ACG 2004: PRINCIPLES OF ACCOUNTING II
PROJECT RESEARCH PAPER: FINANCIAL STATEMENT ANALYSIS
LEARNING OBJECTIVE
The purpose of the project is to apply the lessons of your accounting course to a real
company. You will discover how the issues, topics, practices and procedures described
in your textbook actually affect a company’s financial statements. You will conduct
library and Internet research to familiarize yourself with your company and the industry
in which your firm competes and be able to analyze and evaluate your individual firm’s
financial stability and trends.
The company should be publicly traded, i.e., its stock is traded on a stock exchange
such as the New York Stock Exchange (NYSE). It is usually best to avoid financial
institutions, e.g., banks or insurance companies, as well as public utilities, because
these companies normally have specialized accounting practices.
Instructions for completing the Assignment
1. Choose a publicly traded merchandising/retail company (for example, Apple,
Lowes, Microsoft, Nike, Pepsi, Coca Cola, Proctor & Gamble, etc.)
2. Obtain the latest annual report for your company. Annual reports are usually
extensive. Do not print the entire report. Search for the financial statements
(Income Statement, Balance Sheet, and Statement of Cash Flows) and only
print those pages (they are usually 3 to 4 pages). Save the annual report on a
media storage device for future reference. The annual report is usually
available on the company’s website under investor relations or similar title or
from the Securities and Exchange Commission website (www.sec.gov). (Note:
Publicly traded companies also have to file a 10-K annual report, which also
has the financial statements included in this report).
Please save and submit copies of the financial statements (Income Statement,
Balance Sheet, and Statement of Cash Flows) and include them as an
attachment or in the Appendix for your Project paper. (Do not submit the
entire annual report).
Outline of Project Paper
1. Introduction: Must be a clear and specific summary of everything that you are
going to discuss in the Project paper.
2. Basic Company Information and a brief History of the Company. (Present a
profile of your company including a brief history of the company, their products,
etc.) .
3. Financial Statement Analysis (CH 17)
Calculate the following measures for the most recent two (2) fiscal years, rounding to
one decimal place. Show your work and calculations by including the formulas for
each measure.
Solvency Measures
a. Working capital
b. Current ratio
c. Quick ratio
d. Account receivable turnover
e. Number of days sales in receivables
f. Inventory turnover
g. Number of days sales in inventory
h. Ratio of fixed assets to long-term liabilities
i. Ratio of liabilities to stockholders equity
j. Number of times interest charges earned
Profitability Measures
a. Ratio of net sales to assets
b. Rate earned on total assets
c. Rate earned on stockholders’ equity
d. Rate earned on common stockholders’ equity
e. Earnings per share on common stock
f. Price-earnings ratio
g. Dividends per share
h. Dividend yield
4. Analysis:
Analyze the impact that each calculation has for the company (what the results of
the solvency and profitability measures mean for the company).
5. Conclusion: What conclusions can be drawn from this analysis about the financial
health and status of your chosen company? Include industry trends as well as
economic, social, legal and political environment factors that impact your company.
6. References (APA STYLE)
7. Appendix (Include a copy of the company’s financial statements and any other
items that you consider important).
Due Dates and Grade Rubrics:
This Project can be done by groups or individually. A group cannot be larger
than 3 people. If it is done in a group, please provide the names of the students in
each group on the cover page of the Project paper. Each student in the group will
also have to submit the assignment in Blackboard so it can be graded.
Due by Week 8 – The completed Project is worth 200 points and is due as per the
Course Scheduled detailed in Assignments.
The Project will be graded based on the following categories
Quality of Information
Organization
Sources
Mechanics
Proper Use of APA Style and Formatting Guidelines
Total Grade for Project: 20% of final grade
APA STYLE IS REQUIRED AND ENFORCED
