Obtaining an Annual Report
To give you a "hands-on" look at an actual company's financial statements, we will complete the financial reporting project. The project will require you to work with a company's annual shareholder's report. As soon as possible, you need to obtain the most recent annual report from the list of companies provided. Pick a company that interests you,
How can you obtain an annual report?
1. Visit a company's website to obtain their most recent annual financial statements. Be sure that you are receiving the annual (versus quarterly) financial statements plus footnotes. There should be a balance sheet, income statement, statement of cash flows, and footnotes. Also print the 5 or 10 year summary of financial data table and the auditor's report (opinion) on the financial statements.
2. Visit the website of the Securities Exchange Commission. When you get to the website, double click on "Search for Company Filings" under the Filings & Forms (EDGAR) heading. At the next screen, double click on the bullet "Companies & Other Filers." At the next screen, enter in the company you've selected. Be careful to enter in its formal name - for example, to get IBM you need to enter International Business Machines. double click on "Quick Forms Lookup." On the next screen, enter "10-K" in the "Form Type" box and click enter. Scroll down the list of links at pick the most recent filed From 10-K (note - you'll like see a March 2003 date for the 2002 annual report because the date is the date the Form 10-K was filed). Click on the links to get to the financial statements, which are buried in the document (so scroll through it). Please note that the SEC only contains information about publicly-held companies. So, the company that you selected must be a public company. Keep trying with other names of other companies if one of your choices has no "hits."
Overview of Company
Company Name: Fiscal Year End: ________________
Company'sExternal Auditor: What does auditor's opinion say about the company's conformity with GAAP?
What is the company's business (be specific)?
What do you view as the company's main risks?
What are the main risks listed in section 1A of the company's most recent 10-K?
Financial Statement Highlights for Most Recent Fiscal Year End (watch for whether information is in thousands or millions):
Total Assets $ Total Liabilities $ Total Stockholder's Equity $
Net Sales $ Net Income $ Earnings Per Share $
BALANCE SHEET INFORMATION
Asset Information:
2013 2012
What is largest Current Asset account for 2013?
Accounts Receivable:
Net Accounts Receivable Balance $ $
Calculate A/R Turnover for 2013 and 2012 (show work) (assume all sales = credit sales)
What is the company's Days in Receivables?
If your company sells on a 2/10, n30 basis, how good of a job is your company doing to collect the receivables?
Inventory 2013 2012
What is Inventory as a percent of Total Assets? % %
What inventory method does the Company use?
Calculate Inventory Turnover for 2013 and 2012 (show calculation):
What is the company's Days in Inventory?
If your company's competitors have a turnover of 20, how well is management doing in managing its inventory relative to the industry?
Property, Plant, and Equipment 2013 2012
Net Property, Plant and Equipment as a
Percent of Total Assets: % %
Gross Property Plant and Equipment $ $
Accumulated Depreciation $ $
Net Book Value $ $
What depreciation method is used to calculate Depreciation Expense?
Other Assets
What Intangible Assets, if any, are recorded? $
Does the company have any intangible assets that are not recorded, if so list them:
Liability Information 2013 2012
Current Liabilities: $ $
What is the current portion of Long Term Debt (if any)? $ $
What types of Long Term Debt does the company have? (Hint: See Long Term Debt Footnote)
Using the most recent annual report list for each of the next five years the amount of debt maturing, by year:
Stockholder's Equity Information
What type(s) of stock does the company issue?
What is par value of the company's Common Stock?
What is the market value of the company's Common Stock at year-end?
2013 2012
How many shares of common stock are authorized to be sold? shares shares
How many shares of common stock are issued? shares shares
How many shares of common stock are outstanding? shares shares
How many shares of common stock are in the treasury? shares shares
What earnings have been retained in the business as of yearend? $ $
What $ amount of cash dividends were paid during the year?
$ $
Cash dividends paid during current year as a percent of Net Income: % %
INCOME STATEMENT INFORMATION
2013 2012 2011
Does your company have any Cost of Goods Sold? If yes, what is
Gross Profit (Gross margin) for 2013 and 2012? $ $ $
What is the Gross Profit %? (Gross Profit / Sales) % %
If your company does not have any Cost of Goods Sold, why is that true?
What is the largest expense excluding Cost of Goods Sold? $ $ $
What is the company's effective tax rate?
(i.e., Tax Expense Divided by Income Before Taxes)? % % %
Why is the company's effective tax rate different from the U.S, Statutory Corporate rate of 35%?
STATEMENT OF CASH FLOWS INFORMATION
2013 2012 2011
What was the Net change in Cash for the year?
(if decreasing, put parenthesis around $ amount) $ $ $
Which of these three activities provided the largest Cash Inflow during 2013 (Operations, Investing, or Financing)?
Which of these three activities provided the largest Cash Outflow during 2013 (Operations, Investing, or Financing)?
What amount of stock-based compensation did the company record? $ $ $
Did the company repurchase any of its own stock during the period? $ $ $
(if so, how much?)
What was the average price paid per share? $ $ $
Calculate the company's free cash flow for each year listed. $ $ $
RATIO ANALYSIS (Show Work)
Growth Indicators
Average % Change In Account Balance 2013-2012 2012-2011 2011-2010
Calculated as (This Year's Account Balance - Last Year's Account Balance)
Last Year's Account Balance
Total Assets % % %
Net Sales % % %
Net Income % % %
what are your observations about these growth trends?
LIQUIDITY 2013 2012 2011
Current Ratio
Quick Ratio
What do you conclude about changes in liquidity from 2011 to 2013?
FINANCING
For each of the three years what portion of Total Assets is financed by Creditors?
(Hint: First, calculate Total Liabilities by subtracting Total Stockholder's Equity from Total Assets. Then divide Total Liabilities by Total Assets)
% % %
For each of the three years what portion of Total Assets is financed by Investors
(Hint: What is Total Stockholder's Equity divided by Total Assets)
% % %
RETURN ON INVESTMENT 2013 2012 2011
Return on Common Equity % % %
Return on Assets % % %
PROFITABILITY 2013 2012 2011
Net Income as a % of Sales % % %
Earnings Per Share - Basic
Diluted
What are your conclusions about profitability?
OPERATING CAPABILITY 2013 2012 2011
Total Asset Turnover
Bottom Line:
Assume that the company that you currently work for has an investment committee. Write a 1-page memo addressed to your company's investment committee on whether the company that you just analyzed for the FSA project should or should not be added to the investment committee's "BUY" list. Your answer should incorporate the information in this report, but may include non-financial information.