Identify the company’s most important source of financing

You will evaluate your company using accounting concepts, ratios or analysis techniques (i.e., correct data, correct formulae, correct calculations, and correct interpretations) as follows: I. Introduction • Summary of the company of your choice that includes the following elements: - Name of CEO - Home office 3 - Ending date of latest fiscal year - Description of the principal products or services that the company provides - Main geographic area of activity - Name of the company’s independent auditors. What did the auditors say about the company financial statements? - The most recent price of the company’s stock and its dividend per share (provide the date for this information) II. Industry Situation and Company Plans • Describe the industry and its outlook • Summarise the company’s future plans (based on your research and on reading the annual report) III. Financial Statement Analysis • Statement of Financial Performance - Determine gross profit, income from operations, and net income for the last 3 or 5 years and comment on the increases or decreases in these amount - Adopt common-size statement analysis technique / Trend analysis technique (Include and present the time series common-size Statement of Financial Performance in a table) - Identify significant (or change in) accounting policies in preparation of the statement / relevant notes to the financial statement should be taken into consideration (i.e. revenue recognition…) - Identify trends and items that might be different from the industry norm • Statement of Financial Position - Show that the Assets = Liabilities + Stockholders’ Equity for the past 3 or 5 years - Adopt common-size statement analysis / Trend analysis technique (Include and present the time series common-size Statement of Financial Position in a table) 4 - Identify significant accounting policies in preparation of the statement / topics of the notes to the financial statement (i.e. property and equipment, merchandise inventories, receivables, goodwill and intangibles, cash…) - Identify trends and items that different from the industry norm • Statement of cash flows - Compare operating cash flows with the net income for the past years - Is the company expanding through investing activities? - Identify the company’s most important source of financing? - Overall, has cash increased or decreased over the past years? • Summarise, discuss and report the major points of interest from your analysis IV. Ratio analysis • Calculate the discuss the significance of the following ratios for the past 3 or 5 years, and compare them with the industry ratios (show your calculations) - Liquidity ratios: Working capital / Current ratio / Receivable turnover / Average days’ sales uncollected / Inventory turnover / Average days’ inventory on hand - Profitability ratios: Profit margin / Asset Turnover / ROA (Du Pont equation) / ROE - Long term solvency ratios: Debt to equity / Interest coverage - Cash flow adequacy: Cash flow yield / Cash flows to sales / Cash flows to assets / Free cash flow - Market strength Ratios: Price/earnings per share / Dividends yield • Identify trends, strength and weaknesses V. Conclusion • Summarise your findings and make recommendations as to what you think the company should do to enhance performance • Based on your analysis, would you consider the company to be a strong performer? • Your decision – rationale for the decision