Assignment: Financial Accounting Group Project
The purpose of this project is to further your understanding of accounting information and its implication for investors, creditors, and other users in making rational investment, credit, and similar decisions. You have just been hired as a stock analyst and joined a team to analyze potential investment opportunities and present your research findings to the fund managers.
As a team, select an industry to analyze. Yahoo Finance provides lists of industries. Click on an industry for a list of companies in that industry. Alternatively, go to Google Finance and search for a company you are interested in. You will be presented with a list including that company and its competitors (click on Compare). Each team member should choose one company in the selected industry and acquire the annual report (10-K) of the selected company. You can visit the company's investor relations website or the SEC EDGAR service to download the annual report.
I. Analyzing Revenues and Receivables
On individual basis, each team member should write a short report answering the following questions about the selected company.
1. If your company lists receivables in its balance sheet, what percentage of total assets does receivables represent for each of the last three years?
2. Ratio analysis
a. What does the receivables turnover ratio measure in general?
b. If your company lists receivables, compute the ratio for the last three years.
c. What do your results suggest about the company?
d. If available, find the industry ratio for the most recent year, compare it to your results, and discuss why you believe your company differs or is similar to the industry ratio.
3. If your company lists receivables, use the 10-K to determine what additional disclosure is available concerning the allowance for doubtful accounts. (Usually the information is in a separate schedule, Item 15.)
Discuss any patterns across the companies that you as a team observe. Then, as a team, write a short report comparing and contrasting your companies.
II. Analyzing Inventories
On individual basis, each team member should write a short report answering the following questions about the selected company.
1. If your company lists inventories in its balance sheet, what percentage of total assets does inventories represent for each of the last three years?
2. If your company lists inventories, what inventory costing method is applied to U.S. inventories?
3. Ratio analysis
a. What does the inventory turnover ratio measure in general?
b. If your company reports inventories, compute the ratio for the last three years.
c. What do your results suggest about the company?
d. If available, find the industry ratio for the most recent year, compare it to your results, and discuss why you believe your company differs or is similar to the industry ratio.
Discuss any patterns across the companies that you as a team observe. Then, as a team, write a short report comparing and contrasting your companies.
III. Analyzing Long-Lived Assets
On individual basis, each team member should write a short report answering the following questions about the selected company.
1. List the accounts and amounts of the company's long-lived assets (land, buildings, equipment, intangible assets, natural resources, and/or other) for the last three years. What is the percentage of each to total assets (rounded to two decimal places)?
2. What cost allocation method(s) and estimates does the company use for each type of long- lived asset?
3. What percentage of the property, plant, and equipment (rounded to two decimal places) has been used as of the end of the most recent year? (Accumulated Depreciation/Cost)
4. Ratio analysis
a. What does the fixed asset turnover ratio measure in general?
b. Compute the ratio for the last three years. Round your answers to two decimal places. c. What do your results suggest about the company?
d. If available, find the industry ratio for the most recent year, compare it to your results, and discuss why you believe your company differs or is similar to the industry ratio.
Discuss any patterns across the companies that you as a team observe. Then, as a team, write a short report comparing and contrasting your companies.
IV. Analyzing Liabilities
On individual basis, each team member should write a short report answering the following questions about the selected company.
1. List the accounts and amounts of the company's current liabilities for the last three years.
2. Compute the accounts payable turnover ratio for the last two years.
3. What is your company's working capital for the last three years? Any concerns?
4. List the accounts and amounts of the company's long-term liabilities for the last three years.
Discuss any patterns across the companies that you as a team observe. Then, as a team, write a short report comparing and contrasting your companies.
Requirements:
Your group needs to submit a group project report that contains the following: (a) the list of your group members; (b) analyses of an individual company that is selected by each team member; and (c) team write-ups comparing and contrasting companies in your group.
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.