financial statement analysis

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AWRStage1FinancialStatementAnalysisProjectFall2019.xlsx

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Introduction

ACC305

Cost Accounting

Fall 2019

AWR Step 1: Financial Statement Analysis Project

This is not a group project. You are not allowed to share your project with other students or publicize your work in any public websites which other students can access with or without paying fees). Students involved in sharing projects will be prosecuted according to the Student Academic Honesty Policy and receive failure grades.

Purpose

This project is aimed at familiarizing students with the basic skills and information needed for financial statement analysis. Also, students will learn how to use online databases for financial statement analysis.

Step 1

Use the following link to access the website of MergentOnline available in the library’s databases.
http://webdb.plattsburgh.edu:2048/login?url=http://www.mergentonline.com/compsearch.asp
Select a firm you want to investigate (Firm A). Also, select a major competitor of this firm (Firm B). You may find the competitor’s information using the competitors tab.
List the two firms you selected:
Firm A:	__________________________
Firm B:	__________________________
Read the Business Summary of Firm A. Copy and paste Business Summary here!
In the Ownership tab, find the percentages of shares owned by the institutional investors for Firm A and Firm B.
Company A			Company B
% of shares owned by the institutional investors		%	% of shares owned by the institutional investors	%
Why is it important for investors to pay attention to institutional holdings?
In the Ownership tab, find the percentages of shares owned by the insiders for Firm A and Firm B.
Company A			Company B
% of shares owned by the insiders		%	% of shares owned by the insiders	%
Why is it important for investors to pay attention to insiders' holdings?

http://webdb.plattsburgh.edu:2048/login?url=http://www.mergentonline.com/compsearch.asp

Step 2

In the Company Financials tab, download the most recent three years’ income statements of both firms in Excel format.

Paste your downloaded income statements from Mergentonline here.

Step 3

For both Firms, use the skills of vertical analysis to convert the income statement items into the percentages of net sales for each of the three years’ income statements, respectively.

Show your work below

Step 4

According to your vertical analysis in step 3, type in the calculated percentage into the following table for both firms.
			Firm A			Firm B
		2017	2016	2015	2017	2016	2015
	Net Sales	100%	100%	100%	100%	100%	100%
	Cost of Goods Sold
	Gross Margin
	Selling & Administrative expenses
	Net Income
	(You can modify this table to accommodate your income statement format)
Report your observations in less than 100 words

Step 5

For both firms, use the skills of horizontal analysis to compute the percentage changes across years for each income statement item

Show your work below

Step 6

According to your horizontal analysis in step 5, type in the calculated percentage into the following table for both firms.
		Firm A	Firm A	Firm B	Firm B
		% change from 2016 to 2017	% change from 2015 to 2016	% change from 2016 to 2017	% change from 2015 to 2016
	Net Sales
	Cost of Goods Sold
	Gross Margin
	Selling & Administrative expenses
	Net Income
	EPS diluted
	(You can modify this table to accommodate your income statement format)
	(You can select any income statement items that matter for your analysis)
Report your observations in less than 100 words

Step 7

Under the Company Financials Tab, click on ratios tab to download 5 years’ financial ratios in Excel format for both firms.

Copy and Paste your 5 years’ financial ratios in Excel format for both firms.

Firm A

Firm B

Step 8

Based on the ratios in step 7, comment on comparison of:

Liquidity of these two firms (less than 100 words)

Profitability of these two firms (less than 100 words)

Solvency of these two firms (less than 100 words)

Step 9

Under Equity Pricing tab, produce a price change chart including price changes of Firm A and Firm B in the past 3 years

Take a screenshot of your chart and paste here

In Step 6 you compared the key income statement items of Firm A and Firm B across three years using horizontal analysis.

Is the market performance of these two firms based on the price change chart consistent with the result of your horizontal analysis based on income statement items?

(Less than 50 words)

Step 10

Under reports tab, download the most recent 10-K report of firm A. Use the 10-K report to answer the following questions for Firm A.

Who is the auditor of the 10-K report?

Auditing Firm: (e.g., KPMG)

Read the Auditors’ Report and indicate the major conclusion in their opinions (less than 50 words)

Major Conclusions: