Format of submission
Plan on submitting a PDF or Google Slide of your analysis. You will take screen shots or embed the Common Sized F/S within your final submission. You will do “number crunching” on a separate file for your purposes (not mine)
Download the most recent 10 K to Excel.
Foreign companies will not have a 10 K but a 6 K instead, that’s how you will know if the company can be selected. (sorry no Spotify ~ they are a foreign issuer).
Here is a video on how to locate a company on the SEC and find their 10K. For this assignment, do not use a 10Q. The 10K is an annual report, the 10Q is quarterly. Once you find the most recent report, look for an interactive data option. Once you get to the financial statements, there will be an export to excel option.https://youtu.be/99igUz2dKNA
Create a Google Sheet (or excel file) focusing on the Income Statement and Balance Sheet. Review the Statement of Cash Flows.
You can use the 10K you downloaded, and sift through the massive amounts of information. It will be nice for you to have a file you can work with and modify for your calculations and to embed a “cleaned up” version of the financial info into your PDF.
You can delete data below “Net Income” or “Net Loss” on the income statement and likely anything that is below “Total Liabilities & Equity” on the Balance Sheet. Save the SEC Excel file for reference if you need or want to refer to the vast amount of information found in the notes (or you could always view again from the SEC website).
Create Common Sized F/S for the Income Statement and Balance Sheet.
The statements you exported from the SEC will have 2 – 3 years of data side by side. Add columns for both years presented to be in a % format.
“Clean up” the statements from the SEC into more user friendly versions. Typically you’ll want to reduce the amount of information into more concise and condensed formats (less is more)
Be sure to mention the statements are summarized from the detail provided from the 10K.
Calculate historical changes for both statements between the two years.
Comment on noticeable increases and decreases you find. Start with major categories (Sales/Revenue, Operating Expenses; Assets, Liabilities, Equity) then determine the driving reason for that particular change. Therefore start with the big picture, then get more details to help explain.
Calculate and discuss 4-5 ratios that seem most relevant to your company.
Share why you chose the ratios and if the ratios imply strength or a potential weakness for the company. You will need to calculate the same ratio for 2 years (to comment properly).
One ratio MUST include a “turnover” ratio (Asset, AR or Inventory). This will require you to locate a balance sheet number from a previous 10k.
Include graphics (extra credit)
Bar charts, line graphs, circle charts are just a few options. Horizontal trends often make excellent data to see visually. Three years would be needed for anything impactful to display.
Discuss 2 items you found interesting in the “notes” of the financial statements.
These items can be related to the calculations you ran, something that seemed interesting to you, something you can connect to either from 1B or 1A.
Conclusion
A final “wrap up” of your company including comments, recommendations, areas that should be “watched” as concerns or may require further research, successes that may be shared with the owners.
