Accounting Assignment

Instructions:

A. Locate Annual report - Search your company’s website under investor relations to locate the latest annual report published to shareholders.

B. Reference the annual report page number when you take information from the annual report in your discussions. There is no need to reference the financial statement page numbers for you calculations. Only reference for your discussion.

C. Read Chapter 13 – Financial statement analysis – Most of Chapter 13 will be covered throughout the semester while covering the other chapters in the text; therefore, there will be limited in-class coverage of Chapter 13. Use Chapter 13 as a resource when answering questions.

D. Copy the questions below - Use the electronic copy of this assignment from Blackboard as the starting WORD document. Insert your answers under each question. Answer the questions completely and show the details of all calculations in your report. When you use financial information from the annual report or the 10-K report, include the page number as a reference.

E. Team Update Form - Meet as a team to pick a team name, choose a team leader, set team rules and guidelines, and to set up regular meetings. Turn in this information when the Team update is due.

F. Team effort required - Completion of this project must be a team effort! The finished project must ‘flow’. It is not acceptable to have each member to complete one portion of the project, and then put the pieces together to hand it in. Points will be taken of if this is done!

G. Peer evaluation form must be completed by each team member and uploaded before the due date.

· You must evaluate yourself and your team members.

· IF YOU DO NOT HAND IN YOUR EVALUATION, YOUR GRADE WILL BE REDUCED BY 20%!!

· Your individual grade may differ from the project grade based on these evaluations.

H. The following deadlines apply:

Final due date for the project is the last day of summer class

Summary of deliverables:

· Project report – uploaded to Bb and will be analyzed by Turnitin for plagiarism.

· Team evaluation form – uploaded to Bb

Questions to be answered:

Management Discussion & Analysis section and Miscellaneous (15 points)

1. Review the annual report contents and identify the page numbers for the following sections:

a. Management Discussion and Analysis

b. Financial Statements and Supplementary data

c. Any other sections that is of interest to you. Indicate why it is of interest to you.

2. Read the Management Discussion and Analysis. Describe the major products and/or service the company provides to its customers. Based on what you read, do you get a positive or negative impression about company performance and what the company is doing to grow in the future? Be sure to specifically discuss management perspectives in order to support your impression.

3. Locate the financial statements, and a few pages after the financial statements, the Report of Independent Registered Public Accounting Firm.

a. Who is the company’s independent auditor and what type of audit opinion on the financial statements was rendered (qualified, unqualified, adverse, disclaimer)? What are the implications of this opinion to users?

b. What is the auditor’s opinion on Internal Control over Financial Statements. What are the implications of this opinion to users?

c. Who is responsible for the company’s financial statements? What are the implications of this to management?

Income Statement and Profitability (10 points)

4. Analysis of Profitability

a. For each ratio below, calculate the ratio for the past two years, explain the interpretation of the ratio, and analyze the trend in the ratio for the past two years .

i. Net profit Margin Ratio

ii. Gross Profit Margin Ratio

iii. Return on Assets Ratio

b. Overall, analyze the trend in profitability for your company.

Balance Sheet – Analysis of Liquidity and Solvency (55 points)

5. Analysis of Liquidity

a. For each ratio below, calculate the ratio for the past two years, explain the interpretation of the ratio, and analyze the trend in the ratio for the past two years .

i. Current Ratio

ii. Acid Test Ratio

iii. A/R turnover

iv. Days to Sell Inventory

b. Overall, analyze the trend in liquidity for your company.

6. Analysis of Solvency

a. Calculate the Debt Ratio for the past two years, explain the interpretation of the ratio, and analyze the trend in the ratio for the past two years .

7. Analysis of Accounts Receivable

a. What are the numbers for A/R, Allowance for Doubtful Accounts, and A/R (net)?

b. What percent of A/R does the Allowance account represent? What conclusions can you draw from this percentage?

8. Analysis of Plant Asset and Depreciation

a. What are the numbers for Plant Assets at cost, accumulated depreciation, and Plant Assets (net)? These numbers will be available in the notes to the financial statements if they are not apparent on the balance sheet itself.

b. Calculate accumulated depreciation as a percent of total Plant Assets? What general conclusions can you make about this percentage?

c. What depreciation method(s) does the company use and how does the depreciation method chosen affect the financial statements versus other methods?

9. Analysis of Intangible Assets - Does the company have any intangible assets? If so, what are they and describe what they mean? If not, what are intangible assets and what is an example of an intangible asset.

Cash Flows (10 points)

10. Analysis of Statement of Cash Flows

a. For your company’s past two years , create a table that summarizes the total cash flow from Operating, Investing, and Financial activities, and overall Cash Flow as follows:

	Year2	Year 1
Cash flow from Operating Activities
Cash flow from Investing Activities
Cash flow from Financing Activities
Foreign Currency translation (you may need this to balance)
Total cash flow

11. From preparing a statement of cash flows in chapter 1, we learned what the Statement of Cash Flows tells us about the company. Discuss your company’s SCF using the table you prepared in above.

· Is the company creating enough cash from operating activities (OA) to cover new investment in long term assets?

· Is the company generating enough cash from OA to cover financing activities like repayment of debt or payment of dividends?

· Are there any other observations of good or unfavorable things you noticed about your company’s cash flow activities?

· Comment on these trends? Be sure to assess whether the company is effective in generating cash and why?

User of this information (10 points)

12. Identify a specific user that might be interested in this company analysis that you conducted. Discuss how the user might use this financial information and related decision that could be made based on this analysis. Discuss what other information (not provided in your analysis) the user might need in order to finalize his/her decision.

Writing Quality and Report Presentation

Characteristics to be evaluated:

· Is the final report professionally written, professional in appearance, and easy to read?

· Did the writer go above and beyond in answering the questions? Did the writer make connections between answers of various questions?

· Would the report be good enough to show your boss in a professional work environment?

· Fatal Flaws - Your grade will be penalized for fatal flaws (misspelled words, incorrect punctuation, sentence fragments, awkward wording, incorrect sentence structure, incorrect paragraph structure, etc.)

Total Points (100 POINTS)

Writing Quality and Report Presentation

Characteristics to be evaluated:

· Is the final report professionally written, professional in appearance, easy to read, and user-friendly? Use of tables for presentation of numerical data is suggested.

· Did the team take the time to make the report have a consistent and professional appearance throughout?

· Are page numbers from annual report referenced appropriately?

· Did the writer go above and beyond in answering the questions? Did the writer make connections between answers of various questions?

· Is each chart presented on the same page and NOT split between pages.

· Fatal Flaws - Your grade will be penalized for fatal flaws – grammar, punctuation, awkward wording, word choice errors, fragments, etc.