PART A:
Part A1
Provide an executive summary of your company's background relating to business structure, operations, services and all other business activities that are conducted, etc.
Part A2
Use the annual report for the year ending 2013 & 2014. Your group will need to review the major sections of this report in order to familiarize yourselves with the content of each of the financial statements and appropriate notes to the financial statements.
Review the balance sheet of the company and indicate the amount of the following:
a) Total current assets
b) Total non-current assets
c) Total current liabilities
d) Total non-current liabilities
e) Total stockholder's equity
Compare the above figures with the previous year and compute the percentage increase or decrease and comment on the comparative financial condition of the company.
Part A3
Review the income statement and indicate the following:
a) Total (operating) revenues
b) Cost of Goods Sold (if relevant)
c) Total expenses (before income taxes)
d) Any non-operating (or extraordinary) gains and losses
e) Earnings per common share
Compare the above figures with the previous year and compute the percentage increase or decrease and comment on the comparative financial operation of the company.
Part A4
Review the statement of cash flows for the most recent year and indicate the following:
a) net cash inflow (outflow) from operating activities
b) net cash inflow (outflow) from financing activities
c) net cash inflow (outflow) from investing activities
d) net increase (decrease) in cash during the year
Analyse the Cash Flow Statements for the last 2 years and comment on the cash position of the company.
Part A5
Review the stockholders' equity section in your chosen company's most recent year-end balance sheet and compare that with the previous year-end balance sheet. Compare percentage increase or decrease.
List the stockholders' equity account balances and number of outstanding shares from these two balance sheets and compute the increase or decrease for each during this past year.
Part B Financial Ratios
a) Using the same Financial Statements of the company your group has chosen, determine the profitability, activity, liquidity and leverage using all the ratios below. Use the end of the year financial statements.
b) Give a 300 word analysis for each of the following:
I. Profitability
II. Activity
III. Liquidity
IV. Financing
Ratio Calculations
Ratio Numerator Denominator
A. Profitability ratios
a) Return on equity Operating profit after tax Shareholders' equity
b) Return on assets Operating profit after tax Total assets
c) Profit margin Operating profit after tax Sales/Revenue
d) Cash flow to total assets Cash provided by operations Total assets
e) Price-to-earnings ratio Market price per share Earnings per share
B. Activity (turnover) ratios
a) Total assets turnover Sales Total assets
b) Debtors turnover Credit sales Average trade debtors
c) Days in debtors 365 Debtors turnover ratio
C. Liquidity ratios
a) Current (working capital) ratio Current assets Current liabilities
b) Quick ratio Cash + Accounts receivable + Current liabilities
Short-term investments
c) Interest coverage ratio Earnings before interest & tax Net interest expense
D. Financing ratios
a) Debt-to-equity ratio Total liabilities Total shareholders' equity
b) Debt-to-assets ratio Total liabilities Total assets
c) Leverage ratio Total assets Total shareholders' equity