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150 points
OBJECTIVE: The objective of this assignment is to expose
you to the type of information contained in an annual report as well as learn
where to locate specific financial data within the report. You will use the annual report from your
assigned company to complete the three parts of this assignment. Please
reference (and print) the pages from the annual report used to gather
information for this case study. Each of the three parts of this assignment
will be evaluated on the criteria outlined below.
Company Profile – 15
points
GOAL: For this section of the assignment you will
have to locate pertinent company information contained in the annual report or on financial websites (example is
finance.yahoo.com). Bullet pointing this
information is appropriate for your report.
You
will have to identify the following
items that are specific to your company:
*Ticker
symbol
*Mission
Statement as it is printed in the Annual Report
*Corporate
headquarters location
*Date
of Incorporation
*Public
Auditor
*Name
of CEO
*Name
of CFO
*Stock
classifications (common, preferred, both?)
*Exchange (e.g.: NYSE, Nasdaq)
*Dividends
(have they been issued, when were they last issued, and for how much)
Industry Profile – 25
points
GOAL: For this section of the assignment you will
have to locate pertinent company information contained on financial websites (ONE example is
finance.yahoo.com).
·
Identify the market sector to which your company
belongs. Describe what makes a company
part of this market sector.
·
Define the industry to which your company belongs.
Describe what makes a company part of this industry. Identify 3 industry leaders and 3 industry
laggards.
·
Locate (using
Yahoo Finance) and attach your company’s stock performance in comparison to
your company’s two largest competitors’ stock performance over the past two
years. Note on the graph three events.
These can be company, industry or market specific events. In detail,
describe the events and their effect on your company’s stock performance. This can be done either in Excel or using
web based applications as the data set is large in this example.
·
Explain what is
meant by Market Capitalization. Graph,
using a pie chart in Excel, your company versus other companies (at least 3) in the industry with market
capitalization data. Make observations
and describe your observations. Make
sure your graph is labeled properly including a legend, a title, and
appropriate data labels as well.
Financial Statement
Research – 30 points
GOAL: For this section you should locate data in
both the Income Statement and Balance Sheet.
You will have to find the data from the two most current consecutive years available for each
of the items listed below. You will then
have to create an Excel spreadsheet to represent the data and then calculate the percentage change for
those two consecutive years and indicate that change. On the spreadsheet you
should put information from the two previous years as well as the percent
change between those years and your observations of what it all means. You
must include a copy of the Income Statement and the Balance Sheet from the
annual report for this section of the assignment and highlight data used, as
well as upload your Excel spreadsheet with the aforementioned data analysis and
formula derivation. Based on the
data you gathered, what overall
observations can you make about the company (that does not mean just stating
assets went up or down, but rather strategies, trends or impacts)? You can include questions you would ask or
other information you would want to research.
*Sales *Cash
*Cost
of Sales (COGS) *Total
Current Assets
*Gross
Profit *Total
Debt
*Net
Income (loss) *Total
Equity
*Inventory *Total Current
Liabilities
Financial Statement
Analysis – 40 points
GOAL: For this section you will use financial
ratios to evaluate the relationship between Balance Sheet and Income Statement
data from the two most current consecutive years in making
determinations about company performance.
You are to compare this data to
the averages for your company’s industry. Use at least three companies to
calculate the industry average (your company plus 2 others). You must indicate which to firms were
used to compile this industry average data.
For each ratio you should show the formula used, enter your company’s
numbers into that formula, compute the ratio, and assign the proper label to
the answer ($, %, etc.). You will
complete this for each of the two years’ data.
Once again, an excel spreadsheet is required to complete this
section. Two properly labeled graphs
(including x and y axis as well as titles) are to be created to show
relationships between your company and the industry. One example of this could be showing return
on investment for your company versus the industry as a whole. Based on the data gathered, what overall
observations can you make about the company (that does not mean just stating a
ratio went up or down, but rather why, given strategies, trends or impacts or
particular input data)? You can include
questions you would ask or other information you would want to research.
*Current Ratio/Liquidity *Inventory
Turnover (sales/inventory)
*Debt
to Equity Ratio *Profit
Margin
*Return
on Investment *One additional ratio
of your choice
Interpretive Analysis
– 40 points
GOAL: Each of the ratios in Section 2 provide
relevant information to help answer specific questions about the financial
health of the company. You will have to
interpret that information by responding to each of the multi-part following
questions. The discussion should be thorough and incorporate data and analysis
from above.
1. What is meant by liquidity? Did the company experience and increase or a
decrease in liquidity over the two-year period evaluated? What effect do the liquidity figures have on
the company’s long term and/or short term performance?
2. What
is meant by Profit Margin? Did the
company experience an increase or decrease in profit margin over the two year
period evaluated? What effect do the
Profit Margin figures have on the company’s long term and/or short term
performance?
3. What is measured in a Debt to Equity ratio?
Did the company experience a change in its leverage over the two year period
evaluated? What impact do these Debt to Equity figures have on the company’s
overall long term and short term performance?
4. How does inventory and inventory turnover
affect liquidity? Did the company
experience and increase or decrease in inventory turnover?
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