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ACCT110 Financial Review Project 10% of your grade (out of 10 points)

(This assignment is to be prepared in teams of two.)


Select one of the following companies, and use yahoo finance (or an alternate similar source) to locate and
review the balance sheet, income statement and statement of cash flows from the past fiscal reporting
year. This assignment should be prepared professionally and formatted well, and include proper citations
for sources used.
Under Armour
Bristol-Myers Squibb
Michael Kors
1. Using the financial statement information, calculate the following ratios for each of the prior two
fiscal years. You must show the formula and the input data. Then, explain what the ratios may
indicate for the company in 2-3 sentences for each one (be as specific as possible, and include
chapter concepts such as liquidity, etc.). (7)

Current Ratio
Current Ratio =

Current Assets
Current Liabilities

2015

10415
=1.29
8017

2014

14608
=1. 73
8461

A ratio between 1.5 and 3 is generally considered healthy. Since the 2015 current ratio is 1.29
and the 2014 current ratio is 1.73, this shows that both years it was healthy.

Inventory Turnover
Inventory Turnover =

Cost of Goods Sold


Average Inventory

2015

1221+1560
=2.82
2

3909

2014

1560+1498
=2.57
2

3932

Days in Receivables

Financial Statement Case Study 1

Average Days to Collect Receivables = 365

Net Credit Sales


Avg Accounts Rec

Total Current Assets


=
4,299,000
Total Current Assets
=
2014 365
4,299,000
2015 365

Total Debt to Total Equity Ratio


Total Debt to Equity Ratio =

2015

17482
= 1.23
14266

2014

18897
= 1.27
14852

Net Profit Margin


Net Profit Margin =

Net Income
Net Sales

2015

17482
= 1.23
14266

2014

18897
= 1.27
14852

ROE
Return on Equity =

Total Liabilities
Total Stockholders ' Equity

Net Income
Avg Total Stockholders ' Equity

2015

17482
= 1.23
14266

2014

18897
= 1.27
14852

EPS (you do not have to calculate this one you can research it online in the financials)
2015 Basic = .94
2014 Basic = 1.21

2. Select any two of above ratios, and then research the industry average for the ratio and compare it
to your companys. Show these comparisons in a chart or graph each. Explain what additional

Financial Statement Case Study 2

observations can be made based on this comparative information for your company in 3-4
sentences per ratio selected. (2)

3. Explain what other information you would want to have in order to make a better decision on the
overall health of your company. You should include at least one additional ratio, and then 2 other
quantitative or qualitative aspects for the business. (1)
Unprofessional presentation, lack of sources or identification, incomplete responses, etc. will result in
deductions.

Financial Statement Case Study 3

Reference Tables:

Figure 1. Income Statement from 2015 Annual Report

Financial Statement Case Study 4

Figure 2. Current Assets and Liabilities from the Yahoo! Finance Balance Sheet

Financial Statement Case Study 5

Figure 3. Stockholders Equity from the Yahoo! Finance Balance Sheet

Other Reference:

http://www.oldschoolvalue.com/blog/valuation-methods/balance-sheet-ratios/

Financial Statement Case Study 6