Prepare vertical common-size financial statements

Assignment Help Financial Accounting
Reference no: EM134456

The specific purposes of this project are: 

1. Apply to actual companies the basic knowledge and analytical techniques learned from our course. 

2. Prepare vertical common-size financial statements, several profitability and horizontal common-size financial statements, and risk ratios. 

3. Detect the time trend of the firm's profitability and riskiness, and compare the evaluated results with competitors. 

4. Present/summarize the analyses and make investment recommendations. 

You will be analyzing the subsequent firms: 

a. Costco Wholesale Corp (ticker: COST). 

b. Wal-Mart Stores, Inc (ticker: WMT).

For these firms, download the most recent annual report to begin your work, including financial statements, footnotes to the financials, and the management discussions and analyses. Alternatively, you may use the 10-K report.  You can download the 10-K from the company's website or the SEC's website (i.e., EDGAR online

Tips:

1. Public companies usually publish annual reports at investor relation web pages.

2. You may search EDGAR by company name or by trading ticker symbol. An advantage of using EDGAR 10-K report is that you may quickly copy those tables into Excel. Use the filter (filing type) to show 10-K filings only.  Click the "document" button and the first htm file will be the 10-K report. 

The required tasks are detailed below:

(1) Prepare vertical common-size balance sheets and income statements for both companies.

Note: Compute for the most recent THREE years, i.e., 2010, 2011, and 2012.  

(2) Prepare horizontal common-size income statement and balance sheet (in percentage) for both companies. You should compute for the most recent THREE years. 

(3) Prepare ratio analyses (for the same THREE year time period) for both companies.  At least, you should include the following ratios in your computations: (1) current ratio, (2) acid-test ratio, (3) receivables turnover, (4) inventory turnover, (5) asset turnover, (6) profit margin on sales, (7) rate of return on assets, (8) rate of return on common stock equity, (9) earnings per share, (10) payout ratio, (11) debt to total assets ratio, (12) times interest earned, (13) cash debt coverage ratio, and (14) book value per share.   

(4) Comment on the analytical results of the two companies. Your comments should concentrate on the trends across the companies. In addition to contrasting the ratios between the companies, you should interpret the numbers and make suggestions as to why the ratio of one company might be higher/lower than the other.

(5) Write a conclusive summary on the firms you have studied. Based upon your conclusions, recommend the better performing firm for potential investment. Your conclusions should be based upon, and specifically reference, the analyses prepared in this report.  

(6) Record a short presentation (about10 minutes) in which you briefly introduce the two companies and their industries, highlight some of your major findings from the above analyses, and conclude with an investment suggestion. 

A. Report body requirements:

1. Cover page. List the title of the project, your names, and semester/year. 

2. Abstract or Executive Summary. This is a separate page. It should cover the purpose of the project, the major findings, and the conclusions/recommendations, in summary form. 

3. Table of Contents. 

4. Main body.  Use the following sequence for report content: 

 a. Introduction to the two companies and to the purpose of the report 

 b. Analytical section.  This should include all your numerical analyses. This is where you will discuss the results of, comments on, and conclusions about the vertical and horizontal common-size statements and the ratio analyses for both companies. 

  c. Comparisons of companies and all other analysis (observations and/or interpretations 

  d. Conclusions and recommendation for investment. 

Minimum length: 8 pages

Reference no: EM134456

Questions Cloud

Outline what you know about plasmonics : Outline what you know about Plasmonics? Outline what you know about Raman spectroscopy and surface enhanced Raman spectroscopy?
Evaluate various claims made by the union and counterclaims : Evaluate the various claims made by the union and counterclaims made by the company regarding the charges of unfair labor practices. Which of the arguments are most persuasive?
Implement the parser in two iterations : Implement the parser in a separate file. Implement the main parser function in a separate file main.c
Prepare the consolidated financial statements : Prepare the consolidated financial statements for 20X3 using the direct method. Using the deferral method, prepare a statement of revenues and expenses and a statement of changes in net assets for Wise Owls for 20X1.
Prepare vertical common-size financial statements : Prepare vertical common-size balance sheets and income statements for both companies.
Find the area between them bounded by the given value : The following pairs of functions, graph each one together in Desmos, show on your graph and find the area between them bounded by the given values of x.
Calculate mortgage rates and production lot size : Calculate mortgage rates, production lot size, forecast the demand for the products, track epidemics and their spread, help solve crimes, even help estimate tax revenues.
Main factors that influence the choice of a process design : How do you see the basic principles of project management aiding the operations manager/manageress in introducing change to the system/ process?
Information-intensive goods and classic information goods : What is the difference between "information-intensive goods" and "classic information goods"? How can a firm that find's itself on the losing side of network effects survive?

Reviews

Write a Review

Financial Accounting Questions & Answers

  Evaluate the interest rate on the company''s note payable

Evaluate the interest rate on the company's note payable? The 2013 rent payment was made at the starting of which month? How much did Eldorado lend its customer on Oct 31?

  Borrowing needs and preparation of statement of cash flows

Borrowing Needs and Preparation of Statement of Cash Flows

  Organize the journal entries through the maturity

Organize the appropriate journal entries through the maturity of each liability.

  Present arguments in favor of cost allocation

Present arguments in favor of cost allocation Does cost allocation provide relevant information? Would a current-value approach to computation of fixed assets be preferable? Why?

  Different to statutory income and exempt income

Describe how it is different to statutory income and exempt income and determining whether a fringe benefit

  Prepare the financing and investing activities sections

Create the operating activities section of the company's statement of cash flows, considering use of: Prepare the financing and investing activities sections of the statement of cash flows.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the npv of each choice

Propose when should Bell Mountain buy the new accounting system and Determine the NPV of each choice?

  Business emphasizes the providing of maintenance

Business emphasizes the providing of maintenance and service for customers

  What could be the expected operating income per week

What could be the expected Operating Income per week? When both machines are working how many of each unit should OSC produce?

  Calculate the operating income for the olive oil division

Calculate the operating income for the olive oil division using a transfer price of $4.60.

  Identify the greatest problems virms

Reporting results Identify the greatest problems Virms is likely to have doing the audit

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd