Accounting 201

Financial Statement Analysis Project

OVERVIEW
The financial statement analysis paper and presentation will be a combination individual and
group project of up to six students per team. You will do a thorough analysis of the financial
and business information available about a company within an industry. Much of the paper is
financial analysis, with accompanying written analysis. The second half of the project is a
presentation about the business model of the company, including whether your team believes
this business model is sustainable.
Learning objectives include:

 Critically analyze a company’s financial position and operational results

 Critically analyze a company’s business model, considering internal and external sources, a
variety of questions, including the question, “is this business model sustainable?”
 Demonstrate critical thinking skills, business communication skills, and quantitative
reasoning skills.
 Develop teamwork skills (identify/assign roles and tasks, report on status of project,
identify and resolve personnel issues that may occur)
 Develop your “test for understanding” skills. Don’t assume, be proactive and check in with
your teammates and your instructor. Don’t wait to be told what to do by your teammates,
volunteer.

REQUIREMENTS
FS1. GROUP: Team & Company
FS2. INDIVIDUAL: Company Financial Statements
FS3. GROUP: Team Contract & Status Meeting
FS4. GROUP: Paper (financial statements, ratio analysis and written analysis)
FS5. GROUP: Presentation (powerpoint slides with detailed notes and presentation to class)
FS6. INDIVIDUAL: Reflections

201 Financial Statement Analysis Project YLow Page 1

FS1. TEAM & COMPANY
REQUIRED:

 Interview your classmates and create a team of 6.

 Select a company (see list of companies provided in Canvas) as a team.
 Discuss with instructor your company and team members.
 Read the instructions for the Paper, Powerpoint and Presentation thoroughly so that you
can understand the requirements and to fairly assign work to each team member.

NOTE: a) Only pick the companies assigned, no new companies, b) one team per company
only, first come first served.

DELIVERABLE:

 Email your instructor your company and the full names of your team members.

201 Financial Statement Analysis Project YLow Page 2

FS2. COMPANY FINANCIAL STATEMENTS 
REQUIRED:

 You will be performing analysis on the 10-Ks of the Company your group has selected. This
analysis will help you understand how financial statements are used to evaluate
companies.
 Select one of the following companies listed in Canvas, only one team per Company
please:
 For the Company that your group has selected, use Acct 201 Acct 201 How to Access
Financial Statements from the SEC.doc for step-by-step instructions and an example, and
you should be able to find the company filings on the www.sec.gov. Please follow these
instructions specifically.  You need to assure proper formatting of your Word document so
that your data is readable.  
 Use the most current statements (see below) and upload into one Word document
- Income Statement for three years (e.g., 2018, 2017, 2016)
- Balance Sheet for two years (e.g., 2018, 2017 not the previous two years 2016, 2015)
 EACH student (i.e. each team member) needs to copy all three statements into a word
document as you will use for the whole project.  Copy three years of data, so this means
you will need two balance sheets. neatness counts, fix formatting if necessary!  

DELIVERABLE:

 Print financial statements submit word document in-class.

 This is an individual assignment! Each team member to hand in printed copy in-class.

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FS3. TEAM CONTRACT & STATUS MEETING

REQUIRED:

 Prepare a team contract to ensure your team agrees on and understands their
assignments. All team members must AGREE to the contract!
 Complete table 1 (and answer questions) and table 2 below, this is your team contract.
COMPANY:___________________________ Date of Contract: __________________________________
Team Members: __________________________________________________________________________

a) List your TEAM LIST ALL TIMES YOU ARE AVAILABLE FOR A MEETING
MEMBERS (in-person or by Facetime/Skype)
Team Cell Sun Mon Tue Wed Thur Fri Sat
members phone
names/abbr number
ev (e.g., JP)
Judith (jp) 12pm- 12pm- All Facetime Facetim After After
9pm 9pm day e 6pm 6pm
until
9pm

 Answer the following questions

a. When, Where and How are you meeting (in person or online)?  List ALL MEETINGS dates,
times AND LOCATION:
b. When Where, and How will you meet to work on and review the final draft once
everyone has done his/her individual work(in person or online)?
c. List ALL MEETINGS dates, times AND LOCATION: What is your AGENDA for your first
meeting? For your second meeting?
 Complete the following table (see example included) for your contact. Note: the last 2
columns to be completed later with instructor.

