Project Instructions:

1) To complete this assignment, you will need to use the annual reports of your two companies; i.e. the Primary and Secondary from the pairing of companies you selected.

2) Work in assigned study groups. The team will submit one project in addition you will turn in your own analysis for the summary. See the Grading section below.

3) The case study analysis is intended to be reflective of the learning from each Chapter. The team within the guidelines of these instructions construct a format for the project that will present the analysis and application of information in the most effective manner. The instructions provided, include a series of templates Annual Report Case Study Analysis Template, this will assist in guiding the process. In addition, provided is an example of how you may approach the case study, do not dwell on the format, focus on the content and analysis.

3.a) Use the Annual Report Project Study Template to help you formulate narrative responses to be included in your analysis for the journal, company analysis, ratio analysis, and summary sections. As you complete each chapter, more and more of the templates will apply. Therefore, you need to be selective of which templates will help define the narrative for each chapter. The ultimate goal, is to address the content of the Annual Report Project Study Template before attempting to compose the individual SUMMARY.

3.b) Please fill out the attached cover, put it on the top of Annual Report Project Study with Peer Evaluation and Summary Report, convert into one PDF file, and finally submit it on Blackboard before the due date.

4) You are expected to write narratives about each section. It is not acceptable to copy text directly from the annual reports in to the Annual Report Case Study Template. You are expected to write the In addition, you must provide citations. Excellent resources for citations:

http://libguides.roosevelt.edu/c.php?g=258597&p=1726757 or available through the reference desk at the Roosevelt University Library The MLA Handbook for Writers of Research Papers. Plagiarism will not be tolerated. Do your own work as a team and as an individual. The purpose of the project is to demonstrate what you have learned, not to mimic Wall Street Financial Analysts. As an undergraduate/graduate student, you are expected to know how to credit sources, how to quote and paraphrase, and how to avoid plagiarizing the work of others. If you are unsure, ask your instructor or go to Roosevelt University Writing Center for assistance before you submit your work for credit.

5) Grading: You are graded based on the Grading Rubric provided, plus the Student Peer Evaluation for team participation.

a) Total of 250 points for the project:

i) Company Analysis: (50 points, team effort)

ii) Final Project Journal: (100 points, team effort)

 

1. Market Analysis

 

2. Ratio Analysis

iii) Final Project Individual Summary: 50 points (individual effort)

 

b) Team/Individual Peer Review (50 points, team review of individual effort)

 

1. See the Peer Evaluation Rubric for the breakdown of the scoring by each team member.

2. Total team points per individual will be scored by prorating the weighted score for each student from the team.

6) Locating Information in the Annual Report:

a.    See “How To find 10k and Industry Ratios video; Corporate Annual Reports” found on YouTube: https://www.youtube.com/watch?v=3owcO0vu7rQ and https://www.youtube.com/watch?v=eOGqvzsVW2

b.    Annual reports can be located by going to: https://www.google.com/finance?tab=we, see referenced video above.

c.    Once you are at the Google finance site, input the trading name of the corporation or the trading symbol.

i)    The company annual report should be from the most current year-end report. You will have to deal with some terminology that you are not familiar with able be   forced to make decisions about what is and what is not relevant. Use your text book and the Weiner Study Guide.

d.    In this case analysis, the term “current” year refers to the most recent year for which the annual report was prepared. (note: the annual reports must be from the same fiscal years)

e.    Note that terminology and formats used in “real world” annual reports probably will deviate somewhat from the textbook. This does not mean that our textbook is wrong, only that there is a wide variety of acceptable terminology and formats (within limits) that are used in practice.

f.    Note; that financial statements are “consolidated,” which means that accounts are often shown combined together, so you will not see a separate line item for each and every account. Combining accounts or condensing the information enhances understandability by removing excessive details concerning items that are not material enough to be shown separately. Sometimes, further detail concerning an item in the financial statements can be found in the notes that follow the financial statements.

g.    In a few instances, an item may not be disclosed. In that case, simply indicate in the appropriate blank that the item is not disclosed. Be careful here though to make sure that you are not overlooking something! Information may be disclosed in the financial statements, significant accounting policies note, other notes, or in other parts of the annual report.

7)    When you have questions
a.    Discuss the question with your other team members and, if you cannot reach a consensus, then ask your professor for help!! I am always available as a resource.

