Financial Statement Analysis Project

Financial Statement Analysis Project

A. Key Items
Points: 125 Points or 12.5% of your overall grade

Due Date: Thursday May 13th, 2021 @ 12pm (Noon)

Group/Individual:

You can select to work on the project alone or with a partner.

Deliverables: 3 files submitted via Canvas by the due date

PowerPoint file for your presentation. Google Slides will not be accepted.
Excel file to show your work and computations. Google Sheets will not be accepted.
Files must be saved following this naming convention: Lastname_first name_project.xlsx and Lastname_firstname_project.ppt (example: huang_aileen_project.xls
3. Zoom recordings

Record yourself in Zoom giving the presentation. Please record yourself with BOTH AUDIO AND VIDEO ON! I want to see your face and hear your voice while you are presenting. Copy and paste the Zoom recording link (or download the file) in the comments box when you submit your project. You need to do this by the due date. Any late submissions will have 10 points taken off per day. If you are working on the project with a partner, then you need to start a meeting in Zoom and invite your partner to join the meeting and record the meeting. Share the screen with your partner so both of you can present. Or one can click through the slides (meeting host) while the other person speaks. Whether you are presenting alone or with a partner, practice recording yourself a few times to get the hang of it.

Individual presentation should be around 10 to 15 minutes (max). Group presentation should be 20 to 25 minutes (max). Any longer than that, the audience will lose interest.

B. Companies
First, pick 2 public companies within the same industry from the U.S. Fortune 500 Company List. See link below. These two companies need to be competitors of each other.

https://fortune.com/fortune500/ (Links to an external site.)

Second, choose one out of the following 3 types of analysis:

Horizontal/comparative analysis (described on page 719 – page 722 in your textbook)
Vertical/common-size analysis (described on page 724 – page 728 in your textbook)
Ratio analysis (described on page 728 – page 736)
If you decide to work on the project with a partner, then you need to select TWO out of THE THREE types of analysis above.

After you have chosen your companies, go on each company’s website and find:

Investors Relations
Then click on SEC Filings
Then filter for Annual Reports/10K
Then download the PDF file and the XLS files
Read Item 7 and Item 8 from the 10K PDF file
Format and compute a)$ and % changes or b)common size % or C) ratios from the XLS file
Then copy and paste the excel work into PowerPoint for your presentation
Create charts/graphs that are applicable and complementary to your analysis
Don’t make your slides too busy. Focus on key points, conclusions and take-aways
The slides should be polished, professional and succinct

C. Analysis
Things to consider while you are analyzing the financial statements:

1. Balance Sheet Analysis
In your comparative balance sheet analysis, some of the things you want to look at are:

How are the assets financed? How much by debt and how much by equity?
What are the major % increases on the balance sheet and why?
If there is a major change in cash, take a look at the statement of cash flows to explain the movement.
Did debt increase? Did equity increase? What’s causing these major changes?

2. Income Statement Analysis
Why is net income up or down? Is it related to lower or higher cost of sales/revenues and/or higher or lower operating expenses?
What is the % of net income for both companies? Which company has a higher % of net income and why?

3. Ratio Analysis
In your ratio analysis, you must calculate and explain for both companies: current ratio, working capital, debt ratio, equity ratio, gross margin, and profit margin and PE ratio. If the company has account receivables and inventory, then you must also include AR turnover and Inventory turnover.

For all analysis, first perform INTRACOMPANY analysis, then INTERCOMPANY OR COMPETITOR analysis. Lastly, summarize your findings and form conclusions and recommendations.

Late assignment will be deducted 10 points per day up to 10 days. After 10 days, late assignment will NOT be accepted. If you go above and beyond, EXTRA CREDIT may be awarded. I look forward to your presentation and your project. It’s YOUR time to shine!

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