Financial Statement Analysis Project:
Basic Financial Statements

Refer to the 10-K filings for the companies you selected previously. Submit a single Word document uploaded to the online assignment drop-box. Answer the following questions for each company.

Balance Sheet
1. Locate the balance sheet in their most recent 10-K filing. List the page number where you found it.
2. Calculate the following ratios for the past two years. Show your calculations.
a. Current Ratio
b. Quick Ratio
c. Return on Assets
d. Return on Equity
e. Debt-to-Equity Ratio
3. Interpret the ratios above. Which company is performing better in which areas? Using the information you provided in the company and industry overview, speculate about the reason for the differences and/or similarities of least to ratios.
4. Note anything interesting that you observe about the balance sheet. This could be a comparison, an observation about categories of assets, liabilities, and equity, an observation about formatting and presentation, or anything else that stands out to you.

Statement of Shareholders’ Equity
1. Locate the stockholders’ equity section on the balance sheet. Describe the type(s) of stock that the company has authorized and/or issued. How many shares of each type of stock has the company issued as of its most recent balance sheet date? How many shares of each type of stock are outstanding as of the most recent balance sheet date? Are these numbers in thousands or millions or billions?
2. Now locate the statement of stockholders’ equity. List the page number from the most recent Form 10-K where you found it. What is the title of this statement for the company?
3. Did the company issue any new shares of stock during the most recent year? How many shares? How much did it receive for the stock issuance?
4. Did the company declare any dividends in the most recent year? What type of dividends? What was the dollar value of the dividends declared?

Income Statement
1. Locate the income statement in their most recent 10-K filing. List the page number where you found it.
2. What does each company call their income statement?
3. Were the companies profitable for the most recent two years?
4. Calculate the following ratios for the past two years. Show your calculations.
a. Gross Profit Margin
b. Net Profit Margin
5. Interpret the ratios above. Which company is performing better in which areas? Using the information you provided in the company and industry overview, speculate about the reason for the differences and/or similarities of least to ratios.
6. Note anything interesting that you observe about the income statement. This could be a comparison, an observation about categories of revenues and expenses, an observation about formatting and presentation, or anything else that stands out to you.

Statement of Cash Flows
1. Locate the cash flows for each company. List the page number from the most recent Form 10-K where you found it.
2. Which method (direct or indirect) does each company use to report cash flows from operations? How do you know?
3. Did the company buy back any of its own stock? Did it pay any dividends?
4. What type of activity (operating, financing, or investing) in total generated the most cash flows for the company in the most recent year? What conclusions can you draw?

Auditor’s Opinion Letter
1. Locate the auditor’s opinion letter for each company. List the page number from the most recent Form 10-K where you found it.
2. What is the name of the audit firm?
3. What year did this firm begin auditing your company?
4. In the opinion of the auditors, do the financial statements present the company’s financial information fairly in all material respects? (Yes or No)
5. Do the auditors guarantee that the financial statements are free from errors? (Yes or No)

Evaluation

Group Evaluation: See the next page for a detailed rubric.

Individual Evaluation: Each group member will submit anonymous feedback about how members contributed and how the group worked together. If a member does not contribute equally, his or her grade may be adjusted (up or down) to reflect actual contributions to the work. Failure to submit feedback will result in a zero on the group assignment until feedback is received.

Part 3 – Basic Financial Statements Rubric

20 pts 16 pts 12 pts
Structure Paper is well organized and flows well. Written in complete paragraphs. Appropriate use of headings. Seamless integration of company information. Paper is fairly well organized with mostly complete paragraphs. Can follow the organization flow of the paper. Company information is integrated, although some information is not aligned. Questions are answered, mostly in bullet format. Paper is somewhat difficult to follow. Coverage of companies differs.
Accuracy All ratio calculations and financial statements observations are accurate. Most ratio calculations and financial statements observations are accurate. Two or fewer errors are noted. Three or more errors are noted in ratio calculations or financial statement observations.
Evaluation Assignment indicates a thorough understanding and analysis of GAAP accounting concepts. Evaluation of ratios is in-depth and shows rich understanding of underlying concepts. Paper indicates a good understanding and analysis of GAAP accounting concepts in most areas. Evaluation of ratios is mostly in-depth and shows understanding of underlying concepts. Analysis needs more depth; understanding of GAAP accounting concepts is not clear. Multiple ratios are missing or interpreted incorrectly.
Spelling, Grammar, and Tone No spelling, grammar, or punctuation errors. Tone of the writing is professional and appropriate for business. A few typos, grammatical, or spelling errors are found, but less than three in total. Tone is mostly professional. More than three spelling or grammar errors; tone is not appropriate in multiple places.
Basics All requirements and deadlines were met. All questions were answered in entirety. If needed, group members requested instructor assistance well ahead of final deadlines. Deadlines were met. All requirements were met and all questions were answered with one minor miss. If needed, group members requested instructor assistance at least a few days ahead of final deadlines. Missed a deadline, did not answer two or more questions, or waited until the weekend of the final deadline to request instructor assistance.