Accounting 350
Financial Statement Project
Fall 2006
Project may be done in groups of two or individually. If done in a group the project is worth 50 points , individual projects will receive 5 bonus points .
In order to familiarize yourself with financial statements of publicly-held companies, you or your group will select two similar companies of your choice to analyze. I would suggest finding a company whose financial statements are on the Internet (Company web-site, SEC website for 10-K or an on-line service such as Hoovers). After that find a company that is a close match as to industry and size.
The project has the following specific requirements:
1. Calculate the follow ratios for each of the companies for the three most recent years.
Accounts Receivable Turnover
Inventory Turnover
Length of Operating Cycle (using AR and Invt. Turnover)
Current Ratio
Debt to Equity
Return on Assets
Return on Equity
Gross Profit Margin, if possible
Net Profit Margin
Total Asset Turnover
Financial Leverage
Price to Earnings Ratio
Write a memo that compares the two companies on profitability, liquidity and solvency using the above ratios and any other statistics you would like to include.
2.
Obtain the financial statements (including footnotes) of both firms and compare the form and content of the reports as to form of financial statements, disclosure of accounting methods and disclosure of information in the footnotes.
Write a memo that discusses the similarities and differences you found.
The two memos and the copies of the reports of the companies are due on November 29 .