Select any small- to medium-sized publicly traded company, and use the financial statements from that company (you can get these financial statements by going into Google finance, Yahoo finance, or the company’s annual statements.

 

You are a new accountant of this publicly traded company. Your manager has asked you to analyze the company’s current financial position. Using the company’s most recent financial statements, complete the questions below. Once you complete the calculations, you will have enough information to answer the questions and write your paper.

Part 1

Calculate and show your work for each of the following ratios:

• Liquidity ratios
  • Current ratio
  • Acid-test or quick ratio
  • Receivables turnover
  • Inventory turnover
• Profitability ratios
  • Asset turnover
  • Profit margin
  • Return on assets
  • Return on common stockholders’ equity
• Solvency ratios
  • Debt to total assets
  • Times interest earned

Part 2

Write a paper of 3–5 pages, and discuss the following:

1. Complete vertical and horizontal analyses for the 2 most recent annual reports.
2. Identify any areas, if any, that would cause concern in following U.S. GAAP.
3. How is this financial information useful to the management team in decision making?
4. Analyze the financial ratios, and describe what they reveal about the company’s current financial position.
5. What does this financial information reveal about the company’s overall performance?
6. Based on the information available, what recommendations would you have for continuous process improvements (e.g., investments in technology efficiencies, employee training, and so on)?
7. As a publicly traded company, what accounting ethical issues should the company consider?

Part 3

In Part 1 and Part 2, you were asked to choose a small to medium sized, publicly traded company, and perform an analysis, using the company’s last few year’s annual reports. Indicate which company you have chosen, list the steps that you took to find the company’s annual reports, and indicate why you chose this particular company. What is it about this company’s financial statements that appealed to you?