant assets employed in the business?
- How does the business account for depreciation of its fixed assets? How are investments recognized?
- What are the financing sources of the business? When does debt of the business mature?
- Does the business generate operating cash flow?
- Comparisons with industry ratios will be helpful for responding to some of these questions. RMA Annual Statement Studies (2006) published by Risk Management Associates is available in the Gabrielle Library in the reference section. This contains industry specific statistics. Public libraries carry this and other industry comparison statistics and ratios.