Your name: __________________________
Overview of the Annual Report Project The phone rings. Jill Jones, human resources manager from a company you recently sent a resume to, is on the line for you. She’d like you come for a job interview for a professional position at the home office. Resisting the impulse to jump, wag your tail, and slobber like a golden retriever, you agree in you smoothest professional voice on a day and time. Excitement abounds! You had just about given up on getting a job related to your degree and were looking into waiting tables at Chili’s. After all, Mom and Dad have been giving you those “Its time to get out on your own” looks, and you’ve overheard whispers about turning your room into a den. You realize that you can make a good impression with the interviewers, not by wearing the right silk, tweed, or pinstripes, but by getting to know this company – and its competition. Being a studious sort, you’ve been looking through your old class notes from A201 this very morning. And, being a sensible sort, you decide to take advantage of the things you learned in A201 to help you gather information and assess the company and its outlook. Broadly, the purpose of the annual report project (ARP) is to help you bring together the various threads of accounting knowledge you are expected to learn in this class. Specifically, the goals of the ARP are fourfold: 1. Develop knowledge for sources of information for public companies. 2. Develop an understanding of the information in a company's annual report. 3. Develop an ability to analyze a company's financial results. 4. Develop communication and oral presentation skills. 5. Develop teamwork skills (Peer evaluations will be completed at the end of the semester. Peer evaluations will affect your individual grade on the project). During the course of the semester you will receive the following handouts related to the ARP: 1. Overview of the ARP. 2. ARP - Phase 1, Part 1: Gathering Company Information. 3. ARP - Phase 1, Part 2: Analysis of Company Information 4. ARP - Phase 2: Written Report Guidelines. 5. ARP - Phase 3: Group Oral Presentation Guidelines. Recognize that this project is a significant portion of your total points. Additionally, unlike the time pressure and stress involved with an exam, this is an opportunity to show your instructor what you are learning without those exam factors influencing your performance. Good luck, work hard, and ask questions!
Don’t forget to make a copy of the completed questionnaire before the due date.
Your name: __________________________
Annual Report Project (ARP) – Phase 1, Part 1 Gathering Company Information Required: 1. From either the company’s Home page or the SEC’s Edgar Web site -- a copy of your company's most recent annual report or 10-K. (Expect this to be a document at least 50 pages long.) 2. From a Web source, such as Yahoo Finance (http://finance.yahoo.com/), gather the following information: a. industry competitors b. competitors’ key statistics c. your company’s key statistics d. analyst’s opinions e. headline news 3. Use Helmke Library's "Value Line" database. Once in the library’s databases and indexes system: look for The Value Line Investment Survey online-Standard Edition, Lookup Company (on left bar), enter Ticker symbol in required box, select PDF report, Print. You should get a one page report that has a graph in the top onefourth of the page. Point allocations. Points will be allocated for this portion of the project as follows: 1. 8 points for completeness of the above. 2. 15 points for completeness of the questionnaire. 3. 2 points for presentation, including turning in all the required items in a wellorganized and labeled folder.
Don’t forget to make a copy of the completed questionnaire before the due date.
Your name: __________________________
Annual Report Project (ARP) – Phase 1, Part 2
Complete the following questionnaire (15 points) for your assigned company to be turned-in on the due date per the syllabus for ARP Phase 1. Question 1. 2. What is the company name? What years are presented for the financial statements in the annual report? What are the primary products that your company sells? Where are the company headquarters located? What are the most recent accounting equation figures (A = L + E)? What are the sales and net income figures for the last five years? (Company's are required to include a ten-year summary in each annual report, so the most recent report should have the required information.) Year Sales Net Income Answer
3.
4.
5.
6.
7.
Who is the auditor and what type of opinion (qualified, unqualified, disclaimer, or adverse) did the auditor make on the financial statements? What exchange is the company listed with and what is its ticker symbol? What is the company's homepage URL? According to Yahoo Finance, who are your company’s competitors (list two to three)? Where does your company rank amongst its competitors 1. 2. 3.
8.
9. 10.
11.
Don’t forget to make a copy of the completed questionnaire before the due date.
Your name: __________________________
Ratio Analysis - Trend Required: 1. Compute the ratios below for your assigned company. The first pair of columns are intended to show how you calculated the ratio (i.e., $12/$6 and $15/$5) and the next pair for your final result (i.e., 2.0 and 3.0). 2. Interpret the direction of the trend between the prior and current year. Note: Do not use the ratios as calculated by Yahoo Finance or any other online service!
Ratio Computation current year Computation last year Ratio current year Ratio last year Trend
Debt-toequity Current ratio Return-onequity Return-onassets Accounts receivable turnover and days to collect Inventory turnover and days in inventory Gross margin percentage
Don’t forget to make a copy of the completed questionnaire before the due date.
Your name: __________________________
Ratio Analysis - Competitors Required: 1. Enter your company's and your competitors' ratios in the table below. For comparability find your company’s and your competitors’ ratios on the same online service. 2. Explain how your company compares in the current year to its competitors. Note: Do not use the use the ratios that you calculated for your company on the previous page!
Ratio
Your Company
Competitor #1 is ___________
Competitor #2 is __________
Comparison
Debt-toequity Current ratio Return-onequity Return-onassets Dividend yield Forward P/E Profit margin Operating margin
Don’t forget to make a copy of the completed questionnaire before the due date.
Your name: __________________________ Continuing the Investigation Information about a company extends beyond the four basic financial statements. Specifically, the footnotes to the financial statements can provide richer, more in-depth information and certain online services can provide information that is more current and analytical.
Question From the annual report: Answer
1. What inventory valuation method does the company use? 2. What depreciation method does the company use? Approximately how old are the assets (i.e., you need to calculate the age of the assets using the formula discussed in class)? 3. What do you find interesting in the management's' analysis of results?
4. What footnote disclosure do you find noteworthy?
5. Does the company have any contingent liabilities? If yes, briefly explain your company's exposure.
6. How many shares of company stock are held in treasury? On average, how much did the company pay for each share?
Don’t forget to make a copy of the completed questionnaire before the due date.
Your name: __________________________
Question 7. What item has the largest effect on explaining the difference between cash provided or used by operating activities and net income? 8. What is the greatest source of cash from financing activities? 9. What is the greatest use of cash from investing activities? From online sources: 10. What is the latest news available about your company?
Answer
11. What do the latest financial analysts' reports say about your company?
12. For each of the last 5 years what has been your company's high selling price?
13. For each of the last 5 years what has been your company's dividend payout?
Hint: For questions 12 and 13 use Helmke Library's "Value Line" database.
Don’t forget to make a copy of the completed questionnaire before the due date.