Company Research
Company Selection
1. What company did you choose (give your company's complete name)?
2. What internet sites were used to get your company's information?
3. What is the company's headquarter's address?
4. Why did you select this particular company?
5. Where is the company incorporated?
Company Profile
1. What is the nature of the company's business? Are they a manufacturer or merchandiser?
2. What is the company's industry?
3. What is the SIC - Standard Industrial Classification Code for your company? What is the NAICS Code?
4. What are the primary products/ brands of the company?
5. Who are the primary customers of the company?
6. Corporations experience many wide-ranging social, political, economic and technological issues. List and discuss risks and uncertainties that could materially affect the company's business.
7. Who are the Company Chairman and CEO?
8. How many board members does your company have?
9. Who is the company's independent auditor?
10. Does the company discuss any recent accounting pronouncements that they are in compliance with? Briefly list and describe them.
11. Does the company have any foreign operations? If so, what are they?
12. List and briefly discuss any legal proceedings.
Annual Report Overview
1. Review the Management Discussion and Analysis. Summarize the major points made in the analysis.
2. Locate the Management's Report on Internal Control. Answer the following questions:
a. Who is responsible for establishing and maintaining adequate internal control over financial reporting?
b. Does the company maintain a system of internal controls? Why?
c. Who has signed this report?
3. Locate the Report of Independent Registered Public Accounting Firm. Answer the following questions.
a. Who is responsible for preparation and integrity of the financial statements?
b. According to this report what is an audit?
c. According to the audit report, what is the auditor's responsibility?
d. Summarize the auditor's opinion.
e. What standards were used to conduct the audit?
4. Locate the Report of Independent Registered Public Accounting Firm. Answer the following questions.
a. Have the auditor's conducted an audit of management's assessment on internal controls?
b. What standards were the audit conducted in accordance with?
c. What is the auditor's opinion with regards management's assessment on the firm's internal controls?
d. Who has signed this report?
5. Does the company have a corporate mission? Summarize and discuss it.
6. Has your company undergone any reorganization in the past 3 years? If so, discuss.
7. Does your company have a corporate governance (code of ethics) section on its website? If so, briefly summarize its contents.
Balance Sheet
1. What years are you using for the balance sheet date?
2. Is this a fiscal year or a calendar year?
3. The accounting equation is Assets = Liabilities + Stockholder's Equity. Give the company's accounting equation at the end of the current and prior years.
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Assets
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Liabilities
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Equity
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Current Year:
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'=
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'+
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Prior Year:
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'=
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'+
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Two Years Ago:
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'=
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'+
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4. List the total amount of the following subtotals for the past three years.
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Current Year:
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Prior Year:
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Two Years Ago:
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Current Assets
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Current Liabilities
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5. Calculate the company's current ratio for the past three years. (Show your computation.)
Current Year: Prior Year: Two Years Ago:
a. Explain what these numbers mean. (Use complete sentences.)
b. Has the current ratio improved or worsened? Explain. (Use complete sentences.)
6. Calculate the company's quick or acid-test ratio for the past three years. (Show your computation.)
Current Year: Prior Year: Two Years Ago:
a. Explain what these numbers mean. (Use complete sentences.)
b. Has the quick ratio improved or worsened? Explain. (Use complete sentences.)
7. Calculate the company's working capital for the past three years. (Show your computation.)
Current Year: Prior Year: Two Years Ago:
a. Explain what these numbers mean. (Use complete sentences.)
b. Has the working capital improved or worsened? Explain. (Use complete sentences.)
8. Calculate the company's cash ratio for the past three years. (Show your computation.)
Current Year: Prior Year: Two Years Ago:
a. Explain what these numbers mean. (Use complete sentences.)
b. Has the cash ratio improved or worsened? Explain. (Use complete sentences.)
9. Calculate the company's sales to working capital ratio for the past three years. (Show your computation.)
Current Year: Prior Year: Two Years Ago:
a. Explain what these numbers mean. (Use complete sentences.)
b. Has this ratio improved or worsened? Explain. (Use complete sentences.)
10. Does the company have a deferred tax asset and or liability? If so are they current and/or noncurrent
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Deferred Tax
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Yes or No
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Current Amount
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Noncurrent Amount
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Asset
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Liability
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11. Using elements listed on your company's balance sheet, prepare a common size balance sheet using the following format. (Vertical Analysis Chapter 5)
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Account
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Current Year
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%
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Prior Year
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' %
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Two Years Ago
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%
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12. Using elements listed on your company's balance sheet calculate the increase or decrease in dollars and percent between the years using the following format. (Year to Year Change Analysis Chapter 5)
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Account
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Current Year
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Prior Year
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+/- $
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%
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Two Years Ago
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+/- $
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%
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13. Using elements listed on your company's balance sheet calculate the ratios and amounts using two years prior as the base year (100%) using the following format. Your answers should all be in percentages (Horizontal Analysis Chapter 5).
