Assignment Objective:
This course focuses on financial decision-making at a management level by determining the relevancy of information, conducting internal financial statement analysis, understanding inventory management, engaging in performance measurement, cost analysis as well as operational and capital budgeting.
Assignment Specifics:
Identify two public manufacturing companies, from the same industry, whose financial statements are available through the SEC’s website, and identify the annual period you will be reviewing. It is imperative that you choose public companies whose recent financials are readily available through the SEC website, are in the same industry, and have the same reporting time-frame for financials. For example, Coca-Cola and Pepsi; Ford Motor Company and General Motors; Apple and Samsung, and periods such 12/31/21 v 12/31/20, or 6/30/21 v 6/30/20.
Explain why you choose these two companies, which company you hypothesize has stronger financials and which financial statement you used to make this hypothesis. This will form the basis of your ABSTRACT statement. Your hypothesis may turn out to be incorrect, and that’s perfectly fine! Its not about being wrong or right, it’s about the process of evaluating your assumption, and providing facts and reasoning to support your conclusion.
Research the SEC website to find, download, format and present a copy of the Income Statement and Balance Sheet for the two public companies you chose, with at least a one-year prior comparison on each financial statement. For example, Pepsi’s Balance Sheet for the YE 12/31/21 and 12/31/20, along with Coca-Cola’s Balance Sheet for the YE 12/31/21 and 12/31/20. In addition to the financial statements, prepare a brief narrative of each company that identifies when it was established, the market it trades on (NYSE, Nasdaq), current competitors and other (two to three) noteworthy items from its most recent Annual Report. When putting together your narrative, be sure to include references to your source of information (you’ll find a list of helpful sites at the end of this document).
Dig into the Income Statement for each company, and provide a highlight of the major sections; Revenues, COGS, Operating Expenses, Net Income, focusing on the most recent Year-end. Move over the Balance Sheet and report how much in assets, in liabilities, and in stockholder’s equity for the most recent YE for each company. What was the change year over year by major section, etc? Decide if you will present the comparison as company versus company for the same year, or one company with year over year changes.
Determine the four (4) most influential financial ratios you would use to evaluate the companies, explain why they matter, recite the formula, and then compute those ratios for each company for the most recent Year-end. Based upon all of your work, was your hypothesis proven or corrected?
In conclusion, based on the identified stronger company, prepare a budgeted Income Statement and Balance Sheet for the upcoming year, defining the assumption you used in your budget (e.g. based on an increasing sales trend of 10%…)
Components of the Paper:
Abstract, Introduction, Financial Statements, Discussion and Analysis, Conclusion and Bibliography. MLA formatting is required.
You must make reference in the body of your narrative to and include at least three reputable sources (e.g. your textbook, SEC website, company’s website) in your bibliography; caution: Wikipedia is not a reputable source.
Websites of Interest:
Securities Exchange Commission n:
http://www.sec.gov
Yahoo Finance: yahoofinance.com
Investopedia: http://www.Investopedia.com
Forbes: https://www.forbes.com
American Institute of C A’s:
http://www.aicpa.org
Institute of Mang. Accountants:
http://www.imanet.org
