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ACC 12 –

Financial Statement Analysis Project

Objectives: The objectives of this project are to provide you, the student, with experience in:

· Retrieving public financial information on companies from the Internet and other sources

· Researching, analyzing and evaluating corporate financial statements

· Presenting in a professional manner, the results of your work in a PowerPoint summary with a supporting information package that includes the sources of your research.

Assignment: As a business student you may have at some point, thought of investing in the stock of a particular company. If you have not, think of one that you might consider as a choice investment. Retrieve the most recent financial statements for a public company based in the U.S. as well as any other supporting research information that you can find on the company. You should evaluate the company by comparing its most recent performance to its past performance. In addition, you should compare it to another company in its industry as well as to the industry standards.

To guide you through the evaluation I have prepared the following list of issues to be addressed. You may not be able to answer all questions because of lack of information. You can consult with me if you have any problems or questions.

General information about the company

· In what type of business(es) does the company engage? What are the company’s major product lines or services?

· In what country is the company headquartered?

· In what countries or regions does the company operate and what percentage of total revenue does each of the various regions represent? Have there been any changes in the performance of these regions when compared to one another in their contribution to total revenue and what has caused the changes?

· Who are the major types of customers the company sells to in their various product lines and has this changed over time? How does this compare to their competitor?

The company’s financing and liquidity

· What is the major source of the company’s financing – debt or equity? How did you arrive at this answer? Do you see a need for any future financing and if so, why?

· What are the company’s current & quick ratios? How liquid is the company based on your analysis of these ratios? Interpret your findings by comparing this information to the competing company and to prior years. Also, there is no need to restate what the book definition is of these ratios in your presentation.

The company’s performance and profitability

· What is the company’s accounts receivable turnover? What does it mean? Is the company efficient in collecting its accounts receivable? Why or why not?

· Have the company’s sales been increasing/decreasing over the past two years? By what percentage?

· Did the company’s net income increase, decrease, or remain unchanged over the last three years? Briefly discuss possible causes.

Final overall evaluation

· Would you invest in this company? Please support your answer with your results and any additional computations you feel are necessary to arrive at your decision. Please ensure that your response is based on facts rather than perceptions.

· Please note that not all ratios or analysis may be relevant to all industries. For instance, McDonald’s is a cash based business and thus accounts receivable is not a critical measurement.

Details/Rules:

· This can be done as an individual or a group project formed by a group of either two or three students. Each group should submit one copy of the project and all students in the group will receive the same grade. Each student must have a part in presenting the project to the class.

· This project will be presented in class on Monday, April 15th. A hard copy version should be submitted in class and an electronic version emailed to me prior to class.

· The project submission should include the answers to the questions above and any other relevant material. Do not include all the company’s financial statements but include relevant analytic information.

· Please include in your project’s supporting documentation the source of the material you used in the project.

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All responses must be the student’s own (original) work.

· This project should be prepared as a professional work product. Grading will be based on form as well as content.

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