ACCT project

Financial Statement Analysis Mini-Project

The financial analysis project is designed to develop your ability to (1) understand and analyze published financial reports and (2) make a recommendation to investors regarding the financial condition of a public company. This project can be completed entirely in Microsoft Excel. You should use Mergent Online to download the appropriate financial statements, and can include those statements in the Excel file with cell references in the formulas to guard against mathematical errors. It is important to fully address the question being asked. When answering the questions, make sure to double-check your calculations. Be sure to include your results as well as a detailed explanation/interpretation of the information. Any use of outside reference materials should be cited. The bulk of your grade will be based on your ability to perform the requested analyses and provide an accurate interpretation of the results. Financial analysis includes not just the ability to obtain the correct results, but also the ability to describe and interpret what the results mean in terms of increasing the understanding of the available data. Primary: Starbucks (SBUX) (PICK A DIFFERENT COMPANY, THIS IS JUST AN EXAMPLE) Competitor: Select a competitor from those identified by Mergent Online 1. Calculate the following ratios needed to assess liquidity and interpret the results. This should include the last 3 years of ratios for the company and the last 3 years of ratios for the competitor. What trends are there? (approx. 1/2 page single spaced 12 pt. in Word doc) a. Current Ratio b. Acid-Test (Quick) Ratio c. Receivables Turnover d. Inventory Turnover e. Asset Turnover 2. Calculate the following ratios needed to assess long-term debt-paying ability and interpret the results. This should include the last 3 years of ratios for the company and the last 3 years of ratios for the competitor. What trends are there? (approx. 1/2 page single spaced 12 pt. in Word doc) a. Times Interest Earned b. Debt to Total Assets Ratio c. Book Value per Share

3. Calculate the following ratios needed to assess profitability and interpret the results. This should include the last 3 years of ratios for the company and the last 3 years of ratios for the competitor. What trends are there? (approx. 1/2 page single spaced 12 pt. in Word doc) a. Profit Margin on Sales b. Rate of Return on Assets c. Rate of Return on Common Stock Equity d. Earnings per Share e. Payout Ratio 4. Which company would you invest in? What are the reasons for your decisions? This should be based on financial analysis and significant facts. (approx. 1 page single spaced 12 pt. in Word doc)

How to use Mergent Online to find public firms’ financial data

Step 1: Go to Library home page at http://vcuhvlibrary.uhv.edu/ Step 2: Select Mergent Online from the All Database list Step 3: Select ‘Business’ Service Area Step 4: Click on the “Reference Materials” tab Step 5: Select “Mergent Online” Step 6: Select “Ticker Symbol” and type in “SBUX” in the Search box Step 7: Select “Starbucks.” Step 8: Select “Company financials” Step 9: Change the period to “5 years/quarters” for both Balance Sheet and Income Statement. (note you’re only using the 3 most recent years but may need the last 4 years for some calculations – pulling this now saves time later) Step 10: Download both by clicking on the “Download MS Excel” Step 11: Select “Competitors” Step 12: Repeat Steps 6-9 for the competitor.