Financial statement analysis

Week 1

For the Company selected, please identify the elements of the financial statement

and answer the following questions (including a copy of the financial statements in

PDF format and page references):

• What are total assets for the current and prior period?

• What are total liabilities for the current and prior period?

• What is total net equity for the current and prior period?

• What are total contributions from owners in the current and prior period?

• What are total distributions to owners in the current and prior period?

• What are total revenue in the current and prior period?

• What are total operating expenses in the current and prior period?

• What are total non-operating gains in the current and prior period?

• What are total non-operating losses in the current and prior period?

• What is total comprehensive income in the current and prior period

• Reconstruct the adjusted trial balance for your company for the current fiscal

period. (Prove out that debits = credits)

• Compute a current ratio for your company for the recent period. How does

this current ratio compare with the prior year's current ratio?

• Compute the asset turnover for your company for the recent period. Was

the company more or less efficient in the recent period as compared to the

prior period?

• What method of inventory valuation does your company use?

• What method of depreciation does your company use?

• What material commitments and contingencies does your company report in

the notes to its most recent period financial statements?

Week 2

1) Did your company report or release EBITDA (earnings before interest, taxes,

depreciation, and amortization)? What income or expenses items were adjusted

from net income to reconcile to EBITDA figures? (HINT: You may need to find the

earnings press release correlating to the annual financial report).

2) Did your company's net income increase or decrease from the prior period?

Identify the major reasons for the increase or decrease.

3) Imagine that you are a financial analyst for your company asked to generate a

forecast of your company's net income for the future period. You know that

generally the best place to start in forecasting next year's net income is this year's

net income. Given this starting point, look at the items in your company's recent

period financial statements and make a forecast of the next period's income.

4) What was your company's comprehensive income for the recent period?

5) Locate your company's note on revenue recognition. What is the revenue

recognition policy? What FASB Codification is being followed?

6) Did you company's revenue increase or decrease from the prior period? Identify

the major reason for the increase or decrease.

7) Does your company use the direct method or the indirect method? Explain.

8) Analyze your company's overall cash flow picture for the three most recent

periods in light of the positive or negative cash flow patterns for the three

categories of cash flows.

9) How does your company define cash and cash equivalents?

10) What is the largest dollar item in the Operating Activities section of your

company's statement of cash flows? Explain exactly what is represented in this

item.

11) Companies often compute earnings before interest, taxes, depreciation, and

amortization (EBITDA). This number is used as an approximation of operating cash

flow before interest and taxes. Using the information in your company's income

statement and statement of cash flows, compute EBITDA for the most recent

period.

Week 3

1. Identify your company's basic and diluted earnings per share for the recent

period. Has the EPS improved or declined from the prior periods? What is driving

the difference between the basic and diluted EPS calculations?

2. Identify the different segments of your company. How is this information useful

to prospective investors?

3. Compute gross profit percentage for each quarter for the two most recent fiscal

years. Is the gross profit percentage in the fourth quarter substantially different

from other quarters?

4. Review the notes to the financial statements of the current fiscal year and

determine whether the company had any accounting changes for any of the years

reported. (Note: Most, if not all, of these changes will be as a result of accounting

rule changes by the FASB). To what did those changes relate?

5. Briefly describe the nature of the changes identified in #4.

6. Review the notes to the financial statements of the current fiscal year and

determine whether the company reported any proforma financial results for any of

the years reported. (Note: This includes proforma results related to business

acquisitions).

7. Briefly describe the purpose of the proforma disclosures identified in #6.

Week 4

1) Identify the filing date of your company’s last 10-K filing.

2) Identify the filing dates of your company’s last three (3) 10-Q filings.

3) Identify the filing dates of your company’s last three (3) 8-k filings.

4) Identify the filing date of your company’s last S-1 or S-3 filing.

5) Identify the filing date of your company's last DEF14-A filing.

You will need to include evidence of your dates either through a PDF file or a link to the

appropriate website(s).

6) Risk factors are a required item in the Form 10-Q and Form 10-K. Find an

example of an interesting risk factor and comment on why it's important to the

company you selected.

7) MD&A section provide significant useful information to the users of the financial

statements. Read your company's MD&A section from the recent fiscal period 10-K

and (a) identify the reason given by the Company for the change in revenue from

the prior fiscal year to the most recent fiscal year and (b) identify the reason given

by the Company for the change in cash and equivalents from the prior fiscal year to

the most recent fiscal year.

8) Either: (a) Find your company’s Form S-1 (if it was filed within the last 5 years) or

(b) Research a company who has successfully filed an IPO.

Read through the first and final S-1 documents and provide commentary to

compare the two. What significant changes were made throughout the process?

How do the numbers disclosed vary?