All submissions will be via CANVAS and should be in PDF format or WORD or EXCEL only.
Financial Statement Analysis
#1) 1st 5 POINTS ** NOTE: This was the part due previously this semester (back in February). That was the full set of financial statements.
Remember that you will AGAIN need to attach that exact set of the same 4 financial statements to this final term paper.
Here is the instruction for the other 95 POINTS of this Term Project:
Would you recommend an investment in this company? (YES or NO)
That recommendation will be on the Top of the COVER PAGE of your final report. The report that follows your cover page will be the argument supporting your recommendation. Remember that the majority of your study and conclusion should be based on accounting information.
Here are more of the specifics of what will be required of you for this paper:
#2) 10 POINTS Do some reading/research on your company. Check into current news about the company and introduce the company to the reader. Consider what external factors in the economy, in the world, in the region, in the industry of your company might an investor (and you) consider before making an investment in this company. (Include these comments in paragraph form ~ and assume the reader/potential investor is NOT familiar AT ALL with your company).
#3) 10 POINTS You are to do a full Horizontal Analysis (on both the Balance Sheet and on the Income Statement) for the years presented using the oldest year as your base year and rolling forward that base year to the next recent year. In other words, for the Balance Sheet which contains 2 years of data, you compare the oldest year to the most recent year. Easy. But for the Income Statement, there should be 3 years included in your Horizontal Analysis. I am looking for whole dollars here. NO PENNIES ! Use the exact same numerical format in your tables as that in the original financial statements. I am requiring the differences here be stated in dollar amounts (not percentages). For the income statement, the oldest year gets compared to the middle year. Then the middle year becomes the base year and that base year gets compared to the most recent year. (Thus, the “rolling base year” concept.)
#4) 10 POINTS You are to do a Vertical Analysis (on both the Balance Sheet and Income Statement) for EACH of the years presented. You must show your results as % amounts (not regular numbers) and round your % results to exactly 2 decimal places (ex: 2.07% ~ not 2% and not 2.0689538%).
For these two analyses (#3 and #4 above), you are to present the actual tables of your Vertical and Horizontal Analysis. If you only submit commentary on your results (and not the tables), you lose 20 points. The analysis tables MUST SHOW: titles, every single individual account as shown on the original financial statement, the original dollar balances alongside each of those named accounts under the respective yearly column, and the columns for your vertical/horizontal calculation results. Be sure to label all columns.
**** USE the samples discussed during our Chapter 9 lectures (for Harley Davidson) as a guideline.
NOTE: If your tables for #3 and #4 above spill over onto a second page, you must label the top of that subsequent page with headings of the statement AND headings on columns, just as would be in a published report. If these analyses are not user friendly, you will not get full credit.
#5) 10 POINTS Provide some comments (brief bullet points only ~ No Long Narratives!) on the results of these four tables studies that may be relevant to your overall recommendation. This is key. Crunching numbers is one thing, but you must demonstrate that you understand the value in looking at the end results of these horizontal and vertical analysis tables. I am looking for at least one comment from each of the four tables. Look for the red flags ~ good or bad ~ and comment on them. If your only comment is that something increased or decreased (without an explanation or interpretation), then you will not get credit.
#6) 10 POINTS Provide an overview of the Cash Flow statement by listing (brief bullet points only – no long narratives) specific comments on entries within that one statement. Note which observations are the good (if any) and any that are not so good indicators. Do not comment on anything you do not understand in this statement. Saying that an item “increased” or “decreased” without explanation/interpretation from you won’t get you credit. I expect at least 7-10 notes/observations from you on the Cash Flow statement. NOTE: You are not to comment AT ALL on ANY of the details within the Cash Flow from Operating Activities section. I’d like you to include a comment on the grand total Cash Flow from Operating Activities as one of your 7-10 comments but No Remarks At All on the details within that section will be awarded any credit.
#7) & #8) 10 POINTS EACH Do a ratio analysis on the financial data presented. The six ratios you are required to calculate follow below. For each ratio, you must show: a) the name of the ratio and that specific formula you are using AND b) the numbers you’ve plugged in for each calculation AND c) the numerical result. Again, crunching the numbers is fine, but once those calculations are done, then the most important part is interpreting the results. You should provide your interpretation of the results of each ratio calculation in each year (brief bullet point comments only). Do you see any trends that are a concern? Saying “increased” or “decreased” is not enough and you will get no credit whatsoever if those are you only comments. Help the uninformed reader understand what the results mean. (#7 here is graded based on calculations, #8 is your grade for comments on each of those ratio results)
Here are the 6 ratios you MUST calculate for at least two years (round results to exactly 2 decimal places):
* Working Capital (in dollars – this is not a “ratio,” but this calculation is important to your study).
* Current Ratio
* Debt to Assets ratio
* Debt to Equity ratio
* Return on Investment (a.k.a. Return on Assets) – IMPORTANT: here I want you to use “Total Assets” in place of Average Total Assets in the formula
* Net Margin
Remember that these are the same 6 ratios that we reviewed (will review) during our Chapter 9 lectures in regard to the McDonald’s company.
#9) 10 POINTS Final Summary. (see below)
#10) 10 POINTS Submission of final paper which will include all individual components. The paper is neat, user friendly, tables are all labeled on all pages, there are no typos, etc. (see below)
#11) 5 POINTS The full set of financial statements is again attached to the final term paper submitted in April 2021.
TOTAL = 100 Points (max of 5 points from February portion + max of 95 points here)
There are no extensions and no late submissions will be considered ~ at all. You must submit the full report via CANVAS (see the module for the week the final paper is due). If you have several files making up the final paper, then be sure to submit all files necessary to make up the complete paper (use Excel, Word, or PDF only). Remember that you must include copies of the full set of financial statements again with this final paper.
You can do as much or as little as you’d like on this term project, but the above parameters set the minimum. You may want to comment about competitors, company plans for the future, your own personal experiences with this company or its products, why you like/dislike this company, etc. That is your choice. Do not include any political commentary – at all. The more you do, the neater and clearer your report ~ the more credit you will be awarded (assuming you meet the minimum requirements, as stated). Remember the reader knows nothing about your company or about accounting. Submit a paper that you are truly proud of having completed.
An Excellent paper gets an Excellent grade.
An average paper gets an average grade (C).
An incomplete &/or incorrect paper gets whatever grade is deserved.
BOTTOM LINE: Please – show me that you have understood the “financial accounting” concepts and principles that we’ve studied. Show me that you are able to understand the value of that information and apply it to this type of real world decision. You will lose points for not meeting any of the minimum requirements as stated above, so be careful to include everything.
Thank you. I look forward to reading your final report !!
Here’s the 10 point grading grid (each of these 10 sections is worth 10 points)
1) Description of company/company news
2) Horizontal Analysis (Inc Stmt AND Bal Sheet)
3) Vertical Analysis (Inc Stmt AND Bal Sheet)
4) Comments on 2 & 3 above (brief bullet points)
5) Cash Flow Statements (7-10 solid comments – brief bullet points)
6) Ratio analysis (all 6 ratios for all years, with formulas shown and values you inserted to formulas – otherwise no credit)
7) Comments on EACH ratio. (brief bullet points)
8) Final Summary (Tie the report all together in a short narrative conclusion.)
9) Full set of financial statements (5 points initially & 5 points if again included with final paper submitted).
10) Paper is neat, comprehensive, and user friendly. Your cover page includes all the required following information: Your Name, ACCT204 Section #04 “company name” and the words either “BUY” or “DO NOT BUY”
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