Obtain the recent five years’ annual reports from a corporation of your choice (excluding regulated industries such as financial and utilities industries) and respond to the following questions:.
Required: Obtain the recent five years’ annual reports from a corporation of your choice (excluding regulated industries such as financial and utilities industries) and respond to the following questions: ?
Prepare a graph (or exhibit/ table/ figure) for the “graph” questions. ? If the question is not “for the last five years,” you can answer the question using the most recent annual report available (2019 or 2020 depending on the fiscal year end of the company).
1. General Information (at least include the following)
a) Company name
b) Main products or services
c) Chart the annual net income and revenue for the last five years (graph) 2. Liabilities a) Total liabilities reported in the balance sheet for the last five years (graph) b) Calculate working capital and current ratio for the last five years (graph)
c) Calculate debt-to-asset and debt-to-equity ratios for the last five years (graph) d) Compute the times interest earned ratio for the last five years (graph) o (=EBIT (or CFO)/Interest Expense; where EBIT = net income + interest + taxes; where CFO is cash flow from operations) 3. Contingencies a) Identify any contingencies and whether they are probable or possible, and the potential impact on future net income b) Summarize the section – “Quantitative and qualitative market risk” (due to shocks in interest rates, commodity prices or currency exchange rates) 4. Earnings per share (EPS) a) EPS and/or Diluted EPS for the last five years (graph) 5. Executives, Directors, Compensation and Security Ownership (See also SEC filing “Def 14”) a) Summarize the compensation of the “named” executive officers (table) b) List the name of the beneficial owner and summarize their shares owned 6. Classification a) Is any short-term debt classified as long-term in the most recent annual report, and why? b) Obtain the relevant authoritative literature on the classification of debt expected to be financed using the FASB ASC. Determine the criteria for reporting the currently payable debt as long-term. What is the specific codification citation that the corporation would rely on in applying that accounting treatment (an example of a proper citation reads as follows: [FASB ASC 220-25-45])? See the syllabus for the FASB ASC login information. 7. Discussion & Conclusion: a) Related to debt-to-equity ratios question (2c). How has the proportion of debt financing and equity financing changed over the years? (Compared to the average in the market). Is the corporation experiencing favorable or unfavorable financial leverage? b) Related to times interest earned ratio question (2d). (Compared to the average in the market). What does your calculation indicate about the corporation’s risk? c) Based on the above analysis, how would you conclude the corporation’s default risk, profitability, and recommend the corporation’s CEO? Note: ? Please type the numbers and questions before you answer the questions. ? I do not restrict the length of your report, but 4-7 pages will be enough to answer all questions. (Single spaced, with 12 point Times New Roman font and a minimum of 1” margin from all sides). ? Please include a footnote reference if you cite a paper or extract from a website. ? You can obtain electronic copies of annual reports from EDGAR (Electronic Data Gathering, Analysis, and Retrieval; http://www.sec.gov/edgar/searchedgar/companysearch.html). EDGAR performs automated collection, validation, indexing, and forwarding of submissions by companies and others who are required by law to file forms with the SEC. All publicly traded domestic companies use EDGAR to make the majority of their filings. ? Form 10-K, which includes the annual report, is required to be filed on EDGAR and the SEC makes this information available on the Internet. You can also obtain electronic copies of annual reports from company websites (usually under “Investor Relations”). Do not use quarterly reports (i.e., Form 10-Q). ? To view the annual proxy statement, select the most recent filing with the title “DEF 14A.” ? As you go through each required question you may find that the question may not apply to your particular company. For example, if your company does not have any contingency, please do not leave the question in blank. Instead, include a note indicating the reason(s) why you can’t answer the question.