USE COMPANY – COCA COLA (COKE)
Find the most recent annual report (10-K) from the following website, searching by the company’s ticker symbol shown above in the search bar: https://www.sec.gov/edgar/searchedgar/companysearch.html (Links to an external site.). You will download the Excel version of the financial statements (or copy them into Excel) and perform all ratios using Excel. You will also use the written version of the 10-K.
- Review the financial statement footnotes of the company you are analyzing to obtain information regarding the methods used for two significant accounting policies that we have learned about in class. (Examples include inventory, receivables, payables, fixed assets, expenses, etc.) These are generally listed in Note 1 after the financial statements (should be labeled Summary of Significant Accounting Policies). Describe how each method affects the financial statements and the decisions made by management within the company you are analyzing. Do not just copy and paste the wording from the report. You must include a discussion of the policies and how it impacts the financial statements and management decisions. This discussion must be in your own words. (6 points)
- Examine the cash flow statement and describe one line item from each section (operating, investing, and financing). You will include a discussion for each of the three items. What is the item and amount? How does the change affect cash? Only list one from each section and explain what it means for company operations. Discussion required here in your own words. (4 points)
- Discuss the importance of the three main financial statements (Income Statement, Balance Sheet, and Statement of Cash Flows) and the notes to the financial statements. What do each of these statements and the notes tell you? What were you able to determine about the company by looking at the financial statements and 10-K? (4 points)
- Ratio Discussion – Include your ratio discussion and a table of the results within the body of the Word document. All ratios must be calculated within Excel. (See below.) After calculating the ratios, briefly explain whether the company is performing better, similar to, or worse in comparison to the prior year (FOR EACH RATIO). Do not just state that they are doing better, because it is higher, you must explain why. The goal is to demonstrate that you know what the ratio means not just state what happened to the numbers, which changed the ratio. If a ratio is not applicable, explain why. All ratios must be computed for the most recent 2 years within the 10-K. (7 points)
- Invest or Not? Given your additional research, would you invest in this company? Why or why not? Did your answer change with additional research? Justify your decision based on all research. Discussion here approximately 1 page. (6 points)
- Overall format, spelling, punctuation, grammar, citations. When using outside sources including websites, the 10-K, etc. you must cite your sources. (3 points)
- Excel Document (10 points)
Create an Excel document with the following:
- Tab 1 label “Income Statement” and recreate the Income Statement from the 10-K. You can also use the Excel document downloaded from the SEC website according to the instructions above. If you do this, delete all tabs that are not related to the computations.
- Tab 2 label “Balance Sheet” and recreate the Balance Sheet from the 10-K.
- Tab 3 Ratio Calculations
All numbers in the ratio calculations must be linked to the financial statement tabs. No numbers can be hard coded in the formula. For example, the current ratio would look something like this: =Balance Sheet B5/Balance Sheet B16 where B5 is current assets and B16 is current liabilities.
- Net Profit Margin = Net Income / Revenues
- Gross Profit Margin = (Net Sales Revenue – Cost of Goods Sold) / Net Sales Revenue
- *ROE = Net Income/Average Common Stockholders’ Equity
- Current Ratio = Current Assets / Current Liabilities
- *Days to Collect = 365 / Receivables Turnover
- Receivables Turnover = Sales or Revenue / Average Receivables
- *Days to Sell = 365 / Inventory Turnover
- Inventory Turnover = Cost of Goods Sold / Average Inventory
- Debt to Assets = Total Liabilities / Total Assets
*These ratios require an average calculation. In order to calculate the prior year average for your comparison, you will have to find the prior year 10K (scroll until you find it on the SEC website).
0 comments