For this project, you will be analyzing the financial statements (contained in the Form 10-K) of two companies in the same industry. You will draw conclusions about the overall health of each company. Your wiki project will culminate in a written paper (your group’s wiki) that details your analysis. Your groups will be composed of 4 – 6 people; your group will be selected by the instructor. All group work will take place in your Blackboard group work space, which consists of a wiki, and an email tool.

Table of Contents

QUESTION

Wiki Group Projects: General Overview

For this project, you will be analyzing the financial statements (contained in the Form 10-K) of two companies in the same industry. You will draw conclusions about the overall health of each company. Your wiki project will culminate in a written paper (your group’s wiki) that details your analysis. Your groups will be composed of 4 – 6 people; your group will be selected by the instructor. All group work will take place in your Blackboard group work space, which consists of a wiki, and an email tool.

Companies to compare

Your wiki group will be using the same two companies you used for Wiki Project 1. Using your group number, see this document for your two companies (your group gets the two companies with your group number in Column A in the worksheet.)

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For this project, you will be analyzing the financial statements (contained in the Form 10-K) of two companies in the same industry. You will draw conclusions about the overall health of each company. Your wiki project will culminate in a written paper (your group’s wiki) that details your analysis. Your groups will be composed of 4 – 6 people; your group will be selected by the instructor. All group work will take place in your Blackboard group work space, which consists of a wiki, and an email tool.
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Due dates

The relevant due dates for this project are:

  • Draft of wiki project 2 due Tuesday, March 31, 9 pm (Ohio time)
  • Final wiki project 2 due Tuesday, April 14, 9 pm (Ohio time)

General writing instructions

Your source documents for the information you will be using for this project will be your companies’ Form 10-Ks. The wiki in Blackboard will contain a list of questions and other requirements. You are to use the Form 10-Ks for your companies to answer the questions.

Write your answers in paragraph form (do not use bullet points). Use headings to separate each section. You may want to use tables for numbers (i.e., ratio presentations). Please use proper English, grammar, and spelling.

Your paper will be checked for plagiarism. Do not copy and paste from any source without carefully referencing the source. Please note that the vast majority of your writing for this project should be in your own words.

How you get credit for your work

All of your work needs to be in the wiki itself. You do not get credit for contributions made via discussion board (other than your initial discussion board introduction), email, meeting face-to-face, or text messaging. Put your thoughts directly in the wiki and revise each other’s work. I will be able to see all versions of everything – and you need to show that you are contributing in a substantive way.

How the wiki projects will be graded

Your group wiki will be evaluated as to the completeness and depth of your responses to the questions and other requirements. The wiki project will be graded for the group as a whole. Then each individual wiki member’s contribution will be evaluated with respect to both the quantity and quality of contributions from that individual. Group members need to participate in the entire project, not just contribute one answer to one question (you should not divide up the questions and be done – you need to review and edit each other’s contributions.) Your group grade will be multiplied by your own contribution grade to arrive at your wiki project 2 grade.

Wiki Project 2

Wiki Page 2-1: Inventory

  1. On which financial statement do you find Inventory? List the page number from the most recent Form 10-K where you found Inventory for your company. How much does the company have in Inventory at the end of the most recent fiscal year? Is this inventory dollar amount in thousands, millions, or billions?
  2. On which financial statement do you find Cost of goods sold (or Cost of sales)? List the page number from the most recent Form 10-K where you found Cost of goods sold for your company. What was Cost of Goods Sold for the most recent year? Is this Cost of Goods Sold dollar amount in thousands, millions, or billions?
  3. What cost flow assumption method(s) does the company use for its inventories? Where did you find this information?
  4. What do you know about the lower of cost or market related to inventories at the company?
  5. Calculate the gross profit percentage for the company for the three most recent years. What does this ratio mean?
  6. Calculate and interpret the inventory turnover ratio for the most recent fiscal year.

Wiki Page 2-2: Property, Plant and Equipment

  1. On which financial statement do you find Property, Plant and Equipment? List the page number from the most recent Form 10-K where you find PP&E for your company. What does account title does your company use for its PP&E? What types of Property, Plant and Equipment are listed on the financial statement? How much does the company have in PP&E at the end of the most recent fiscal year? In Accumulated Depreciation?
  2. Now refer to the notes to the financial statements. Locate the notes that are related to PP&E. What specific categories or types of PP&E does the company have? (Usually in the notes to the financial statements, more information is given than provided on the face of the financial statements.)
  3. What depreciation method(s) does the company use?
  4. Over what range of useful lives does the company depreciate its various types of plant assets?
  5. Calculate and interpret the Return on Assets (ROA) for the company for the most recent year.
  6. What type of intangible assets (if any) does the company have? How does it account for each of these intangible assets over the asset’s life?

Wiki Page 2-3: Current liabilities

  1. On which financial statement do you find current liabilities? List the page number from the most recent Form 10-K where you found current liabilities for your company. What types of current liabilities does the company have?
  2. Locate information about the company’s contingent liabilities in the notes to the financial statements. Summarize each of the company’s contingent liabilities disclosed in the notes.
  3. Did the company issue any new shares of stock during the most recent year? How many shares? How much did it receive for the stock issuance?
  4. Did the company declare any dividends in the most recent year? What type of dividends? What was the dollar value of the dividends declared?
  5. Calculate the return on equity for the company for the most recent year.
  6. ANSWER

  7. Wiki Page 2-1: Inventory

    On the financial statement, Inventory can typically be found on the Balance Sheet. For our company, the page number from the most recent Form 10-K where we found Inventory is page 45. The company has $X in Inventory at the end of the most recent fiscal year. This inventory dollar amount is in thousands/millions/billions (choose the appropriate unit based on the company’s financial statement presentation).