A: CONTRACT: 1ST FOUR COLUMNS

ONLY, list all activities of the project and
assign someone to it, as well as an
auditor.
B: STATUS: Report on
progress IN PERSON
WITH INSTRUCTOR*
Team Assigned Deadline Auditor Instructor’s Agreed
Member & Work (see Comments upon Action
checker project for
ALL areas):
JP – example Horiz Analysis - 05/15/19 Sheila Met SL: Slight
(delete this schedule 5/17/19 deadline, correction in
when you attended all JP’s numbers,
submit) meetings ready to use
APS – Prepare PPT 5/18/19 Leslie Delayed on Revised his
example shell with 5/19/19 deadlines, deadline to
(delete this images/creativ showed up 5/19. If not
when you e work late to completed,
201 Financial Statement Analysis Project YLow Page 4
 submit) meetings, will request
left early removal of
APS on team
and reassign
his work.
Add
additional
lines as
needed

 BE SURE TO INCLUDE:
- Who is doing what part of the paper? (at least two people to avoid errors)
- Who is checking (auditing) each section? (at least two people to avoid errors)
- As many rows for all the items as you need, along with who is auditing the work.
- Specific dates for deadlines
- When you are meetings together as a group to compile/edit/complete the final paper
after everyone has completed individual work?
 Print and hand-in the completed tables in class.
 Bring your completed work/work in process to class for a group meeting with the
instructor.  Each Project Team member will review their status with the instructor.  Each
team member must show significant progress for credit.

DELIVERABLE:

 Hand in completed contract, signed by all team members, in class. Note: Keep a copy of
the contract for your own reference.

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 FS4. PAPER  

REQUIRED:

Note 1: see the end of each chapter for ratio discussion/calculations. Also see chapter 13 for
all ratio calculations and how to perform horizontal and vertical analyses.

Note 2: see writing guidelines at the end of this section to use throughout paper.

 Horizontal analysis and Ratio calculation of the numbers on the spreadsheet below.  

A horizontal analysis is presenting multiple years of data, showing the growth percentage
from the base year.  Change the words "Current Year" to actual year (e.g., 2018).

For % change, the formula is:

(TY – LY)/LY x 100. TY = This Year; LY = Last Year For example, if this year is $1,000
and Last Year is $750, then the Percent Change is (1,000-750)/750 x 100, or 250/750 =
0.3333 x 100 = 33.33% . Use 2 decimals on all % and ratios. Note: for examples of
Horizontal Analysis, see Chapter 13.

Complete the spreadsheets below (list numbers exactly as you see them on the statements,
then put whether numbers are in millions or thousands or dollars at the top of your
spreadsheet).

BALANCE MOST Current Prior Year $$ Difference % Change from

SHEET: Year $$ Amount Amount (calculate) $ Prior year* =
Amt (Difference/Prior
Year) x 100.
TOTAL Current $ $ $ %
Assets
TOTAL Assets $ $ $ %
TOTAL Current %
$ $ $
Liabilities 
TOTAL %
$ $ $
Liabilities 
TOTAL Equity  $ $ $ %
TOTAL %
Liabilities + $ $ $
Equity
Ratio: Current % % % N/A
Ratio
Calc: Working $ $ $ N/A
Capital
Ratio: Debt to % % % N/A
Assets

201 Financial Statement Analysis Project YLow Page 6

 Current Prior
INCOME STATEMENT: Year Year $$$  % 
  (e.g., (e.g., Change Change
2017) 2016)
Net Sales        
Cost of Goods Sold
Gross Profit (or Margin)        
Operating Income (you may need to calculate)        
Net Income        
Ratio: Gross Profit (or Margin) %
Ratio: Net Income %        
Metric: Earnings Per Share $
BALANCE SHEET:        
INVENTORY METRICS:
(Calculate) Inventory Turnover
(COGS)/(Average Inventory)
COGS = current year
Average Inventory = (current year's inventory
PLUS prior year's inventory)/2

(Calculate) Days Inventory on Hand

= 365 days/Inventory Turnover

 Written Analysis - analyze the numbers/ratios. Discuss the Company's performance

of the current year, compared to the prior year.   Say whether the company has improved,
worsened, or stayed the same.  After taking your position on this, provide evidence from
the above numbers and metrics to support your position.  List the most important ones
first. If some items are minor, ok to omit. In all your writing, following the guidelines at the
bottom of this assignment.
A. Balance Sheet and Income Statement Trends: Refer to the above Balance Sheet
and Income Statement spreadsheets and key ratios calculated.
- Using your analysis, state a position on and discuss the Company’s performance in the
current year compared to the prior year in topic sentence. I.e. whether these numbers
have improved, worsened, or stayed the same.  
- Discuss how you arrived at this position using evidence using your numerical analysis
from above. You won't be able to discuss each number but pick the ones you think are
most important.
- Write a concluding sentence.
- In all your writing, following the guidelines at the bottom of this assignment.
B. Balance Sheet: Find two accounts on your company's balance sheet that are not
covered in the textbook. Look them up and define them here. Explain why you think
they are in the category (assets, liabilities, equity).

