2022 GSBA 510
Business Application #1 (Group Project #1)
Amgen 2020
Annual Report
Fundamentals of Accounting
Identifying and Interpreting Information in Published Financial Statements:
Business Application #1 provides experience identifying and using information in published financial reports. Your
first task will be to obtain Amgen’s 2020 Annual Report, 10-K. Upon obtaining the annual report (See the
Appendix for some suggestions to make life easier), provide brief answers to questions 1 – 20 below. Based upon
your review of Amgen’s 2020 financial statements and answers to questions 1 - 20, generate predictions and
rationales for Amgen’s 2021 Sales and 2021 Total Assets. Your group submission may not exceed 3 pages
including tables, answers, etc.
Part A. Locating Information in Publicly Available Financial Disclosures
CEO’s Letter to Shareholders (pgs. 1 - 11) Amgen 2020 Annual Report
(1) Briefly summarize and critique Amgen’s Strategy and financial expectations (See Part B below) as
articulated in the CEO’s Letter to Shareholders (maximum 3 paragraphs).
Income Statement (pg. F-4 & F-5 in Amgen 2020’s 10-K)
(2) What are total revenues for Amgen for 2018, 2019, & 2020?
(3) What was the growth rate for total revenues from 2018-2019 and 2019-2020?
(4) Describe any differences that you detect over the three-year period 2018-2020.
(5) What is R&D for Amgen for 2018, 2019, & 2020?
(6) What were the growth rates for R&D for 2018-2019 and 2019-2020 and what does this suggest?
(7) What was net income (Earnings) for Amgen for 2018, 2019, & 2020?
(8) What was the growth rate in net income for Amgen from 2018-2019 and 2019-2020?
(9) Compare and contrast the growth of total revenue with the growth in net income (earnings)?
Balance Sheets (pgs. F-6 - in Amgen 2020’s 10-K)
(10) What are total assets as of Dec. 31, 2019 & Dec. 31, 2020?
(11) How did total assets change from Dec. 31, 2019 to Dec. 31, 2020 and what does this suggest?
(12) What are the largest, second largest, and third largest assets on Amgen’s balance sheet as of Dec. 31, 2020?
(13) What are the largest, second largest, and third largest liability on Amgen’s balance sheet as of Dec 31,
2020?
Statement of Stockholders’ Equity (pg. F-7 – in Amgen’s 2020 10-K)
(14) How do the most important determinants of the change in retained earnings (denoted as “accumulated
deficit” in financials) support Amgen’s strategy in 2020?
Statement of Cashflows (pg. F-8 –in Amgen’s 2020 10-K)
(15) What was cashflow from operations for Amgen for 2018, 2019, & 2020?
2018(11,296)2019(9,150)2020(10,497)
(16) How does cashflow from operations compare to net income for 2018(74.3), 2019(85.7), & 2020(69.2)?
From 2018 to 2019 there was 11.4% increase in margin and 2019 to 2020 there was a 16.5% decrease.
What is the primary reason that these measures of operations (net income & cashflows from operations)
different for Amgen? The reason these measures of operations differ is due to the long-term tax liabilities
and other liabilities.
(17) What was net cash used by Investing Activities for Amgen for 2018(14,339), 2019(5,709), & 2020(5,401)? What is the primary investing activity for Amgen and what does this suggest about Amgen’s
future? The primary investing activity was in purchasing marketable securities. This suggest that they are
expecting better returns than their cash equivalents, that the future is looking optimistic.
(18) What was net cash used by Financing Activities for Amgen 2018, 2019, & 2020? Net cash used by
financing was for repurchasing of common stock.What is the primary financing activities for Amgen and
what does this suggest about Amgen’s future? By repurchasing stocks this allows for the company to
invest, in itself, and reduce the assets on the balance sheet. As a result, return on assets increase and return
on equity increases. This suggest that the company could be trying to increase stock value to the benefit of
shareholders and illustrating, through the numbers, that company is doing well and will continue in that
manner.
(19) How did Amgen cash balance at the end of the year change from 2018 to 2019 & 2019 to 2020?
