Assignment: Examining Financial Statements
Students will select a Fortune 500 company to examine. Prepare a Word document using information from their Annual Report. (Use the most recent year available.)
The Word document must cover ALL of the following:
Overview
• Describe the content and purpose of the three main financial statements.
Balance Sheet
• What are the balances at year-end for assets, liabilities, and stockholder's equity?
• Prepare a common-size Balance Sheet. Be sure to properly label and form this financial statement.
• Review the Notes to the financial statement:
• What Inventory Method does the company use?
• What other pertinent information does the company disclose about their inventory
• What does the company disclose regarding fixed assets and depreciation?
Income Statement
• What is revenue, gross profit, and net income for the year?
• Prepare a common-size Income Statement. Be sure to properly label and form this financial statement.
• Are there any special items on the Income Statement (e.g. Discontinued Operations, Extraordinary items)? If so, describe the event that caused the item and why is this event classified as a special item.
• Review the Notes to the financial statement:
• Describe the company's policy on revenue recognition.
Statement of Cash Flows
• What are the cash flow totals for operating, investing, and financing activities?
• What are some of the main investing and financing activities that occurred? If there are negative cash flow totals, describe whether this cash outflow has a positive or negative impact on the company's sustainability. Why?
Management's Discussion and Analysis (MD&A)
• Highlight 3 interesting topics discussed in the MD&A section of the annual report.
• How does the information presented impact the financial statements and relevant ratios?
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.