 

8)    Final Project DESCRIPTION AND OBJECTIVES

a.    An annual report communicates a wide variety of information about a corporation, both financial and nonfinancial, to those who use financial statements. In this case, you will analyze the actual annual report of a “real world” company.

b.    Specifically, the final project analysis asks you to:
i.    answer general “theory” questions regarding annual report items
ii.    locate and report information in your company’s annual report
iii.    perform calculations and analyses on your company’s financial statement data
iv.    evaluate the results from your calculations and analyses and form conclusions regarding your company compared, to prior reporting periods (trend analysis), the competitor and the industry.
c.    This project analysis has many important learning objectives and purposes, including:

i.    to provide a comprehensive review of important concepts covered in this course (which is an excellent starting point in reviewing for each of the chapter assessments), as well as integrating the knowledge you have gained during the semester so that you can see the “big picture,”

ii.    to provide “hands on” experience applying your knowledge using an actual corporate annual report

iii.    to improve your ability to locate, obtain, and organize information contained in an annual report

iv.    to expose you to alternative formats for financial statements and disclosures as well as terminology that may not be “just like” the textbook

v.    to practice your communication skills (i.e., effective reading, listening, writing, speaking)

vi.    to improve/reinforce your interpersonal skills by providing experience in working with other students as a cooperative learning team

vii.    to provide a foundation in understanding and using corporate annual reports that will be useful in your future college courses and professional career, as well as from a potential investor standpoint.

 

COMPANY ANALYSIS (50 points):

1)    Name of the company and competitor to be studied this semester:

a)    Symbol for your companies on the stock market

b)    Type of business (retailing, computer hardware/software, health care, etc.)

c)    Why did you select these companies?

2)    Select one of the companies as your “primary” and the other as the “competitor”. Provide the following information for your primary company:

a)    Give a brief history of the primary company and secondary company

i)    What is your company’s business i.e. what does your company do to earn revenues. Specific Industry and Sector (this will be found on the Final Project Corporate Listing, with the paired corporations.

ii)    Is there a management discussion and analysis section in the annual report?(Typically, and for most of the companies on the list this MD & A will be available in the annual report) If so, summarize valid information it contains.

iii)    The top officers of a corporation usually address the stockholders about the performance and prospects for the company in a letter at the beginning of the annual report. For your companies, list the name(s) and title(s) of the person who wrote the letter.

(1)    What is the name of the President/CEO, and other officers of the corporation?

(2)    this is significant, specifically because of past experience, and how this is impacting strategy of the corporation.
(3)    Summarize what management says in the letter regarding the current year’s performance for your company. Provide cited examples.

(4)    Summarize what management says in the letter regarding the future goals, prospects and strategy for your company. Provide several cited example.

3)    What is stated about the composition of the Board of Directors. Are any names provided? If so, provide names and one line biography of each board member ( this should be a citation from the annual report or corporate website.)Understand the impact of the board, with regard to risk management, strategic direction, audit, and corporate governance. Provide specific reference if available, as an example roles in risk management, audit compliance, corporate ethical standards of conduct, etc.

4)    Does the corporation have an audit committee? Does it have an internal audit department?

a)    Qualified or unqualified report?

b)    Can you find any information dealing with internal control?

c)    Who are the external auditors? Are they the same auditors for your competitor company? Is there any specific task they are providing beyond audit compliance?

Example of content regarding Audit report:

REPORTS OF INDEPENDENT PUBLIC ACCOUNTANTS (AUDITOR’S REPORTS)

Independent CPAs (auditors) prepare two reports based on their audits; one on the company’s financial statements and the other on the company’s internal control system. The auditor’s reports add credibility to the annual report. For your company, what is the name of the independent auditor and to whom are the reports addressed?

The auditor’s report on the financial statements identifies responsibilities of management and auditors with respect to the financial statements. Identify

(a)    who is responsible for the financial statements and
(b)    what is the auditor’s responsibility with respect to the financial statements?

The auditor’s report on the financial statements also discusses the “audit.”

(a)    What do generally accepted auditing standards require in planning and performing the audit of the financial statements?

(b)    What activities are included in performing the audit of the financial statements?

The auditor’s report on the financial statements also contains an opinion section. (a)What is the auditors’ opinion regarding your company’s financial statements?

 

Final Project JOURNAL( 100 points)

1)    You must start a journal the following information:

b)    Trading symbols of the companies, exchange for each company; i.e. NYSE, NASDAQ, etc (this is provided on the corporate listing provided on the website)

c)    You have $50,000 to start your investment. You must determine the investment and number of share you will purchase from each or only one company (e.g. if the stock price is $2 per share, your number of shares will be 25,000)

d)    Document the starting stock price for each company, and keep a weekly log of the stock price and the change in your initial $50,000-dollar investment; i.e. what the total value of your investment is at the end of each week

2)    It is very important that you document any significant events or press release that is impacting the stock price.

a)    In addition, note any changes submitted to the SEC, i.e. 8k releases, or 10Q or 10k

b)    You need to demonstrate that you are achieving the SLO (student learning objectives, as outline in the course syllabus)

3)    The journal provides the opportunity for you to demonstrate your success in achieving the Student Learning Outcomes outlined in the course syllabus.

a)    The journal and needs to have detail:
2)    Use the coverage from the weekly lectures to perform the ratio analysis, and financial analysis

