Project 3: Financial Statement Analysis Project

 

  1. Introduction:

This project is designed to assess your ability to research corporate data, analyze and interpret financial statements and make a presentation to your boss and colleagues.

The project provides opportunities for you to further develop the following competencies:

Graduate School Core Competencies:

  1. Communication
  2. Critical thinking

Accounting Competencies:

  1. Measurement, analysis, and interpretation
  2. Reporting
  3. Research
  4. Technology and tools

Business Competencies:  

  1. Global and industry perspective

Professional Competencies:

  1. Professional behavior

 

Scenario:

You graduated with a MS in accounting from UMGC and have recently been hired by a large accounting firm in Washington, D.C.  You report directly to the senior accountant, Kathryn Cowgal, who is originally from Colorado and loves to ski when she’s not riding horses.  Fortunately, you and Kathryn hit it off right away and you’re excited to be part of her team.

 

It’s Monday morning, you’re at your desk with a cup of coffee and a Danish staring at your long list of emails wondering how you’ll ever have time to catch up on last week’s projects.  Your boss Kathryn briskly enters your office, sits down, and says, you’re going to love this assignment.  I have hand-picked you to prepare financial analysis for a new client in the retail industry. Kathryn goes on to say your report will be part of a company-wide analysis of the retail business sector in the US.  For the analysis, she instructs you to choose from a list of paired public retail companies that are among the Fortune 500 and to be prepared to present your findings to the client.  Kathryn hands you the list of paired public retail companies, suggested steps to follow, and a list of deliverables.  She strongly encourages you to submit drafts, which she refers to as milestones.  The purpose of the milestones is to receive Kathryn’s constructive feedback on your deliverables to give you an opportunity to improve your final versions before her deadline.

 

Further, Kathryn informs you that she and the CFO will also be attending your presentation to the client.  They plan to use your presentation as part of the first quarter review all new employees undergo during the probation period with the company.  Realizing this project could make or break your opportunity to stay employed beyond the probation period, you decide to review financial analyses techniques, interpreting SEC 10-K reports, and other resources to prepare the report and make a stellar presentation (Appendix A).

 

  • Steps to Completion:

Step 1:  Select two companies to analyze

Select any pair of companies found in the Project 3 Fortune 500 Paired Companies List (Excel).  Post your selection in the Subject Line of the Week 8 discussion topic.  Each paired-company can only be selected by one student.  Before making your selection, check the discussion to learn which paired-companies have already been selected by a colleague, and therefore no longer an option for you.


Step 2:  Conduct research

Click Edgar to search for the SEC filings of your chosen retail ­­paired corporations.  Download and review the SEC Forms 10-K for the most recent year.

If you are unfamiliar with the corporations you selected, learn more about each company by reading Part I of its SEC Form 10-K. To learn more about the corporations, the following resources will be helpful:

  • UMUC Library: Research Guide for Business and Management: Resources
    • Browse all databases in this guide to find the most relevant resources
    • Hoovers will be used for the industry averages
  • Academic journals
    • ABI/Inform is the best starting point
    • Click Peer Reviewed
  • Federal government Websites
  • Big 4 Accounting firm articles published within the last 3 years

Step 3:  Using technology and tools to measure, analyze, and interpret

  • In Excel:
    1. Perform a horizontal analysis of the Balance Sheet and Income Statement for the most recent 2 years in Excel using formulas. Reference different sheets in your formulas when necessary.
    2. Perform a vertical analysis of the Balance Sheet and Income Statement for the most recent 2 years in Excel using formulas. Reference different sheets in your formulas when necessary.
    3. Perform ratio analyses using 20 ratios for each corporation using formulas in each cell that contains an answer. Reference different sheets in your formulas when necessary.
    4. Compare the horizontal analysis, vertical analysis, financial ratio analysis of both corporations and the industry averages, which can be found in Hoovers, to detect trends and outliers, if any.

 

Milestone 1: Optional opportunity to receive feedback in advance of submitting your final version for a grade.  Submit your excel file in the Assignment folder for Milestone 1. 

 

Step 4: Reporting, communication, critical thinking, and professional behavior

Reporting
Prepare one Excel file with multiple sheets labeled as follows:

Sheet # Label Contents Notes
1 Corp A BS & IS of Corp A Copy & paste from Edgars
Cite all sources
2 Corp B BS & IS of Corp B Copy & paste from Edgars
Cite all sources
3 Ind Avgs Industry averages Copy & paste from Hoovers
Cite all sources
4 Horizontal Side-by-side horizontal analyses Both Corp A & B, must use formulas
5 Vertical Side-by-side vertical analyses Both Corp A & B, must use formulas
6 Ratios 20 relevant financial ratios Same ratios for both
Corp A & B
7 Ind Avgs Compare same 20 financial ratios to the industry averages Compare Corp A to Corp B & to the Industry averages
(in Hoovers)
Cite all sources
8 Summary Side-by-side comparison Corp A & B and
Industry Averages
Cite all sources

Communication
Prepare a Power Point presentation that includes the following:

  • Graphs, tables, and other data visualization tools to explain your findings
  • A summary side-by-side comparison of the two corporations and the industry averages completed in step 8 above
  • Speaker’s notes must be placed under each slide. Use the speaker’s notes to create either a/an:
    • Audio-enhanced PPT presentation with accurate transcription (or accurate Closed Captioning) that you will present to your boss and colleagues,
    • Video of yourself presenting the content of your slide to your boss (professor) and colleagues (classmates).
  • Your recommendations to improve profitability in Company A and B

Critical thinking and communication
A Word document summarizing your analyses and recommendations for both Corporation A and B.

  • Approximately a 3-4-page report, (not including the cover sheet and reference list) in APA format.

 

  1. Deliverables:
  2. Original SEC Forms 10-K for each corporation used for the analyses
    • Highlight figures on the Form 10-K’s used in your analyses
  3. One Excel workbook with 8 tabs (Sheets) as described above
    • Note: all computations must be computed via an Excel formula that references other sheets when necessary. The Excel file must be prepared by you.
  4. Power Point presentation as described above. All slide content and speaker’s notes must be in your own words.

 

  1. A 3-4-page Word report as described above and written in your own words.
    1. Hints and Tips:

 

  • As your professor, please note that I have very little interest in reading what others in the field have written. It is fine to quote sources to illustrate or support your own thoughts, however, every graded assessment in graduate accounting courses will be based on the content you have thought about and you have written in your own words. To properly guide you, I need to read your thoughts and interpretations and observe you making presentations which demonstrate your comprehension of the learning goals and ability to perform the competencies.
  • Read the grading rubric before beginning the project to fully understand the requirements; ask questions about the requirements if needed.
  • Review and refresh your memory of APA style formatting 3-4 weeks before the assignment is due.
  • Seek feedback for submitting your final version for a grade.
    • Ask a classmate, friend or family member to read your report, watch your presentation, and share constructive feedback to help improve your final version.
    • Submit your draft Word document to the Graduate Writing Center at least 1 week before the project due date.  This FREE resource can be accessed in your LEO classroom. Make edits to your report after reviewing feedback from the writing center tutors.
    • Submit milestones to your professor to receive constructive feedback and use the feedback to improve your work before submitting a final version for grading.
  • Submit all required files on or before the due date.  Late assignment policies can be found in the syllabus.  No assignments are accepted after the last day of class.
  • Ask questions as needed in the weekly Ask the Professor forums.  Students may discuss questions about the project in LEO.
  1. Rubric:

You will find the rubric in LEO under Contents>Course Resources>Projects & Rubrics.

 
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