Assignment: Financial Statement Project-Principles of Financial Accounting
OBJECTIVE: Students will use financial reports of real companies, find specific items in financial statements, and use analytical tools currently available to accountants, investors, and other users of financial information. These analytical tools and data will be used by students to analyze company current financial position and company potential for the future.
Choice of company to be analyzed:
• Tiffany & Co
• Hershey Co
• Under Armour, Inc.
• Monster Beverage Corp.
Instructions:
A. This is an individual project (no groups).
B. You may choose a company from the List of Companies provided above.
1. This will be on a first come, first serve basis.
2. You must email me your choices labeled 1 - 4
3. I will send you an email identifying your company for analysis
C. Your answers should be clear, concise, complete, and directed toward answering the question in professional business language.
1. It should be single spaced, 12 font, times new roman.
2. Repeat the questions required and place your answer below each question.
3. The report should be a maximum of 12 pages with the questions repeated.
4. You will be graded on the quality of answers, the quality of writing, and professionalism of the report.
D. All information sources need to be cited; and accordingly, include a bibliography at the end of your report. You should be referencing the page number of the annual report (Form 10-K) as you obtain information from that report.
E. Become familiar with the data analysis tools required for this project.
1. Annual Report (Securities and Exchange Commission (SEC) Form 10-K filing)
i. Go to SEC gov website and click on the "filings" tab at the top of the page. Enter your company's name or ticker symbol to view your company's filings with the SEC.
ii. Sometimes the annual report (Form 10-K filing) can be found on the company's website under investor relations.
iii. Open "Form 10-K" to access your company's annual report. Within the annual report, you will need to search for the following information to answer various questions in this project:
1. Financial Statements, Significant Accounting Policies, Notes to the Financial Statements
2. Management Discussion & Analysis (MD&A)
3. Report of Independent Registered Public Accounting Firm
4. Management's Annual Report on Internal Control Over Financial Reporting
2. Calcbench
i. Access Calcbench at the following link and set up an account accordinglywww.calcbench.com/Bryant(NOTE: be sure to use the /Bryant notation)
ii. View instructive videos on YouTube - "Calcbench - How to use the toolkit".
iii. Using your Bryant email, create an account and related password the first time you log in
iv. see the reference librarian if you have questions about Calcbench
F. To turn in your project, upload the following into the appropriate link on Bb in the assignments folder.
1. Your project will be evaluated for plagiarism through the Bb software called "Turnitin". Accordingly you should view your originality report because your instructor will be checking this.
Questions to be answered:
• Repeat these questions and insert your answers below each question.
• Use the annual report (Form 10-K) to answer the questions below. Within Form 10-K, find the Financial Statements, related Notes to the Financial Statements, and the Management Discussion & Analysis (MD&A).
• Be sure to properly cite your sources and to reference the annual report page numbers as you extract information from the annual report.
1- Answer the following in a brief manner:
a. List the following - Name of your company, company sector, stock exchange ticker symbol.
b. By reading the annual report (Form 10-K SEC Filing), determine if the company is following US GAAP or IFRS reporting standards. How can you tell?
2- Analysis of Income Statement:
a. Revenues - Based on your analysis of the MD&A,what are the company's major products and/or services that generate its revenues?
b. Expenses - Based on the Income Statement, prepare a table of the top three expenses that the company incurred in the most recent year. If you are a manager, discuss how would you control each of these expenses?
c. Earnings - Based on the MD&A, does the company have the potential for growth in future earnings? Explain why based on the MD&A discussion.
3- Analysis of the Balance Sheet and related Notes:
a. Current Assets - Prepare a table of the top three components of Current Assets. Describe what each means and why are they considered current assets? If these items increase, indicate which financial ratios will be affected and whether the effect is favorable or unfavorable.
b. Accounts Receivable - Prepare a table indicating the detail for Gross Accounts Receivable, the Allowance for Doubtful Accounts (ADA) balance, and Accounts Receivable, net. (Note that this information should be available in the notes to the Financial Statements located behind the financial statements). What does this set of numbers (Gross A/R, ADA, Net A/R) mean for your company?
c. PP&E - Prepare a table indicating the detail for Gross Property Plant and Equipment(PP&E), Accumulated Depreciation (A/D), and PP&E, net. What do these numbers (GrossPP&E, A/D, and Net PP&E) mean for your company? Would you consider their Property, Plant, and Equipment (PP&E) to be a significant amount of their total assets? Explain your answer and why this would make sense for the company.
d. Intangibles - Prepare a table listing the company's Intangible Assets and related dollar amounts. Why they are considered Intangible assets? Describe what each is and why each is important to the company.
e. Liabilities - Would you consider total liabilities for this company to be significant? Why is this an important factor in analyzing a company's financial situation?
f. Stockholder's Equity
*What portion of S/E is provided by profitable operation of the business? Explain.
*What portion is provided by the owner investments (contributed capital)? Explain.
*What is the total owner's claim to the assets of the company? Explain.
4- Analysis of Statement of Cash Flows:
a. Complete a table for the past 3 years as follows.
Cash flow from Operating Activities (OA)
Cash flow from Investing Activities (IA)
Cash flow from Financing Activities (FA)
Total Cash flow
b. What does the total cash flow mean? What type of activity (OA, IA, FA) is the main source of cash inflows in each of the last three years for this company? What type of activity (OA, IA, FA) is the main use of cash in each of the last three years?
c. In your judgment is this trend good/bad for the company and why?
5- Use Calcbench to answer the following questions:
a. Using Calcbench information, prepare a table indicating your company's performance in the ratios listed below over the past three years. Find the company's nearest competitor, add a column indicating the competitor's performance in these ratios for the last year. NOTE: You do not need to calculate ratios for your company or its nearest competitor because Calcbench provides this information.
• Profitability ratios - Return on Assets (ROA), Return on Equity (ROE), Gross Margin Ratio, Net Profit Margin Ratio
• Liquidity Ratios - Current Ratio, Acid Test (quick) Ratio, Days Sales Outstanding, Inventory Turnover
• Solvency Ratios - Debt ratio or Debt to Equity - whichever is available, Times Interest Earned (sometime called Interest Coverage)
b. Write a paragraph defending why you chose the company you identified as your company's nearest competitor.
c. Analyze Profitability performance - Using your table, comment on your company's trendedprofitability performance over the past three years. Compare Profitability performance to its nearest competitor. Be sure to prove you understand what Profitabilityis.
d. Analyze Liquidity performance - Using your table, comment on your company's trendedLiquidity performance over the past three years. Compare Liquidity performance to its nearest competitor. Be sure to prove you understand what Liquidity is.
e. Analyze Solvency performance - Using your tablecomment on your company's trendedSolvency performance over the past three years. CompareSolvency performance to its nearest competitor. Be sure to prove you understand what Solvency is.
6- Read the Report of Independent Registered Public Accounting Firmwithin the annual report (Form 10-K SEC filing).
a. Who is the Independent Auditor for your company?What are the major points made in this report?
b. How can this report be used to evaluate your company?
7- Read Management's Annual Report on Internal Control over Financial Reporting within the annual report (Form 10-K SEC filing).
a. What was management's assessment of company internal controls?
b. Why is the assessment of internal control important?
8- Each team member should prepare a brief paragraph answering the following.
a. Given your major at Bryant and the career you are planning on going into, give a specific example of how your knowledge of accounting can help you to perform better on in your job?
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.