Financial Statement Analysis

Financial Statement Analysis in $29 OnlyFinancial Statement Analysis

Complete Project and submit analysis. It should be no more than 10 written pages (including exhibits, etc.).
You can use any company of interest, however, you must be able to address all of the questions below (most biotechnology and technology companies will not be appropriate). You will need the company’s annual report and/or other documents that it files with the SEC (i.e. 10K or 10Q). These documents can be obtained through the Internet. In addition, you can obtain this information from the library, the company itself, or from a full-service brokerage firm. Please submit a copy of the company’s financial statements (only, i.e. just the balance sheet, income statement, and statement of cash flows) along with your analysis.

In your project, address the following questions.

1. Analyze the firm’s financial statements and supplementary information.
2. Identify the strengths and weaknesses of the company.
3. Conduct a ratio analysis of the company over the past three years using the profitability, and liquidity (short-term and long-term) ratios discussed in Chapter 6.
4. What does this analysis indicate about the company’s profitability and liquidity (short-term and long-term)?

Balance Sheet
♦ which two current assets are the most significant? What percentage is each relative to total current assets? What percentage is each relative to total assets? Calculate these percentages for the last three years. Why are the percentages trending upward or downward?
♦ What percentage is the inventory account relative to total assets? Analyze the trend of the percentages over the last three years relative to current assets as well as to total assets. What inventory method does the company use?
♦ Conduct a horizontal and vertical analysis (use total assets as the denominator). Discuss any major trends in assets and liabilities?
♦ What other assets are significant to the company? What percentage is each relative to total assets? Are the relative proportions of these assets what you would expect for this company? Explain.
♦ Discuss the types of liabilities the company holds and note any significant changes in the company’s liability structure.
♦ Does the company have any short-term/long-term investments in stocks or bonds? What are they? How does the company account for these investments

Income Statement
♦ Conduct a horizontal and vertical analysis of the company’s income statement. Discuss any major trends in the company’s revenues, expenses, and net income.
♦ What has been the trend in the company’s earnings per share over the past three years?
♦ What method of depreciation does your company use for tax purposes and for financial reporting purposes. Why do companies use different depreciation methods for tax reporting and financial reporting purposes? What has been the trend in depreciation expense over the past 3 years?
♦ Have there been any unusual items over the past three years? If so, what are they and how have they affected net income and earnings per share?
♦ Has the company made any changes in accounting principles over the past three years? If so, what are they and how have they affected the company’s net income?
♦ What is comprehensive income and what has been the trend in the company’s comprehensive income over the past three years.

Statement of Cash Flows
♦ Conduct a horizontal analysis of the company’s statement of cash flows over the past 3 years. Discuss any major trends in cash flows from operating, investment, and financing activities. Has net cash increased or decreased each year? Why? Has cash flow from operating, investing, and financing activities increased or decreased? Why?
♦ Explain what information you gain from the statement of cash flows that cannot be found in other financial statements. In your company’s case, what do you learn from the statement of cash flows, that is different from what you learned from the Income

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