Case Study:
An annual report is a comprehensive statement describing a company's activities throughout the preceding year. Annual reports are intended to give shareholders and other interested stakeholders information about the company's activities and financial performance. All public corporations must provide shareholders with a financial report every year so that shareholders understand and are able to assess overall performance.
The front part of the report often contains an impressive combination of graphics, photos and an accompanying narrative, all of which chronicle the company's activities over the past year. The back part of the report contains detailed financial and operational information.
In this assignment, you will read and assess the financial performance of IBM, Inc. over the past couple of years. Begin by downloading the 2013 IBM annual report from the IBM Website.
Read and then find the financial data (i.e., income statements, balance sheets and statements of cash flows).
Using the IBM income statement data in the annual report, create a common size income statement by filling in the following format:
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| Revenue (services) |
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| Cost (services) |
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| Gross profit (services) |
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| Revenue (sales) |
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| Cost (sales) |
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| Gross profit (sales) |
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| Revenue (financing) |
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| Cost (financing) |
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| Gross profit (financing) |
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| Total revenue |
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| Total cost |
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| Gross profit (total) |
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| Less expenses |
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| Selling, general and administrative |
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| Research, development, engineering |
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| Intellectual property and custom development income |
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| Other (income) and expense |
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| Interest expense |
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| Total expenses and other (income) |
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| Income before taxes |
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| Provision for income taxes |
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| Net income |
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Then, using the income statement data and the balance sheet data in the IBM annual report, create a table of ratios
To create the required common size income statements for IBM, see the following resources:
NetMBA (2010) Common Size Financial Statements Investigating AnswersUse total revenue for sales to construct these values.
Write a four-part analysis of IBM. In Section 1 your paper, summarize what you learned and/or found particularly interesting about IBM in your reading of the annual report. In Section 2, insert the tables you created (either cut and paste from Excel or create tables in Word) . In Section 3, evaluate IBM by discussing the numbers in your common size income statement and balance sheet ratios. Look for trends that identify areas of strength, stability or possible concern. Finally, in Section 4, find two scholarly reports that discuss IBM's financial performance during this period and discuss how those professional reports correlate with what you found in your analysis.
Length: 4 to 5 pages not including title page and references
Your response should demonstrate thoughtful consideration of the ideas and concepts presented in the course and provide new thoughts and insights relating directly to this topic. Your response should reflect scholarly writing and current APA standards.