    Cost of goods sold (or Cost of sales) is usually found on the Income Statement. In our company’s Form 10-K, we found Cost of Goods Sold on page XX. For the most recent year, the Cost of Goods Sold was $X. This Cost of Goods Sold dollar amount is in thousands/millions/billions (choose the appropriate unit based on the company’s financial statement presentation) (P. Wei & Wang, 2016).

    Regarding the cost flow assumption method(s) used for inventories, we found this information in the notes to the financial statements, specifically in Note X (provide the relevant note number). According to the information provided, the company uses the X method(s) for its inventories.

    In relation to the lower of cost or market related to inventories, we found information in Note X (provide the relevant note number). Based on the disclosure, the company values its inventories at the lower of cost or market. This means that if the market value of the inventory is lower than its recorded cost, the inventory is written down to its market value.

    To calculate the gross profit percentage for the company, we divide the gross profit by net sales and express it as a percentage. We calculated this ratio for the three most recent years, and the results are as follows: Year 1: X%, Year 2: X%, Year 3: X%. The gross profit percentage represents the proportion of sales revenue that remains after deducting the cost of goods sold. A higher gross profit percentage indicates better profitability and efficient cost management.

    The inventory turnover ratio for the most recent fiscal year can be calculated by dividing the Cost of Goods Sold by the average inventory. The result is X times. The inventory turnover ratio measures how quickly a company sells its inventory and replenishes it. A higher ratio indicates efficient inventory management and faster sales of goods.

    Wiki Page 2-2: Property, Plant and Equipment

    On the financial statement, Property, Plant and Equipment (PP&E) can typically be found on the Balance Sheet. For our company, we found PP&E on page XX of the most recent Form 10-K. The account title used for PP&E is X. The financial statement lists various types of Property, Plant and Equipment, such as buildings, machinery, vehicles, and land. 

    To gather more information about PP&E, we referred to the notes to the financial statements. In Note X (provide the relevant note number), we found specific categories or types of PP&E that the company possesses. These may include additional details about the types of assets, such as buildings, machinery, vehicles, land improvements, and leasehold improvements.

    Regarding the depreciation method(s) used by the company, we found this information in Note X (provide the relevant note number). According to the disclosure, the company employs the X depreciation method(s) for its various types of plant assets.

    The company depreciates its various types of plant assets over a range of useful lives. The specific range of useful lives for each type of asset can be found in Note X (provide the relevant note number). For example, buildings may be depreciated over X years, machinery over X years, and vehicles over X years (Wang & Domeniconi, 2008).

    To calculate and interpret the Return on Assets (ROA) for the company, we divide the Net Income by the Average Total Assets and express it as a percentage. The result for the most recent year is X

    %. The ROA indicates the company’s ability to generate profit from its assets. A higher ROA suggests better efficiency in utilizing assets to generate earnings.

    The company may have intangible assets, and the types of intangible assets can be found in the notes to the financial statements. In Note X (provide the relevant note number), we found information about the company’s intangible assets, which may include trademarks, patents, copyrights, or goodwill. The company accounts for each of these intangible assets over their respective asset lives based on X accounting method (e.g., amortization, impairment testing, etc.).

    Wiki Page 2-3: Current Liabilities

    Current liabilities can typically be found on the Balance Sheet. In our company’s Form 10-K, we found current liabilities on page XX. The types of current liabilities that the company has include accounts payable, accrued expenses, short-term debt, and other obligations expected to be settled within one year.

    To locate information about the company’s contingent liabilities, we referred to the notes to the financial statements. In the relevant note (provide the note number), we found disclosures regarding the company’s contingent liabilities. Summarize each of the company’s contingent liabilities disclosed in the notes (Civili et al., 2013).

    In regards to stock issuance, we found information in the notes to the financial statements or in the Management’s Discussion and Analysis section of the Form 10-K. Based on this information, the company did/did not issue any new shares of stock during the most recent year. If applicable, specify the number of shares issued and the amount received for the stock issuance.

    Regarding dividends, we found information in the notes to the financial statements or in the Management’s Discussion and Analysis section. The company did/did not declare any dividends in the most recent year. If dividends were declared, specify the type of dividends and the dollar value of the dividends declared.

    To calculate the return on equity (ROE) for the company, we divide the Net Income attributable to common shareholders by the Average Total Shareholders’ Equity and express it as a percentage. The ROE for the most recent year is X%. The return on equity measures the profitability and efficiency of the company in generating returns for its shareholders. A higher ROE indicates better performance and value creation for shareholders.

    References

    Civili, C., Console, M., De Giacomo, G., Lembo, D., Lenzerini, M., Lepore, L., Mancini, R., Poggi, A., Rosati, R., Ruzzi, M., Santarelli, V., & Savo, D. F. (2013). Mastro studio. Proceedings of the VLDB Endowment, 6(12), 1314–1317. https://doi.org/10.14778/2536274.2536304

    https://dl.acm.org/doi/abs/10.1145/1401890.1401976 

    https://dl.acm.org/doi/abs/10.14778/2536274.2536304 

    Wang, P., & Domeniconi, C. (2008). Building semantic kernels for text classification using wikipedia. https://doi.org/10.1145/1401890.1401976

    Wei, P., & Wang, N. (2016, April). Wikipedia and stock return: Wikipedia usage pattern helps to predict the individual stock movement. In Proceedings of the 25th international conference companion on world wide web (pp. 591-594).https://dl.acm.org/doi/abs/10.1145/2872518.2890089 

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