Company Prepares Financial Statements in Accordance with US GAAP Analysis
Company Prepares Financial Statements in Accordance with US GAAP Analysis
REQUIRED:
Select a publicly traded company to analyze that meets requirements 1 to 4 below:
1. Company’s name begins with the same letter as the first letter of any team member’s first name.
2. Company prepares financial statements in accordance with US GAAP.
3. Company is currently traded actively on a US Stock Exchange
4. Only one team in the class can select a company (we will have a class sign-up sheet; selection of the
company is on a first-come, first-serve basis).
5. Select a chief competitor from the same industry group meeting requirements 2 and 3 above.
Yahoo!Finance provides lists of industries at biz.yahoo.com/p/industries.html. Click on an industry for a list of
companies in that industry. Alternatively, go to Google Finance at www.google.com/financeand search for a
company. You will be presented with a list including that company and its competitors.
You must acquire the most recent Form 10-K (i.e., annual report) for the publicly traded company that you
selected. You should download this Form 10-K so that you can reference it easily as you work on this
assignment.
You should be able to work on most of the requirements of this project after we complete Chapter 4 in the
text.
DELIVERABLE:
Write a report answering the questions on the following page about the main company you selected. You should
document your sources of information. The most recent annual report (Form 10-K) should be the primary source of
your information. You may also need to go to other sources on the internet to locate related industry information….Be
creative and resourceful!
1. Using information contained in the Form 10-K (especially the MD&A (management discussion and analysis) section
(and other sources if needed), write several paragraphs in good business writing form addressing all or most of the
following:
a. The company’s business and its principle products or services
b. The company’s history
c. Key management personnel
d. The company’s vision or mission
e. The company’s chief competitors
f. Business challenges facing the company and outlook for the future.
2. What formats are used to present the
a. Balance Sheets?
b. Income Statements?
c. Operating Activities section of the Statement of Cash Flows?
3. Find one footnote for each of the following and describe its contents in brief:
a. An accounting rule applied in the company’s statements.
b. Additional detail about a reported financial statement number.
c. Relevant financial information but it does not describe a particular number reported in the financial
statements.
4. Describe the type of stock that the company has issued to shareholders (types, classes, par or no par, shares
authorized, issued, and outstanding).
5. Does the company have any Treasury Stock as of the Balance Sheet date? If so, describe briefly.
6. Does the company have any bonds or notes payable reported in the Liabilities section of its year-end Balance Sheet?
If so, describe briefly.
7. Does the company have any current or long-term investments reported in the Assets section of the year-end
Balance Sheet? If so, describe briefly.
8. Has the company declared or paid dividends to shareholders during the past fiscal year? If so, describe briefly.
9. Using electronic sources, find one article reporting the company’s annual earnings announcement. When is it dated
and how does that date compare to the balance sheet date.
10. Using electronic sources, find two articles about your company. For each, give the date, name of the article,
publication, and a short summary of the point of article.
11. Using the SEC EDGAR website (www.sec.gov), what is the most recent document filed by your company with the
SEC (e.g., 8-K, S-1) and what did it say in brief?
12. Ratio analysis:
a. What does the return on total assets ratio measure in general?
b. Compute the ROA ratio for the last two years. Show the formula and your calculations.
c. What do your results suggest about the company?
d. Compare the ROA to the chief competitor firm ratio for the most recent year, compare it to your results, and
discuss why you believe your company differs from or is similar to the chief competitor ratio.
13. Use the ROA profit driver analysis to determine the cause(s) of any differences in the ROA ratio over the past two
years. (Remember: you computed the 3 profit driver ratios in Chapters 2, 3, and 4 of your text.)
14. What was the most surprising or interesting thing that you learned about the company after reviewing its Form 10-K
and other material during this assignment?
15. If you were invited to meet with the company’s CEO and CFO, what two questions would you ask?
16. If you could invest in a company, would you invest in this company, why or why not?
Don’t write too well, average level is enough.
