Financial Statement Analysis

Financial Statement Analysis Words: 909

You may choose either to compare Walter and Target or Coors and Boston Beer Co. You may work individually, or in groups of two members. The purpose of this project is to provide you an opportunity to apply the analytical techniques studied in Chapters 3, 9 and 11. In conducting this analysis, take the perspective of a common stock investor. You will be interested in all aspects of the firms’ performance.

Comment on the important trends and achievements of each firm. Also explicitly compare the performance of the firms. Be sure to get to know the industry and the firms’ businesses. Look behind the numbers. That is, what economic factors explain the trends and differences that you observe? Your report should contain the following: 1. A title page. 2. The narrative (a maximum of four typed pages). Given that you are limited to four pages, you should not comment on every trend (or lack thereof) that you observe. Rather, your narrative should contain the major “stories” that your analysis reveals. 3. Citations of outside references. Appendices. Include the results of all of your calculations (even if not mentioned in the narrative): all ratios discussed in class, the vertical balance sheet, the horizontal income statement and the vertical income statement. In preparing the narrative, consider the following: O The firms and their industry; 1 A balance sheet analysis that includes the vertical balance sheet, debt ratio, current ratio and acid-test ratio; 2 An income statement analysis that includes the horizontal and vertical income statements, ROI, the DuPont Model, ROE, and times interest earned. 3 An analysis of the statement of cash flows.

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An activity analysis including number of days’ sales in accounts receivable and inventory and APE turnover. I nee most essential place AT International Is teen 1 K report Tort can company . I nave posted the needed 10-K reports on Blackboard (Documents section). 10-K reports are quite daunting. Fortunately, we need focus on only two parts. The financial statements are of obvious interest to us. Any additional detail you need from comparing the financial you can refer to that section in the Notes to the Financial Statements. I have provided the financial statements in Excel so you can more easily manipulate the numbers.

The second part of the 10-K report that you will find helpful is the Management Discussion and Analysis (MAD). This section contains management’s analysis and explanation of the firm’s performance. Keep in mind that management is not a disinterested third party. Financial statements are essentially a report on the performance of management, and management has every incentive to put a positive spin on the story told by the financial statements. Interpret this section cautiously. Also, your report should not be a “cut and paste job. ” That is, I am interested in your interpretation of the financial statements.

The MAD should be an input for your analysis, but it is only an input. If you use material from the MAD, be sure to appropriately reference it. See the section below on Scholastic Dishonesty. You should also consult several sources other than the firms’ 10-K report and incorporate the insights from these sources in your report. Be sure to document your sources. Any referencing format is fine. The important thing is to simply document your sources. See the section in the syllabus on Scholastic Dishonesty. Perhaps the easiest way for you to undertake the calculations is to use Excel spreadsheets.

The SEC provides spreadsheets with the financial statement data for the companies I have chosen for this project. Based on these spreadsheets, you can use Excels formula functions to calculate the required ratios. Given that the analysis of the statement of cash flows is relatively less extensive, there is no need to rely on the SEC’s spreadsheet for the cash flow analysis. I have also posted the SEC’s spreadsheets on Blackboard. As we progress through each unit, you can work on the part of your project related to that unit. This approach will help you avoid a crunch immediately before the project’s due date.

The financial statements of all firms have many similarities. However, financial statements are not identical across all firms. You will see differences between the financial statements of Intel and Cataracts (used as examples throughout the term) and those of the firms that are the subject of your project. Part of your responsibility is to determine how to deal with the peculiarities of the financial statements of the firms that you analyze. The good news is that we are dealing with real world data. The bad news is that we are dealing with real world data. You can complete tons selectmen Analytically or In teams or two memoirs.

IT you work in a team, members must work collaboratively and submit one cohesive report. Although the narrative is short (four pages), the analysis you conduct of each firm will be extensive. Moreover, selecting the highlights to include in the narrative is crucial. Your report may well be of higher quality if you work in a team. Each team member will receive the same grade. Submit the project by bringing a hard copy to class on the due date. Please do not put your project in a folder; a simple staple (or clasp) should do. Assignments submitted after the due date will be assessed a late fee of five percentage points per day.