FINANCIAL STATEMENT ANALYSIS PRESENTATION

Financial Accounting — MBA 2022

The requirements for Financial Accounting course include a Presentation.

INSTRUCTIONS:
1) You must select a publicly listed company for analysis. Merchandisers and manufacturers are probably
better for analysis given the orientation of this course. You should avoid banks, utilities, and insurance
companies since their accounting is specialized and is not the focus of our course. One company is analyzed
per group, along with two competitors. You need to notify me by email of your company selected as soon as
possible (if you desire a specific company then select quickly since companies can be chosen only once).

2) Once you select a company you immediately must begin collecting data, performing analysis, and drawing
inferences. One of the first items you should obtain is the company’s financial statements and its SECP filing.

3) Once you gather, analyze, and interpret the available information on your company, it is time to prepare
your presentation. The following “guidelines” can help you in the preparation of your presentation:

COMPANY ANALYSIS PRESENTATION

Your presentation must include analyses of both past performance and current financial condition along with
prospects for future performance. Your presentation should be 20 minutes long (15 min for presentation and 5
minutes for question/answers). Since part of your grade is based on presentation format, you are strongly
encouraged to prepare your presentation using Power point or similar package and thoroughly review it for
typos, spelling, and grammar. Mistakes in grammar and errors of fact compromise the credibility of your
analysis.

The presentation should include a cover page followed by a table of contents to help listeners focus on those
areas pertinent for their business decisions. Note that only relevant material should be included. For example,
decades-old details of the beginnings of a company and discussion of miscues of analysis are irrelevant. Also,
ambiguities and qualifications to avoid responsibility should be eliminated. The contents of your presentation
should consist of the following parts, including supporting materials (Note: When information is required from
outside the annual report, suggested sources are identified in brackets.):

I. Executive Summary
The analysis should begin with an Executive Summary section. This executive summary is brief, and it should
summarize the important results and conclusions. Remember that importance is determined by the user perspective
selected by you (e.g., investor, creditor, and environmentalist).

II. Company Facts

A. Identify the complete company name and its home office location
B. Identify names of the Chief Executive Officer (CEO) and Chairman of the Board
C. Indicate the end dates of recent fiscal years
D. Describe the main products and/or services provided
E. Identify main geographic areas and major segments of business activity
F. Report the number of employees
G. Identify the independent auditor and interpret the audit report
H. Indicate its stock ticker symbol, its exchange listing, and its recent price including the date [Web]

III. Accounting Analysis

A. Identify and briefly describe the company’s major accounting policies [usually Note 1 in annual report],
including that for:
1. Revenue (including recognition policies) 2. Major Expenses (including recognition policies)
 3. Investments 4. Inventories (if applicable)
5. Property and Equipment (including depreciation) 6. Goodwill and Intangibles (including amortization)
Assess whether any of these policies appear too aggressive or conservative
B. Specify (list) the heading of each Note to the financial statements in a separate Appendix

IV. Financial Analysis

A. Compute and interpret the following ratios for each of the past three years:
1. Liquidity and Efficiency Ratios
a. Current ratio b. Acid-test ratio
c. Accounts receivable turnover d. Inventory turnover
e. Days’ sales uncollected f. Days’ sales in inventory
g. Total assets turnover
2. Solvency Ratios
a. Debt ratio
b. Equity ratio
c. Times interest earned
3. Profitability Ratios
a. Return on total assets b. Return on common stockholders’ equity
c. Profit margin ratio d. Gross margin ratio
e. Book value per common share f. Basic earnings per share
g. Cash flow on total assets
4. Market Ratios
a. Price-Earnings ratio
b. Dividend yield

B. Prepare and interpret comparative income statements and balance sheets for the past 3-4 years
C. Prepare and interpret common-size comparative income statements and balance sheets for the past 3-4
years
D. Compute and interpret trend percents for all individual income statement and balance sheet accounts for
the past 3-4 years

V. Prospective Analysis
Once the analysis and interpretation for parts II through IV are complete, you must prepare a prospective
analysis. This prospective analysis is your assessment/prediction of the future performance of your company
(this can include predictions of key financials such as sales, income, assets, and so forth). Support all
inferences with reference to your prior analyses.

Hint for completion: This presentation is best completed gradually over the course of the term. Parts II and III
can be started and completed immediately. Parts IV and V can be started immediately, but their completion is best
achieved in a gradual process as one proceeds through the course. To expedite the presentation preparation, one
should be encouraged to read Financial Statement Analysis reading about mid-way through the course.