Examining Financial Statements

Examining Financial Statements.

Assignment #1–

75 Points 

Students will select a Fortune 500 company to examine (http://fortune.com/fortune500/). Prepare a Word document using information from their Annual Report. (Use the most recent year available.)

The Word document must cover ALL of the following:

Overview

• Describe the content and purpose of the three main financial statements. 

Balance Sheet

• What are the balances at year-end for assets, liabilities, and stockholder’s equity?
• Prepare a common-size Balance Sheet. Be sure to properly label and form this financial statement.
• Review the Notes to the financial statement:

• What Inventory Method does the company use?
• What other pertinent information does the company disclose about their inventory
• What does the company disclose regarding fixed assets and depreciation?

Income Statement

• What is revenue, gross profit, and net income for the year?
• Prepare a common-size Income Statement. Be sure to properly label and form this financial statement.
• Are there any special items on the Income Statement (e.g. Discontinued Operations, Extraordinary items)? If so, describe the event that caused the item and why is this event classified as a special item.
• Review the Notes to the financial statement:
• Describe the company’s policy on revenue recognition.

Statement of Cash Flows

• What are the cash flow totals for operating, investing, and financing activities?
• What are some of the main investing and financing activities that occurred? If there are negative cash flow totals, describe whether this cash outflow has a positive or negative impact on the company’s sustainability. Why?

Management’s Discussion and Analysis (MD&A)

• Highlight 3 interesting topics discussed in the MD&A section of the annual report. 
• How does the information presented impact the financial statements and relevant ratios?

Additional Instructions

• Make sure to choose a Fortune 500 company that has inventory
• Annual Reports (10-k) can be found:

• Company website – Usually at the bottom of the main page under a link titled ‘Investor Relations’, ‘Corporate’,  (or something similar).
• SEC website (https://www.sec.gov/). Click ‘Filings’ tab to search for the company (Make sure to use the 10-k report).
• The document should include the same headings listed above (Overview, etc.).
• The document should be APA formatted (including title page, APA formatted references, etc.)
• You can complete the common size financial statements in Excel then copy and paste into your main Word document.
• MUST: Include the direct link to the Annual Report
• You must upload your file to Blackboard under Week 3 Assignments.  Go to the Assignment, scroll down to “Attach Local File” and click Browse to select YOUR file, then hit SUBMIT.

Examining Financial Statements

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