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Financial Accounting and Analysis

This document outlines a project to analyze the financial statements of a company over multiple years. It involves: 1) Comparing net income and operating margins over time and identifying factors driving trends 2) Analyzing how the company allocates its assets across non-current, investment, and current assets 3) Breaking down the company's liabilities and shareholders' equity components 4) Calculating key financial ratios to assess profitability, cash flows, and lending risks 5) Providing recommendations to "buy, hold, or sell" shares based on the analysis

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MOUMON BHAR
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34 views

Financial Accounting and Analysis

This document outlines a project to analyze the financial statements of a company over multiple years. It involves: 1) Comparing net income and operating margins over time and identifying factors driving trends 2) Analyzing how the company allocates its assets across non-current, investment, and current assets 3) Breaking down the company's liabilities and shareholders' equity components 4) Calculating key financial ratios to assess profitability, cash flows, and lending risks 5) Providing recommendations to "buy, hold, or sell" shares based on the analysis

Uploaded by

MOUMON BHAR
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Financial Accounting and Analysis

Project - Reading and Analyzing Financial Statements

Part 1
1. Compare current year’s net income with that in the previous year. Compute the annual
growth rate in earnings over the last five years. What earnings trend do you observe and
what factors may be causing these trends?
2. Calculate the operating margin percentage for each period presented in the income
statement. What trends in the operating margin do you observe and what factors might be
causing these trends?
3. Where are the resources of the company employed? What percentage of total assets of the
company are invested in non-current assets, investments and current assets.
4. Provide a breakup of the liability of the company in percentage terms.
5. Identify the major components of shareholders equity. Did it change significantly during
the year? If so explain the cause for each change.

Part 2
1. Ratios – ROE, ROA, EPS, NPM, Current Ratio, Quick Ratio, Receivables Turnover,
Inventory Turnover, Interest Coverage, Debt/Equity, P/E for three years.
2. Compare cash flows over three years from operating, investing and financing activities.
3. Based on your computation –
a. Assessment of profitability of the company in recent years.
b. Is the company generating adequate cash flows from operating activities to take
care of its investment requirements?
c. Would you lend money to this company in the short term and in the long term?
d. Provide a recommendation about buying, holding or selling the shares of the
company.
4. Briefly explain significant accounting policies relate to revenue, inventory, non-current
assets (fixed assets) and depreciation.

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