ANALYSIS OF THE FINANCIAL STATEMENTS OF A PUBLICLY OWNED CORPORATION

Comprehensive Accounting Case Problem (1)
 

  ANALYSIS OF THE FINANCIAL STATEMENTS OF A PUBLICLY OWNED CORPORATION

 

This Comprehensive Problem is to acquaint you with the content of the financial statements of a publically traded company. The problem contains three major parts, which are independent of one another: Part I is designed to familiarize you with the general contents of a company’s financial statements; Part II involves analysis of the company’s liquidity; and Part III analyzes the trend in its profitability. Since all publically traded companies in the U.S. are required to submit their quarterly (unaudited by independent CPAs) and their Annual Financial Statements (Audited) to the Securities and Exchange Commission (SEC) using generally accepted accounting principles (GAAP) which this course is based on; you will find the recent and complete annual report of such a company using the Edgar search – see next paragraph.

You may choose any US-based publicly traded company related to Sports and Sports Management which is required to file with the SEC. Once you pick a company and find that company’s annual report (10-K) filed with the SEC, email the instructor with the choice, the name of the company and the fiscal year of the Company’s 10-K.  You will be able to find the company’s by going to SEC Edgar site on the internet and search Company Filings for the company you would like to use by either the Company Name, or by the Fast Search: using the Ticker symbol or the CIK

The detailed instructions for each part mentioned above and two to four tasks for each part are provided below. You, then will prepare a written report of your analysis of each of these parts as directed. A summary of these tasks is as follows:

 

Part I. Annual reports include not only comparative financial statements but also other sources of information, such as:

  • A multiyear summary of financial highlights, a summary of key statistics for the past 5 or 10 years.
  • Full set of Comparative Financial Statements for the most recent year and 2, 3 or more of the previous year’s financials.
  • A significant number of pages of Notes that accompany the financial statements.
  • Reports by management and by the independent auditors in which they express their respective responsibilities for the financial statements.

Tasks. Find and analyze specific items in the latest annual report to familiarize yourself with the structure and how such annual report is organized and how to find financial information about the company.

 

Part II. Analyze the financial statements from the context of credit manager of a vendor of the company as directed.

      Tasks. Compute assigned financial statement ratios to determine liquidity and solvency using the usual ratios for these two types of financial analysis presented in Chapter 13 of the text

 

Part III. Perform a profitability analysis and trend analysis for a five-year period ending with the most recent year reported.

Tasks. Be able to compute and properly report an analysis of profitability and the current trends in recent years.

 

Write a summary with the following structure:

  • You should start your analysis with a proper heading for the document with 1) the name of the company, 2) the purpose of the report (Financial Analysis), and 3) the accounting periods covered and the ending Fiscal Year Balance Sheet Date. The text is full of examples of proper headings.
  • An introductory paragraph, with the background and business of the firm in your own words.
  • A paragraph for each of the three parts’ tasks summarizing in which you present your own analysis as presented in the class presentations for chapter 13.
  • Finally, a conclusion paragraph which summarizes your assessment of the financial condition at the latest year end and the result of operations for the latest fiscal year of the company.

 

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