3)    As the semester progresses you will effectively complete all of the required ratios and interpretation required for the final summary analysis

4)    You need to use the homework from each chapter, case study, class discussion and assessment as a basis for demonstrating in the journal your ability to apply what you have learned with the analysis of your primary and secondary company

b)    Journal entries become the content for your SUMMARY analysis. With a well-constructed journal your final summary report will be a very simple task at the end of the semester.

c)    The initial entry in your journal and will also be the basis for the company analysis portion of the report at the end of the project. (Note this information is already provided from the corporation listing in the course syllabus)

1)    Weekly entries detailing the stock performance changes
(a)    price per share and total value of the investments

(b)    If you change the investment amounts, you must document why you may the change and provide backup from the financial reporting or press releases from the respective company.

(i)    if there are specific ratios results that cause the change in your investments, you must provide the WHY interpretation, and the details of how you calculated the ratio(s)

(ii)    Example of a journal entry for Chapter 1. See the following pages for an excerpt from a student submission:

MARKET DATA ANALYSIS:

4)    Prepare a form similar to the one below for the current and prior year of your primary company, current year for your competitor.

d)    Some companies will have different names for these accounts; others will not have any balances in the accounts.

e)    You may rename the accounts, if desired. Put N/A if the account name is not applicable for your company. Use Word or Excel.

f)    Where it states to use the Current Year numbers, you are to use the numbers from the annual report you have been working with since the beginning of the semester

iii)    You may have other accounts that are not listed below. Expand the table to include the “other” accounts

g)    Note, not all of the information may be available, this is OK. Some of the companies on the selection list are emerging technologies.

iii)    If the information is not available, try to understand why, and discuss in your final analysis.

iv)    This is a summary of the annual report, 10k. You need to extract the information from the financial statements; Income statement, Balance Sheet, Statement of Stockholder Equity.

(a)    You will also need to obtain the statement of cash flows

h)    Complete the following based on your stock portfolio:

iii)    Stock Market Data: (Note: this must be updated and part of your journal if you make any trades or changes during the course of the semester. In other words, if you change the initial investments you made at the beginning of the semester, you must complete the chart below and reflect in your journal.)

i)    Resources for Primary and Company Market data, industry ratios, and company news: https://www.google.com/finance?tab=we

 

	Primary	Primary	Primary	Competitor
	Company	Company	Company	Current
	Current Quarter	Current Year	Prior Year	Year
Monetary Units (thousands,
millions)
Cash & Cash Equivalents
Accounts Receivable
Inventory
Marketable Securities
Total Current Assets
Property, Plant, & Equip
Accumulated Depreciation
Total Assets
Total Current Liabilities
Long-term Liabilities
Total Liabilities
Contributed Capital
Retained Earnings
Total Stockholers’ Equity
Net Sales/Revenue
Cost of Sales
Gross Profit
Operating Expenses
Depreciation Expense
Net Income
Inc/Dec in Cash
Dividends Paid
Inventory Valuation Method
Depreciation Method(s)
				Company	Competitor
Stock Price @ purchase date
Stock Price @ sale date
Price Earnings Ratio @ purchase date
Price Earnings Ratio @ sale date
Earnings per Share @ sale date
Number of Shares Purchased
Gain/Loss per share
Total Gain/Loss
Annual Dividends Per Share
Dividend Payout Ratio

RATIO ANALYSIS:

5)    Ratios need to be included with each chapter journal/analysis. It is important to provide the calculations, analysis and interpretation. Use a form similar to the one below to summarize the results. The table will be very useful for seeing the interconnections, and trends as a easy to read summary. In addition, in the preparation of the individual SUMMARY write-up, very useful to have the table available to inform conclusions and comparisons.

d)    Note: Refer to the Textbook as reference for all of the ratios covered during the course. Remember the chapter is only a “summary” the detail for each ratio is found in each specific chapter covered during the course of the semester.

iii)    Note: Do not use the ratios from the various financial websites. The ratios on the financial websites are slightly different. You are expected to complete the ratios on your own.
e)    It is critical that you show your work and how you calculated the ratio. When calculating ratios that require averages (average inventory, average accounts receivable, etc.) use the average (i.e. (prior and current year)/2. Three year’s worth of information would be required to calculate the prior year average. This will require you to have access to the most current annual report and look at the multiyear information provided in the report.

f)    Note: you must show the work; the answer alone is insufficient when describing in the journal).

g)    Many of the ratios will not have the industry average, therefore enter what is available for the industry averages. This, of course, is not the “perfect” way because you will compare “old” numbers to current industry averages, but this is a learning exercise to show you understand the concepts and can interpret the ratio with regard to the company performance.

h)    Remember, it’s the process that counts! Show all of your work for the ratios, and discuss what each ratio indicates about the company performance. This is absolutely critical to the final project

For Details Check : Accounting Final Project Spring 2019(1) (2)