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Financial Statement Analysis Project 2




Question;Financial Statement Analysis Project 2The specific purposes of this project are:1. Apply to actual companies the basic knowledge and analytical techniques learned from ourcourse.2. Prepare vertical common-size financial statements, horizontal common-size financialstatements, and various profitability and risk ratios.3. Detect the time trend of the firms profitability and riskiness, and compare the calculatedresults with competitors.4. Summarize/ present the analyses and make investment recommendations.As a coffee lover, you will make some serious investments in one of the two rosters:a. Keurig Green Mountain, Inc. (formally Green Mountain Coffee) (ticker: GMCR).b. Starbucks Corp (ticker: SBUX).Before you work on the financial statement analysis, take some time to understand thecultures and products of these companies. Download the most recent annual reports tobegin your work, including financial statements, footnotes to the financials, and themanagement discussions and analyses. Annual reports are usually available at thecompanys website. Alternatively, you may download their SEC forms (10-K reports)from the SECs website (i.e., EDGAR online Public companies usually publish annual reports at investor relation web pages.2. You may search EDGAR by company name or by trading ticker symbol. Anadvantage of using EDGAR 10-K report is that you may quickly copy those tablesinto Excel. Use the filter (filing type) to show 10-K filings only. Click thedocument button and the first htm file will be the 10-K report.3. Free reference is available at Yahoo finance ( or Googlefinance ( Hoovers is also available( for you to browse the company information (other contentis for paid users).The required tasks are detailed below:(1) Prepare vertical common-size balance sheets and income statements for both companies.Note: Compute for the most recent THREE years, i.e., 2013, 2012, and 2011. If youdecide to add the 2014 results, you need to wait for a few monthsboth companies willissue their 2014 reports in the coming November.(2) Prepare horizontal common-size income statement and balance sheet (in percentage) forboth companies. You should compute for the most recent THREE years.(3) Prepare ratio analyses (for the same THREE year time period) for both companies. Atleast, you should include the following ratios in your computations: (1) current ratio, (2)acid-test ratio, (3) receivables turnover, (4) inventory turnover, (5) asset turnover, (6)profit margin on sales, (7) rate of return on assets, (8) rate of return on common stockequity, (9) earnings per share, (10) payout ratio, (11) debt to total assets ratio, (12) timesinterest earned, (13) cash debt coverage ratio, and (14) book value per share.(4) Comment on the analytical results of the two companies. Your comments shouldconcentrate on the trends across the companies. In addition to contrasting the ratiosbetween the companies, you should interpret the numbers and make suggestions as towhy the ratio of one company might be higher/lower than the other.(5) Write a conclusive summary on the firms you have studied. Based upon yourconclusions, recommend the better performing firm for potential investment. Yourconclusions should be based upon, and specifically reference, the analyses prepared inthis report.(6) Record a short presentation (about10 minutes) in which you briefly introduce the twocompanies and their industries, highlight some of your major findings from the aboveanalyses, and conclude with an investment suggestion.Report Format Requirements:A. Report body requirements:1. Cover page. List the title of the project, your names, and semester/year.2. Abstract or Executive Summary. This is a separate page. It should cover the purpose ofthe project, the major findings, and the conclusions/recommendations, in summary form.3. Table of Contents.4. Main body. Use the following sequence for report content:a. Introduction to the two companies and to the purpose of the reportb. Analytical section. This should include all your numerical analyses. This is whereyou will discuss the results of, comments on, and conclusions about the verticaland horizontal common-size statements and the ratio analyses for both companies.c. Comparisons of companies and all other analysis (observations and/orinterpretations). (You may combine b and c if you wish, as long as both are wellcovered.)d. Conclusions and recommendation for investment.5. References. List all major reference sources.6. Appendices. Include tables and graphs of your numerical analyses. For referenceconvenience, assign a title to each separate item, such as Table 1, Exhibit 1, etc.B. Typesetting requirements:Use size 12 font. Times New Roman is preferred.Single space between lines.Number pages in accordance with the APA style guide.One inch on all sides.Do not right justify text. Use left justify.Minimum length: 8 pages.The submitted work should be in ONE file with a word or pdf format. An Excelspreadsheet file is NOT acceptable.C. Presentation requirements:1. PowerPoint slides are that explains the whole report.Please include notes for presentation on the power point slide.


Paper#39272 | Written in 18-Jul-2015

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