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DELIVERABLE:

 Print and hand in Final Paper in class including:

- Title Page – Company name and group members
- Written Analysis – Analyze the numbers and answer the questions (see above)
- 2 Spreadsheets – Horizontal Analysis & Ratio calculation (see above)
- Appendix – Financial Statements: (Income Statement and Balance Sheets) and
Highlight the numbers you used on your spreadsheets

WRITING GUIDELINES
Make time to proof read BEFORE the due date!  The difference between an A paper and a not-
A paper is often just TIME.
Remember to consider: C-O-E, content, organization, and editing. 
Content:  take a position; provide evidence to support your conclusion, e.g., “Sales have
improved dramatically over the two years-- 10% growth in 2001 compared to 2000, by
$50,000.”
Organization:  Organize your thoughts clearly; don’t ramble from topic to topic.  For longer
paragraphs, make a short outline to assure that you say what you want to say.
Editing: Avoid typos and misspellings, avoid run on sentences, awkward sentences.  Ask
someone to proof read your writing and return the favor.

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FS5. PRESENTATION

REQUIRED:

 Research and present your Company’s business model including a brief (8-10 slides)
PowerPoint presentation, with detailed notes for each slide. Note: present business model
only, no need to present the Company’s financials.
 Use the following main sources for your research:
Company 10-K:
- Return to your company's most recent 10-k on the SEC website.  Do NOT click on
"Interactive Data", but click on "Documents"
- Select the 10-k, full document (it may take a few tries, but it should be the biggest file
there).
- Open up the 10-k, full document, and scroll down the Table of Contents
- Review the sections under "Business", "Risk Factors", and the "Management Discussion
& Analysis".
Minimum two Independent Sources:
- Independent outside (external to the company) resources (articles, news reports, etc.)
which describe the company.
Yahoo/finance:
- Your company’s Corporate Governance Score
 Using the Company’s 10-k, answer the following questions:
- Describe the company's business; what does it do?
- Describe the company's customers, what is a typical customer (consumer, business,
government)?
- What are the company's strengths, as compared to its competitors? Each of your
company's has ONE competitor in the class.  
- What are the risk factors (name 2-3 that you feel are important)?
- What growth opportunities does the company have?
- What is corporate governance and discuss in context of your company. Is their
structure favorable or unfavorable?
 Using your independent sources:
- Summarize the external resources (articles, etc.) in a few key points (in your own
words, what do the articles say?)
 Then, answer the following questions:
- Are the INSIDE (10-K) and OUTSIDE (articles, magazines, etc.) sources consistent?  Why
or why not?
- Based on your analysis of both internal and external documents, do you believe the
Company’s business model is economically and environmentally sustainable?  Why or
why not? (NOTE:  When you consider sustainability, be CREATIVE. Consider BOTH
Economic Sustainability and Environmental Sustainability.  Don't just look at the
Company's business model, consider its effect on Society.  For example, a company like
Safeway sells affordable ("cheap") produce.  They buy it cheap and sell it cheap.
However, this requires the shipping of fresh produce from long distances on
federally/state maintained roads.  What is the cost to Society of shipping products by
truck, long distance and is this sustainable?)

DELIVERABLE:

 Print and hand in the following in-class:

- Powerpoint slides: the final presentation

201 Financial Statement Analysis Project YLow Page 9

 - Detailed Powerpoint notes: can be included in the Notes section on Powerpoint or in a
separate Word document
- Appendix: the Table of Contents from the 10-k and the first page of each of the
following sections from the 10-k: "Business", "Risk Factors", and the "MD&A".
- References: attach the first page of each outside source and the web reference.

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FS6. REFLECTIONS

Compete this short reflection/lessons learned under Quizzes. Complete this after
turning in your group Financial Statement Analysis Project. There are four short answer
questions for you to answer about your project reflections answer them thoughtfully. As part
of this FINAL reflection of the project, you will evaluate your team with a numeric score. If you
feel you participated fully and provided a decent amount of work, you will award yourself 90-
100%. You will evaluate your team members the same way. As part of your evaluation of
team members, I reserve the right to adjust the project scores based on comments and
scores.

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