accointing report and analysis

ANNUAL REPORT PROJECT

Curricular Issues:

This course needs to articulate (transfer) to a four-year college or university. For that reason we work hard to meet university requirements in our courses. Courses in the 200 level (BUS221) have writing across the curriculum requirements. Therefore we do require a paper in this course. I will do my best to make it as easy for you as possible. Also the universities require our business and accounting courses take a hard look at interpreting financial statements. For this reason I have assigned problems or exercises throughout the semester that deal with this. In Chapter 13 you will learn all about Financial Statement Analysis and the homework for that chapter will be to prepare a financial analysis on Research in Motion. It is important to note that at the very end of each chapter, and before the Demonstration Problem for the chapter, you will find a Decision Analysis section. This will help you a great deal in understanding how to complete your Annual Report’s financial analysis.

I strongly advise that you print out the files and information found in the Annual Report section under Assignments in your Angel Course. Then, as you work through the individual chapters you can complete the activities in the final project rather than waiting until the end of the course. The information will be more meaningful then. There is no reason to hold off on starting this project.

Appendix A, beginning on page A-1 in the back of the text, contains financial statements for four companies: Research in Motion, Apple, Palm, and Nokia. This semester you are required to report on Research in Motion. I choose this because the text has included an entire copy of their Financial Report rather than just the financial statements as the other three companies have. You can start the report now and also the financial statement ratio analysis. The Common-size Comparative financial statement analysis will come at the end of the semester as a Chapter 13 assignment. As we work through each chapter and learn to calculate and analyze the ratios that particular chapter teaches you can complete the ratio calculations for Research in Motion. The work sheet for this can be found in this Annual Report folder. I am giving you all the necessary tools for the final project early on so there is no reason to procrastinate.

As I mentioned in the Announcement Section of the course, you will find a Decision Analysis section at the end of each chapter just before the demonstration problem. Here you will find how to calculate the ratios and a discussion of the ratios that pertain to that chapter (how to analyze the ratio.) If you complete this ratio analysis as you move throughout the text rather than waiting for the end of the course, it will have more meaning to you.

For the report itself you will need to research three current periodicals on your company besides the company’s annual report found here in the text. “Current” in business is considered three years. However, it depends on the subject of your paper. For example, it would be reasonable to go back further if your topic was the company’s growth over “x” amount of years, how the company got started, etc. You will use this information for bullet 4 below.

A business report is written in very concise language. It helps to have paragraph headings so the information can be easily found by the reader. I recommend you use the bulleted sections below for your headings and bullet the items when possible for an easier read (especially in section I – Introduction and Summary.)

Information to be included in your report: For the most part, most of this information should be able to be found in the annual report, business periodicals, or on the company’s website.

· Introduction and Summary – Identify your company

Name and location of home office

CEO

Last Fiscal Year

Principle Products

Main geographic area

Name of independent auditors

Most recent price of company stock and dividend per share

· Industry Situation and Company Plans

Describe the industry and its outlook

Summarize the company’s plans

· Accounting Policies

What are the significant accounting policies relating to revenue recognition

Cash, short-term investments, merchandise inventory, and property/equipment.

· Something interesting you researched about the company. (The paragraph heading for this would depend on the interesting topic you are reporting on.) The report should be on something interesting you researched about the company such as its products, how it got started and grew, personnel aspects about the company, community involvement, international holdings, etc. and not the financial status of the company. You will be reporting on that in the financial analysis that you will be doing.

· Personal evaluation of your findings

· Recap.

Paper format:

1. The paper needs to be 1500 words which equates to 6 pages double spaced with a two inch top margin on the first page and one inch top margins on the subsequent pages. There should be one inch side and bottom margins on all pages. This should not be difficult if you include all the required information found above.

2. The paper should contain a cover page (not included in the required 6 pages.). This would be a standard report cover page including the name of the paper, your name, the class the paper is prepared for, and date

3. Use an endnote page to reference periodicals. I won’t require a bibliography or formal referencing throughout the report.

4. It goes without saying the report should be concise, well organized, and free of spelling and grammatical errors. (Unlike a paper written for an English course, business reports eliminate unnecessary words.) They use shorter sentence structures and do not have run-on sentences. Keep it simple but specific. Business people don’t have time to read lengthy reports with a lot of adverbs and adjectives to “spice” it up.

Using your company to do chapter 13 homework at the end of the semester

This is not included in the required 6 pages of the report. The financial statement analysis is a separate part of the report. (Refer to grading sheet included in the annual report folder.) So that I don’t have to calculate ratios, common size, and trend analysis’ for a lot of different time periods I ask that you use the financial statements for Research in Motion that are found in Appendix A in the text. This is an exercise focusing on the “how to” not using the most up-to-date financial information.

Prepare a common-size/comparative Balance Sheet and a Comparative Income Statement. The format for them can be found in Chapter 13 and the financial statements for Research in Motion can be found in Appendix A. Complete a brief paragraph for each statement and discuss pertinent information you observed regarding the accounts.

Prepare a Ratio Analysis that includes:

Liquidity Ratios

Working capital

Current ratio

Acid test ratio if possible

Receivable turnover

Average days’ sales uncollected

Inventory turnover

Average days inventory on hand

Profitability ratios

Profit margin

Asset turnover

Return on assets

Debt to equity

Return on equity

Market ratios

Price earnings ratio

Dividend yield

These ratios and their descriptions can be found in the related chapters of your text and inside the back cover of the text.

Prepare a brief explanation (three paragraphs one covering each group of ratios: Liquidity, Profitability, and Market) about the financial situation of the company, the performance of stock over this semester, and your recommendations as to the feasibility of purchasing the stock. Also make a recommendation as to what you think the company needs to do to promote better efficiency and effectiveness or maintain its current performance level.

For your reference, you might want to print out the grading sheet I will use to grade the final. Make sure that everything on the grading sheet is covered when you turn in the paper and the analysis.

Enjoy!