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(solution) Analysis and Use of Financial Statements Project This assignment
Analysis and Use of Financial Statements Project
This assignment requires financial ratio analysis on a publiclytraded company of your choosing. Do not select a bank, insurance company, financial institution, or public utility. I would also strongly suggest avoiding an automobile company. The project is due on the date indicated in your course timeline. Each student will be required to examine the chosen company?s annual report and calculate the ratios listed below. Each student will calculate the ratios for the two most recent years from available annual reports.
Once you have performed an analysis of the financial statements, students will write up a report summarizing the findings. The report will include a brief introduction, synopsis of the company?s business and current business situation, a summary of the student?s interpretation of team?s analysis, and a conclusion. Written proof of how the ratios were calculated MUST be attached to the report. You must calculate the ratios yourself. Use the attached work page behind to show proof of your calculations of the ratios (show all numbers in the calculations ? not just the end result). The paper should be six (6) doublespaced, typed pages (not including the ratios and the ratio calculations). Roughly, the paper should have one page of introduction, four pages of analysis and interpretation, and one page of conclusion. The focus should be on the analysis and your interpretation.
The analysis of the financial ratios should include insights into the meanings behind the ratios. The ratios should tell a story about how the company is doing and its prospects for the future. You need to tell that story. Do not copy directly from the annual report. In order to make the ratios more meaningful, a benchmark company or industry average for each ratio should also be included. You must calculate the benchmark company?s ratios as well. I do not need these calculations attached. The conclusion should provide insight into the financial future of the company. An investment recommendation should also be made in the conclusion.
The paper will be worth 100 points, the presentation will be worth 40 points, and the two progress checks will be worth 10 points.
Required ratios:
Liquidity Ratios and Asset Utilization ratios:
 Current Ratio
 Quick Ratio
 Accounts receivable turnover
 Inventory turnover
 Average collection period
 Total assets turnover
 Fixed Asset turnover
Solvency & Leverage Ratios
 Times interest earned
 Debttoequity ratio
 Debt to total assets
 Fixed charge coverage
Profitability Ratios:
 Profit margin ratio
 Gross Margin ratio
 Return on total assets
 Return on common stockholders? equity
Places to find Annual Reports and financial information:
 Your chosen company?s website (look under investor relations)
 The Securities and Exchange Commission
 Go to: http://www.sec.gov/edgar.shtml
 Look under ?Search for company filings?
 Look under ?Companies & other filers?
 Type in your chosen company?s name
 On the lefthand side you will be looking for the Form 10K (that?s the annual report)
 Yahoo! Finance: http://finance.yahoo.com/
 Morningstar.com: http://www.morningstar.com/
 CNN Money: http://money.cnn.com/
Evidence of Ratio Calculations
Please show your calculations of the financial rations of your chosen company in the column labeled ?Your Company.? You can calculate the ratios by hand or attached a sheet that clearly demonstrates how you calculated the ratio (i.e. X/Y = Z). The ratios you provide for your competitor or industry average do not need to be calculated (you can find these on various finance websites ? though you will most likely have to calculate some yourself). Please attached this sheet to the back of your written project.
Ratio  Your Company  Competitor/Industry Avg. 
Current Ratio 


Quick Ratio 


A/R Turnover 


Inventory Turnover 


Average collection period 


Total Assets Turnover 


Fixed Asset turnover 


Timesinterest Earned Ratio 


DebttoEquity Ratio 


Fixed charge coverage 


Profit Margin Ratio 


Gross Margin Ratio 


ReturnonTotal Assets Ratio 


ReturnonCommon Stockholders? Equity Ratio 


Analysis and Use of Financial Statements Project
This assignment requires financial ratio analysis on a publiclytraded company of your choosing.
Do not select a bank, insurance company, financial institution, or public utility. I would also
strongly suggest avoiding an automobile company. The project is due on the date indicated in
your course timeline. Each student will be required to examine the chosen company?s annual
report and calculate the ratios listed below. Each student will calculate the ratios for the two
most recent years from available annual reports.
Once you have performed an analysis of the financial statements, students will write up a report
summarizing the findings. The report will include a brief introduction, synopsis of the
company?s business and current business situation, a summary of the student?s interpretation of
team?s analysis, and a conclusion. Written proof of how the ratios were calculated MUST be
attached to the report. You must calculate the ratios yourself. Use the attached work page
behind to show proof of your calculations of the ratios (show all numbers in the calculations ?
not just the end result). The paper should be six (6) doublespaced, typed pages (not including
the ratios and the ratio calculations). Roughly, the paper should have one page of introduction,
four pages of analysis and interpretation, and one page of conclusion. The focus should be on
the analysis and your interpretation.
The analysis of the financial ratios should include insights into the meanings behind the ratios.
The ratios should tell a story about how the company is doing and its prospects for the future.
You need to tell that story. Do not copy directly from the annual report. In order to make the
ratios more meaningful, a benchmark company or industry average for each ratio should also be
included. You must calculate the benchmark company?s ratios as well. I do not need these
calculations attached. The conclusion should provide insight into the financial future of the
company. An investment recommendation should also be made in the conclusion.
The paper will be worth 100 points, the presentation will be worth 40 points, and the two
progress checks will be worth 10 points. Required ratios:
Liquidity Ratios and Asset Utilization ratios:
1. Current Ratio
2. Quick Ratio
3. Accounts receivable turnover
4. Inventory turnover
5. Average collection period
6. Total assets turnover
7. Fixed Asset turnover
Solvency & Leverage Ratios
1. Times interest earned
2. Debttoequity ratio 3. Debt to total assets
4. Fixed charge coverage
Profitability Ratios:
1. Profit margin ratio
2. Gross Margin ratio
3. Return on total assets
4. Return on common stockholders? equity
Places to find Annual Reports and financial information:
1. Your chosen company?s website (look under investor relations)
2. The Securities and Exchange Commission
a. Go to: http://www.sec.gov/edgar.shtml
b. Look under ?Search for company filings?
c. Look under ?Companies & other filers?
d. Type in your chosen company?s name
e. On the lefthand side you will be looking for the Form 10K (that?s the annual
report)
3. Yahoo! Finance: http://finance.yahoo.com/
4. Morningstar.com: http://www.morningstar.com/
5. CNN Money: http://money.cnn.com/ Evidence of Ratio Calculations
Please show your calculations of the financial rations of your chosen company in the column
labeled ?Your Company.? You can calculate the ratios by hand or attached a sheet that clearly
demonstrates how you calculated the ratio (i.e. X/Y = Z). The ratios you provide for your
competitor or industry average do not need to be calculated (you can find these on various
finance websites ? though you will most likely have to calculate some yourself). Please
attached this sheet to the back of your written project.
Ratio
Current Ratio Your Company Competitor/Industry Avg. Quick Ratio
A/R Turnover
Inventory Turnover
Average collection period
Total Assets Turnover
Fixed Asset turnover
Timesinterest Earned Ratio
DebttoEquity Ratio
Fixed charge coverage
Profit Margin Ratio
Gross Margin Ratio
ReturnonTotal Assets Ratio
ReturnonCommon Stockholders?
Equity Ratio
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