ACC 215
Spring of 2025
Financial Report
Step 1: If you have not yet selected your companies, please do so. You may pick any two
companies that meet the three following criteria (1) have same SIC code, (2) have
financial information on sec.gov, and (3) were not selected by another person. Send your
selection to me so I can make sure no one else is doing the same companies. Do not
begin until you have received a 10/10 on your company selection or have my blessing via
email.
Step 2: Locate and download (optional) your companies’ form 10-K. They are available
at: https://www.sec.gov/edgar/search/. You will need the income statements and balance
sheets for each of your companies for the most recent years available.
Step 3: Make an Excel spreadsheet like the one posted to Blackboard. You will need to
enter the information for two years for each of the companies. Use a tab for each
company. You cannot modify the SEC website information. Make sure your finished
excel matches the SEC website line for line.
Step 4: Complete the following financial analysis tools with each clearly labeled as
noted below in your Excel document:
1. Perform a horizontal analysis of each company for the most recent year. You
need dollar difference for two years and precent difference. You should see how
to do this on the excel.
2. Obtain earnings per share (EPS) - EPS is the amount of net income earned per
share of the company’s common stock. You will not have to calculate EPS figures
because they are provided at the end of the company’s income statement. Use the
figures identified as “Basic EPS” for all operations.
3. Current ratio – Calculate the current ratio for each company for both years. The
current ratio measures a company’s liquidity. It is a proportion of current assets to
current liabilities. Your book offers information about the current ratio on page 109
as well as on page 500. As is shown on page 109, be sure to provide the results
of your calculations to two places after the decimal point. This is not a percentage.
4. Calculate the debt ratio for each company for each year. The debt ratio reflects a
company’s ability to meet its long-term obligations. Details about this ratio are
provided on Page 63. NOTE: The example shows a result of .60 for the current
year. That figure is really a percentage and should be reported with two places
after the decimal point (69.51%). Be sure to report your debt ratio results in this
format.
5. Calculate return on assets (ROA) for each company for the most recent year. ROA
is a measure of how well a company uses its assets to produce profit. This ratio
is discussed on Page 19 of your text. Again, be sure to report your results to two
places after the decimal point. The result of the calculation shown on Page 19 is
18.99%.
Step 5: Prepare your financial report in Word.
a) First, introduce your companies and their industry or sector. Explain why you chose
the companies that you did.
b) In the body of your paper, one by one, discuss each financial analysis tool, what it
means, and describe how each of your companies performed regarding that
measure. Make sure you take the time to really define the measure and what it
means. The most common pitfall happens here because students do not take time
to really think about the measure and why its significant. I’m looking for in-depth
quality analysis here. The financial items may be discussed in the same order as
listed. Reference each companies’ actual ratio or analysis tool result. For the
horizontal analyses, discuss the items you believe to be significant.
c) Once all calculations and financial measures and the companies’ results have
been discussed, determine which company would be a better investment and why
using the results of your analysis. Your reasoning does not have to be limited to
the financial information discussed in your report. You may address other financial
or non-financial factors. However, make sure whatever decision is reached is
supported by some relevant thought process.
d) Format of your report: Provide a cover page for your report that includes your name
and the names of the companies you chose to analyze. When completed, your
cover page and report must be in one Word file.
e) References: I expect you to locate the information in each company’s 10K,
so “Googled” answers are not acceptable and will result in a zero grade. In
the introduction to your report, indicate the URL for each 10-K you utilized.
f) Submit your report as an Excel document and a Word document in Black Board.