For this project, you will be analyzing the financial statements of Ford and Tesla. You will draw conclusions about the overall health of each company. Your project will culminate in a written paper that details your analysis.
Instructions for finding a Form 10-K
You will need to locate a company’s Form 10-K, which is the annual report that publicly-held companies file with the Securities & Exchange Commission (SEC). The Form 10-K is usually quite long, exceeding 100 pages in most cases.
The first thing you need to do is find the most recent 10-K Ford and Tesla.
To find a Form 10-K, go to http://www.sec.gov/edgar.shtml#.VOhw6vnF9mX. There is a video to demonstrate this located in the supplemental course materials for Module 1.
Company Criteria
Ford and Tesla are companies in the same general industry (i.e. retailers, restaurants, food, etc.).
General Writing Instructions
Your source document for the information you will be using for this project will primarily be your companies’ Form 10-Ks. To follow are a list of questions and other requirements. You are to use your Form 10-Ks for your companies to answer the questions.
Industry and Company Overview
Write a 200 – 400 word paragraph including general facts about the industry in which your two companies operate. Also summarize each company (in your own words) from reading the Form 10-K. Each company description should be 200 – 300 words in length. Do not copy and paste information; put the information in your own words.
Complete the following for both companies
Calculate and interpret these ratios for two years (show your calculations):
Current ratio
Quick ratio
Average daily sales (Net sales / 365 days)
Days’ sales outstanding (Average net receivables / Average daily sales)
Gross profit percentage for each company
Inventory turnover ratio
Debt ratio
Times interest earned ratio
Trend Analysis and Common Sized Analysis
2. Perform a Trend Analysis for the most recent two years for each company.
3. Prepare a Common Sized Balance Sheet statement for the most recent year of both companies.
Overall analysis
4. This section is the overall analysis of your 2 companies. Which company do you believe is healthier? Why? Which company would you be more likely to invest in? Why? Be specific in your reasoning. In a concluding paragraph or two, make sure to answer the following and make your conclusions.
How easily can the companies meet their current obligations?
Which company is more liquid?
How easily can the company meet its long-term obligations?
How profitable are the companies?
Be sure to fully support your conclusion of which company is healthier. Be sure to include a variety of measures, not just one measure of financial health.