It decreased 15% from 2018 to 2019 and 2019 to 2020 increased by 3.7%. In 2018 there was an increase in
cash while in 2019 there was a decrease. From 2019 to 2020 there was in an increase in cash. Most of the
contributing factor stemmed from the cash flows from financing activities.
Notes to Consolidated Financial Statements (at the end of Amgen’s 2020 10-K)
(20) Describe the contents and usefulness of Amgen’s 2020 Footnote # 3. (pg. F-17)
The footnote describes the results of the company’s operations in a consolidated format by product, geographic
areas, and revenue. It also describes the distribution of the product in the U.S and internation format. The usefulness
of this note is that it gives an overall marginal view of the revenue that company brings from a national and
international market. Illustrating its strong demand.
Part B. Forecasts
Provide a forecast and brief explanation of Amgen’s 2021 predicted sales and total assets based exclusively on your
answers to Part A and Amgen’s 2020 Annual Report. Be sure to include both Qualitative and Quantitative
information in your forecast rationale.
(Caution: DO NOT OBTAIN AMGEN 2021 ANNUAL REPORT, LISTEN TO ANALYST CALLS, OR ANY
OTHER MATERIAL BEYOND THE 2020 AMGEN ANNUAL REPORT. Your answer to Part B will in all
likelihood not match with the actual financial results. Imagine you are trying to predict 2021 upon receipt of the
2020 Amgen Annual Report, 10-K.
Appendix: How to find Annual Reports and 10-K materials
Step 1: Google Amgen, Inc. Investor relations
https://www.google.com/search?source=hp&ei=hlb1XJ6qLM_cgTsmZ_YAw&q=amgen+investor+relations
Step 2: In the drop-down menu under “Financial”, Select “Annual Reports”
http://investors.amgen.com/phoenix.zhtml?c=61656&p=irol-reportsAnnual
(Not every US publicly traded firm has a section described as Annual Reports. In some cases,
the firm may merely have SEC filings.)
Step 3: Click on “Chairman and CEO Letter and Amgen Inc. 2020 Annual Report”
You will have the electronic version of the Amgen 2020 Annual Report!
Step 4: Go back to Investor Relations, Financial, and Select “SEC Filings”
http://investors.amgen.com/phoenix.zhtml?c=61656&p=irol-sec
You will find a treasure of SEC filings including: (1)10-Ks (Annual filings with the SEC), (2) 10-Qs
(Quarterly filings), and (3) other interesting public information disclosures.
For this project, you will want to emphasize the 2020 10K (filed on Feb. 9 2021 – Auditing takes
a little time!). You can capture the 10_K filing in pdf or docx format. Importantly, you can also
download all of the statements, tables, and schedules with numbers in an excel format! You
will not have to read the original document and input the data for the exercise above. Every
table and schedule in the 10-K or 10Q is presented in the excel worksheet. There is a treasure
trove of information available for publicly traded firms.
The quarterly filings, 10-Qs have pdf, docx, and excel files available as well.
Finding data on US public companies is relatively easy!
For Geeks only:
You can also find XBRL data in the SEC filings. This is an even more interesting set of data. It
allows sophisticated analysts to construct their own financial reports from basic data. (Beyond
the scope of GSBA 510, but intriguing)
Videos for Interested Students to Help Understand Technical Issues in Amgen’s
Industry
a. Animation of CAR-T cell therapy;
https://ed.ted.com/lessons/how-to-biohack-your-cells-to-fight-cancer-gregfoot#digdeeper
b. Smart Cell Therapies for Solid Cancers Ready to Move Toward Clinical Trials
https://www.ucsf.edu/news/2021/04/420441/smart-cell-therapies-solid-cancers-readymove-toward-clinical-trials
c. The Basics of Biosimilars – FDA Video.
https://www.youtube.com/watch?v=1s7W1EKUekk
d. Heart Attack Basics - National Health Service Dr. Peter Schofield
(bottom of page).
https://www.nhs.uk/Video/Pages/heart-attack.aspx