The world of business has changed radically over the last twenty years. Where once it was unique to operate globally, it is now much more commonplace. Many U.S. Companies are either moving overseas or moving operations overseas and numerous international companies are moving operations into the United States.
Choose an industry, which you will analyze. Get the annual reports of four companies. The companies should be picked as given:
Insurance Industry
1) One company should be a foreign company (Headquarters) that does not have operations in the United States.
AXA - French top insurance company
2) One company could be a foreign company (Headquarters) that maintains operations in the United States.
Wawanisa- Canadian insurance company, Service office locates in San Diego
3) One company should be a United States company (Headquarters) with operations in a foreign country.
State Farm- In Fortune 500, operates in Canada and Mexico
4) One company should be a United States company (Headquarters) with no foreign operations.
ALL STATE - U.S based only
Read and examine the reports in preparation for answer¬ing the subsequent questions. The paper should be a collaboration involving all group members.
1. Examine the operations of each company. How is the company doing in this present economic environment? Is the world economy affecting the company? How?
2. Compare the format of the financial statements. What are the basic similarities and differences? Why do these differences exist?
3. Compare the footnote summarizing the accounting policies followed by the company (typically the first footnote to the financial statements) in the most current annual re¬ports. Recognize any differences in the accounting princi¬ples employed by the companies. What effect do these differences have on their financial position, results of operations, and cash flows? Is one company more conservative or liberal than the other in selecting its accounting principles? Why do you think the differences exist? Also show any accounting principle change that occurred during the period covered by the financial statements. Was it a mandatory or elective change?
4. Compare the overall disclosure and information content of the financial statements. Critique the overall presentation and the detailed disclosures. Why are the reports different? Are the financial statements simple or difficult to read? What are the unanswered questions in each of the financial state¬ments?
5. Which accounting principles have the major impact on the financial statements of companies in this industry and which have the least impact? Why? Will any principles affect the financial statements of one company any more or less than the other? Why?
You are to prepare the report as if you are a team of analysts at an investment company interested in international investments in your chosen industry. As part of your report, provide a background on your chosen industry and the major players and markets around the world. The project is to be a single, coordinated effort. It should not be several reports, written by individuals, stapled together.