Exercise
Overview:
Building on what you learned in the last module, you are now ready to pick a publicly traded company using the Yahoo! Finance website. The chosen company must have been in existence for at least five years. You will submit your choice for instructor approval, as this is the object of your review and analysis for the remainder of the term.
Take a look at your chosen company's financial statements by visiting the Yahoo! Finance website. Select your company by typing in the name in the search bar. Then, in the left-hand navigation bar, click on each of the three statement types under the heading "Financials" (i.e., Income Statement, Balance Sheet, and Cash Flow). Save each of the three financial statements as PDF files or copy/paste them into a Word document and turn them in with your assignment write-up.
Using the financial statements of your chosen company, you will classify and explain the purpose of key line items in financial statements. You will specifically address the following:
1) In the income statement, classify and explain the purposes of revenue, gross profit, operating margins, and net income.
2) In the balance sheet, classify and explain the purpose of major asset categories, i.e., current assets, long-term assets, as well as liabilities and equity items.
3) In the cash flow statement, classify and explain the purpose of operating activities, investing activities and financing activities.
Type your explanations and classifications into a Word document. You do not need to write the information in paragraph format; instead, list them as bullet points.
Specifically the following critical elements must be addressed:
I. Select a publicly traded company that has been in existence for at least five years.
II. Download and submit the financial statementsfor your chosen company, including income statement, balance sheet, and cash flow.
III. Classify and explain the purpose of key line items in the income statement, including revenue, gross profit, operating margins, and net income.
IV. Classify and explain the purpose of major asset categories in the balance sheet, including current assets, long-term assets, as well as liabilities and equity items.
V. Classify and explain the purpose of key line items in the cash flow statement, including operating activities, investing activities and financing activities.
Guidelines for Submission: Paper must be submitted as a one-to two-page Microsoft Word document. No need to write in paragraph form; instead, list your classifications and explanations as bullet points.
Project Milestone:-
Overview: The final project for this course is the creation of a financial statement analysis. A business's financial statements offer important insights into its performance and financial health that help guide internal managers' and external investors' resource allocations. For a financial analyst, being able to accurately read and interpret these statements is a critical tool in making sound recommendations to clients or company executives. Analysts also need to understand how the limitations of these statements and the legal and ethical obligations that underpin them impact business decisions.
Prompt: In this milestone, you will submit your chosen company's financial statements for a three-year period and a portion of the analysis step (Part II), Section A: Financial Statements' Role. First, submit the three financial statements, including 1) income statement, 2) balance sheet, and 3) cash flow statement for a three-year period for your chosen company (one that has been in existence for at least five years).Lastly, you will define the purpose of the three financial statements and explain why it is important that these statements be completed accurately and ethically.
Specifically, the following critical elementsmust be addressed:
I. Financial Statements. Locate and submit the following financial statements for your chosen company for the last three years:
a) Income Statement
b) Balance Sheet
c) Statement of Cash Flow
II. Analysis.
a) Describe the financial statements' roles in evaluating company performance. Briefly and in general terms:
1. Assess the strengths and limitationsof financial statement analysis in evaluating a company's performance. Be sure to explain how those strengths and limitations affect your analysis. In other words, what can the company's a financial statement tell you about its performance and limitations, and how does that information affect interpretation of results?
2. Explain why it is important that these statements be completed accurately and ethicallyand what the ramifications are if they are not.
Guidelines for Submission:Your paper must be submitted as a 2-3 page Microsoft Word document with double spacing, 12-point Times New Roman font, one-inch margins, and at least two sources cited in APA format. You should submit your company's financial statements as PDF documents.