Accounting assignment in Essay format for Master MS program. Original study free of similarities.
You will select a publicly traded company that is of interest to you. You will also select a competitor to that company (publicly traded) to analyze.
Annual reports can typically be found on the company’s website in the Investor Relations section. You are looking for the annual report (may also be called the 10-K). Annual (10-K) reports can also be found on the SEC website (www.sec.gov).
Materials submitted for the assignment should include:
• A cover sheet with the name of the class, company name, and your name. The report should be typed in 11 point font, single spaced, with 1 inch margins.
• Provide each question (bold font) asked in the assignment, followed by its answer (non bold font). Some questions can be answered with a single word, phrase, or number, but discussion of relevant issues is required for full credit. Other questions will require more involved analysis presented in essay format. This portion of the report should not exceed 6 pages. I want 4 pages for this part.
• The report should contain an appendix containing the following items from the annual report: the balance sheet, income statement and cash flow statement and financial statement footnotes utilized in your answers. Please also include the balance sheet and income statement of your competitor.
Specific questions to address in the report
1. The income statement is generally shown for the three most recent years.
a. Evaluate the trend in sales or total revenue over the past three years. Discuss what is driving the changes in sales. Consider what you know about the company, the industry, and the overall economic conditions.
b. Evaluate the trend in net income over the past three years. Discuss what is driving the changes in net income. Consider performing vertical analysis (calculating each expense item as a percentage of revenue) on the income statement to help with your analysis.
2. Compare your company to a key competitor (clearly state the competitor you selected).
a. Compare and discuss the trend in sales across these two companies.
b. Compare and discuss the trend in net income across these two companies.
c. What differences exist in each firm’s strategies that could result in the differences in trends?
3. Which classification of assets (cash, receivables, inventory, investments, PP&E, and intangible assets) is the largest component of total assets? Consider the asset classification of a major competitor of your company. Which classification of assets is the largest component of total assets for the competitor company? (Analyze percent of total assets rather than just dollar amounts.) Discuss if your analysis makes sense given the industry and business model of your company.
4. What are the firm’s and its competitor’s assessments of short-term and long-term liquidity? Calculate the current ratio, debt to equity ratio, and either accounts receivable or inventory turnover ratio for both companies to support your analysis. Chose the turnover ratio that makes most sense based on your company’s balance sheet. Discuss any similarities or differences.
5. Are there any intangible assets reported on firm’s and its competitor’s Balance Sheets? How are they accounted for and amortized? What discussion regarding impairment of intangible assets did you find in the annual report?
6. Review the statement of cash flows for the most recent year. Which activities (operating, investing, financing) provide net cash inflows? Which activities result in net cash outflows? What are the key items or transactions driving inflows or outflows within each section?