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Account
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Current Year/Base
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Prior Year/Base
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Two Years Ago / Base
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14. In thoughtful, well-organized paragraphs, comment on changes you see in the balance sheet over the two-year period.
Use a separate sheet of paper and label it "Balance Sheet Analysis." Answer in complete sentences. Use a separate paragraph to discuss each item. Label your paragraph according to the letters below. This analysis should be at least one full page in length.
Among the items to consider:
a. In which assets does the company have the most significant investment?
b. Is the company financed primarily with debt or equity?
c. Is the debt primarily short-term or long-term?
d. Comment on any significant changes in assets or liabilities.
e. Comment on any significant changes in the composition of current assets or current liabilities.
f. Evaluate the company's debt-paying ability.
Current Assets
1. List the types and dollar amounts of the current assets for the past three years using the following format. Include the totals.
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Account
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Current Year
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Prior Year
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Two Years Ago
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2. What is the gross and net amount of accounts receivable for the past three years?
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Accounts Receivable
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Current Year
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Prior Year
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Two Years Ago
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Gross Amount
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Net Amount
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3. What is the amount and percentage of bad debt allowance for the past three years?
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Bad Debt Allowance
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Current Year
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Prior Year
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Two Years Ago
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Amount
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Percentage
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4. What is the amount of inventory for the past three years?
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Inventory Type
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Current Year
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Prior Year
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Two Years Ago
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5. Calculate the following ratios:
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Ratio
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Current Year
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Prior Year
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Two Years Ago
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Days sales in inventory
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Inventory turnover
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Inventory turnover in Days
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Days sales in receivable
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Accounts receivable Turnover
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Accounts receivable Turnover in Days
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a. Explain what these ratio numbers mean. (Use complete sentences.)
b. Have the ratios improved or worsened? Explain. (Use complete sentences.)
6. What are the inventory methods and other inventory information provided in the notes to the financial statement? (Use complete sentences.)
7. Does the company have any short-term investments? List them and state how they are classified.
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Type of Investment
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Amount
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Long-Lived Assets
1. Use the following format to list all the types of property, plant and equipment listed on the company's balance sheet for the current year. (May need to use information from SEC 10-K).
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Type of asset
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Amount
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Accumulated Depreciation
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Depreciation Method
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Useful life
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2. Compute and comment on the age of the property, plant and equipment. Formula (Accumulated Depreciation / PPE, gross)
3. Use the following format to list the types of long-term investments if available for the current year and the dollar amounts?
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Type of Investment
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Amount
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4. Use the following format to list the types of intangible assets if available for the current year, including goodwill and the dollar amounts?
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Type of Intangibles
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Amount
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Accumulated Amortization
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5. Does the company have any research and development expenditures? If so, how much?
Liabilities
1. List the types and dollar amounts of the liabilities for the past three years using the following format. Include totals.
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Account
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Current Year
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Prior Year
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Two Years Ago
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2. What are the amounts of total current and total long-term liabilities for the past three years?
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Current Year
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Prior Year
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Two Years Ago
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Current Liabilities
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Long-term Liabilities
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3. Does the company have any Long-term Debt (Notes or Bonds payable)? If so, list the types and dollar amounts of the debt. Briefly comment on these.
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Notes / Bonds Payable
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Current Year
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Prior Year
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Two Years Ago
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4. List and comment on any significant lease commitments or contingent liabilities of the company? Use complete sentences.
5. Provide a schedule of future minimum rental payments under operating leases.
6. Does the company have any warranty liability?
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Current Year
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Prior Year
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Two Years Ago
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Warranty Liabilities
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Stockholders' Equity
1. List the types and dollar amounts of the stockholders' equity accounts for the past three years using the following format. Include totals.
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Account
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Current Year
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Prior Year
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Two Years Ago
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2. How many shares of Common stock are?
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Authorized
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Issued
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Outstanding
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Par Value
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Add'l Paid in Capital
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3. How many shares of Preferred stock are?
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Authorized
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Issued
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Outstanding
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Par Value
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Add'l Paid in Capital
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4. Does the company have any Treasury Stock?
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Number of Shares
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Dollar Amount
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5. Are there any other Comprehensive Income Items? (Please list item with dollar amount using the following format.)
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Comprehensive Income Item
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Current Year
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Prior Year
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Two Years Ago
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6. Is there any Non-controlling interest presented? If so, how much?
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Minority Interest
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Current Year
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Prior Year
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Two Years Ago
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7. Were any dividends paid? (Look on the Statement of Cash Flows)
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Type of Dividend
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Current Year
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Prior Year
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Two Years Ago
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Cash
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Stock
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