Form 10-K Case Study
Introduction
Form 10-K is an annual report some companies are required to file with the U.S. Securities and Exchange Commission. This sophisticated report is available to the public through the Internet. Also, there are many databases using data from the 10-K prepared for purposes of analyzing industries and segments of the economy. The 10-K includes information related to the company's history and organizational structure, financial disclosures, and executive compensation. Companies required to file Form 10-K include companies with more than $10 million in assets and 500 shareholders.
To gain familiarity with the 10-K disclosures, Part 1 of this submission is focused on researching the 10-K disclosures to answer specific questions. (It is also recommended that you skim Form 10-K before interviewing for a job with any public company.) Part 2 of this submission is open-ended so that you can focus on a 10-K that aligns with your interests.
Part 1:
For Part 1, Farmer Brothers Company has been selected. This company was chosen because its business model is not complex. The 10-K selected was filed on September 14, 2015. Farmer Brothers is a publically traded company with a fiscal year that ends on June 30.
To access the 10-K, go to the website for the Securities and Exchange Commission (sec.gov). Select "Filings" and then "Company Filings Search." Enter "Farmer Brothers" in the search box that appears.
You will arrive on a page detailing all the filings. Type "10-K" in the "Filing Type" box at the top of the page, and the filings will be resorted so that the 10-K filings are at the head of the listing. Open the filing that was submitted on September 14, 2015, for the fiscal year ended June 30, 2015.
Scan the 10-K filing submitted by Farmer Brothers for the fiscal year ended June 30, 2015, and respond to the following questions. Your response to each question should be concise.
1. What does Farmer Brothers do?
2. What new product lines did Farmer Brothers add in fiscal year 2015?
3. How much did the company pay to stockholders in dividends in fiscal year 2015? What might impact the company's ability to pay dividends in future years?
4. What methods of inventory accounting does Farmer Brothers use?
5. On page 26, the company states the following: "As a result, we recorded $4.9 million in beneficial effect of liquidation of LIFO inventory quantities in cost of goods sold in the fiscal year ended June 30, 2015, which reduced net loss for the fiscal year ended June 30, 2015 by $4.9 million."
a. Is $4.9 million a significant amount in relation to Farmer Brothers' net income? Explain.
b. Explain the meaning of the sentence quoted above.
c. Does Farmer Brothers speculate in commodities? Explain.
6. With regard to property, plant, and equipment,
a. What method(s) of depreciation did Farmer Brothers use in its 10-K filings?
b. What useful lives did it assign to its depreciable assets?
c. Farmer Brothers listed "capitalized software" as an asset. Explain what it means to have "capitalized software."
Part 2:
Select a company that filed a 10-K and consult its most recent 10-K filing. If you work for a publically traded company, you may wish to select this company. Or, you may wish to select a competitor, a major supplier, or a company in which you might invest. The choice is yours.
1. Why did you select this company?
2. Briefly (250 words or less) discuss one fact related to either inventory accounting or plant and intangible asset accounting for the company you selected.
3. Briefly (250 words or less) discuss one disclosure from the company's 10-K that you believe has significance to investors and/or creditors who are stakeholders in this company.
Attachment:- Assignment File.rar