FINANCIAL ACCOUNTING
Term Project
FINANCIAL STATEMENT ANALYSIS

NAMES OF GROUP MEMBERS
1. _______________________ Focused on parts: ………………

2. ________________________ Focused on parts: ………………

3. ________________________ Focused on parts: ………………

4. ________________________ Focused on parts: ………………

(The group (max 4 members) may allocate the work among themselves. In that case each member may focus on some specific parts for report preparation purpose; every member should review all parts and is responsible for the entire project in order to achieve the term project objectives.)

Name of the corporation analyzed: ________________________________

[This report will not be returned to you. Keep a copy For Your Reference if you wish]

This project is graded based on quality and comprehensiveness of the material subject to judgement of the instructor and in comparison with other students’ projects.

THIS TERM PROJECT HAS THREE PARTS:

A. Reading and understanding financial statements

B. Analysis of financial statements

C. Class presentation of the high lights (Executive Summary)

Your answers must be typed. For this purpose, a copy of this project is presented electronically and you can type your answers in the given spaces. Type your answers in Italic font or different color to differentiate your answers from the questions.

INTRODUCTION

Annual reports produced by companies are a primary source of information about a company’s activities over a specific period of time. The information disclosed in these reports is prepared by the company’s management and is useful to different users, mainly investors and creditors.

The primary purpose of an annual report is to convince existing shareholders to continue investing in the corporation. However, management may also use the annual report to: (1) persuade prospective shareholders to invest in the corporation, (2) inform financial analysts about the investment quality of the corporation, (3) inform lenders, such as bankers and suppliers, of the credit-worthiness of the corporation, and (4) provide evidence to government agencies of compliance with regulations.

As a manager, you are (or will become) involved in the preparation of financial statements, which entails knowledge of the disclosure requirements. Furthermore, you will most probably use financial statements frequently in your profession. For example, as a manager, you will be the responsible person for the accuracy of the information in the financial statement. As an analyst, you may be asked to advise clients about investments in particular companies. More importantly, as an individual investor you may use financial statements to select your personal investments.

The basic purpose of the Financial Statement Project is to “get your hands dirty” with analysis of a public company.

The objectives of this project are:

1. To expose you to alternative formats for presentation of financial statement disclosures as well as the accounting terminology which may differ across companies.

2. To integrate real world illustrations of the accounting issues and disclosures related to the specific topics covered in this course in order to gain a better understanding of the course material.

3. To formally perform financial statement analysis and prepare the report.

4. To enhance your business research skills by searching for company-related information in current business periodicals, the financial press, and other financial publications.

GETTING STARTED

You are asked to divide the class into groups of four students, max, per group. You will be assigned a public company or you can choose the company that you are working for if it is a public company. When you receive the annual report, familiarize yourself with its contents by reviewing it carefully. Annual reports usually have a contents page to help you locate specific items.

INSTRUCTIONS