Discuss the short term credit risk of the company

Reference no: EM13896742

REQUIREMENT

1. Choose two companies in the same business and industry; one company must be a Saudi listed Company and the other one must be from the Fortune 500 companies ( US Listed company).

a. Go to www.tadawul.com.sa then click on equities, then click on listed companies web link. The list of companies with their official website is listed on the page.

b. Go to https://fortune.com/fortune500/2014/ The list of top 500 companies for 2014 is listed on this page.

2. Go to the company's website to get each company's latest annual report (2014.)

3. All of the financial and company information that you need will be in the company's Annual Report. Submit soft copy of the annual reports (in CD) together with your written report.

4. Answer all of the questions to the best of your ability, using all of the accounting skills that you have accumulated in Accounting One, Two, and Intermediate to answer the questions

5. You must submit your final report about your findings.

QUESTIONS

Using the annual report for each company answer the following:

Business:-

1. What products or services does the company sell? Be specific

2. What do you think the outlook is for these products or services?

3. Who is the company's external auditor? How many times the audit committee did meet? How many members are there on the committee? What is the percentage of attendance for the audit committee meeting?

4. Who is the chief operating officer (CEO) of the company? Who is the chair person for the board of directors? How many members on the board of directors? How many times the board did meet?

Income statement:-

1. Look at income statement presentation, which method does company follow: IASB or GAAP? How can you tell, be specific?

2. What is the company's (weighted) average number of shares-basic?

3. What are the company's basic earnings per share?

4. What are the company's total sales/revenues/net sales?

5. What is the company's total operating income/income from operations?

6. What is the company's interest expense (net)?

7. What is the company's pretax income (earnings)/income before taxes?

8. What is the company's income tax expense/provision for income taxes or zakat?

9. What is the company's net income/net earnings?

10. What is the company's gross profit/gross margin?

11. What is the company's gross profit percent (gross profit divided by sales)?

Balance sheet:-

1. Look at balance sheet presentation, which method does company follow: IASB or GAAP? How can you tell, be specific?

2. What are the company's total assets?

3. What are the company's total current assets?

4. Look at account receivable; calculate the percentage of changes in account receivable from 2013 to 2014? As an investor why would

you want to compare these changes?

5. Look at inventory: what inventory cost flow method does the company use? Where is this information recorded, be specific?

6. What are the company's total property, plant & equipment (net)?

7. What method of depreciation company use? Where is this information recorded, be specific?

8. Does the company have intangible asset? If so, identify them.

9. What are the company's total liabilities?

10. What are the company's total current liabilities?

11. What are the company's total non-current liabilities?

12. What is the company's total contributed capital (includes common stock,

preferred stock and additional paid in capital in excess of par)

Cash flow statement:-

1. What are the individual totals of the operating activities, investing activities & financing activities-found on the statement of cash flows?

2. How much cash did the company invest in property plant and equipment?

3. How does net income compare to its net cash provided by operating activities?

4. What items were the most responsible for the difference between net income and net cash provided by operating activities?

5. Did the company pay dividend? If so how much were they?

6. What percentage of net income was the cash dividend?

Overall:-

1. Are there any significance differences between annual report of a Saudi listed company and the fortune 500 company? If so identify the differences? Be specific (the differences can be in terms of additional information provided, clarity of information provided etc.)

2. Calculate liquidity ratios for both companies and discuss the short term credit risk of the company.

Reference no: EM13896742

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