company analysis 13
Obtain the most recent 10-K for one of the following companies:
Whole Foods: WFM
https://www.sec.gov/Archives/edgar/data/865436/000086543617000238/wfm10k2017.htm (Links to an external site.)
Dick’s Sporting Goods: DKS
https://www.sec.gov/Archives/edgar/data/1089063/000108906318000029/dks-10k_20180203.htm (Links to an external site.)
Yahoo Finance is also a great resource for the project and you will use it for the graph. http://finance.yahoo.com (Links to an external site.) Input the above ticker symbol in the search bar and it will take you to the company page.
Your project must be typed using 1.0 spacing and a font of 12 or smaller.
Be sure to cite any and all outside resources used including the 10-K, financial websites, etc. Footnoting is an effective method of citation and looks very nice. I prefer you use footnotes for citations.
I do grade for spelling, grammar, punctuation, etc. so if these are not your strong points, you may want to consider going to the Learning Resource Center for assistance. Their information is available under the Free Tutoring announcement on the homepage.
I prefer you answer the questions in numbered format with a response to each of the questions below. Be sure to address all questions and include analysis when requested.
This project is an INDIVIDUAL assignment. Sharing of answers is not allowed and you must do your own analysis. The analysis portion of the project is worth quite a large portion of the grade and it is expected that it will be in your own words.
- Describe the history, development, and primary operations of the corporation. What do you find interesting about the company? Why did you choose this company over the other option? Obtain this information from the 10-K, company website, Google, etc. (Limit discussion on #1 to one page maximum). 5 points
- What is the purpose of the section of the 10-K entitled “Management Discussion and Analysis”? Discuss this portion of the 10-K. What is interesting? What can you tell about the company and their management? 5 points
- Find the Auditor’s report. This may be called “Report of Independent Registered Accounting Firm.” What is the name of the company’s Independent Auditing firm? What is the purpose of the “Auditor’s Opinion”? Discuss the audit opinion and what it means. 4 points
- What has been the lowest price of the common stock in the last year? What has been the highest price of the common stock in the last year? Include a one year historical graph of stock price – you can get this graph from yahoo finance. 3 points
- What has been the trend in the stock price (upward, downward, volatile)? Find at least one piece of news that is reflected in stock price and discuss the event and change in stock price. This could be the announcement of a new product, mergers, etc. Discussion required here. 4 points
- What does the 10-K and/or company website say regarding ethic responsibility as a company? Do you think this is sufficient? Is the company doing their part to create an ethical workplace? Are they maintaining ethical practices? 4 points
- Has there been a growth in profits (Net Income) over prior years? Discuss and include the net income numbers for the last two years. If you do see growth, why? If not, why not? Obtain the earnings per share amounts from the face of the income statement and include these in your discussion. A discussion is required here about the company income fluctuations, EPS, and what has been going on with the company to contribute to income fluctuations. 4 points
- What was the major source of cash outflows during the year? List the item and amount. What does this tell you about the company operations? Be careful here and make sure the number you are discussing is a CASH FLOW number. Remember, net income is accrual not cash. Depreciation is a non-cash number. (Hint: the major cash in/outflows will be found in the investing or financing activities sections.) 2.5 points
- What was the major source of cash inflows during the year? List the item and amount. What does this tell you about the company operations? Be careful here and make sure the number you are discussing is a CASH FLOW number. Remember, net income is accrual not cash. Depreciation is a non-cash number. (Hint: the major cash in/outflows will be found in the investing or financing activities sections.) 2.5 points
- Does the company think it will collect all of its accounts receivable? If not, what percentage of accounts receivable is expected to be uncollectible? Discuss this and why or why not a company may expect to collect all accounts receivable. You can find this information in the notes to the financial statements. Use Ctrl + F (or whatever variation your computer uses) and search for receivables, uncollectible, etc. 3 points
- Does the company report any goodwill on the balance sheet? Any other intangibles? What do the amounts consist of? Discuss these assets. You will have to look in the notes to the financial statements to find details. If the company does not report goodwill or other intangible assets, do a bit of research to find out why not and discuss here. Did the amount of goodwill change from the prior year? If so, why? 3 points
- Ratio analysis – calculate AND discuss the following ratios for the most recent two years. I am looking for quite a bit of discussion here. After calculating the ratios, 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. What do the ratios mean? What do the results tell you? You must include the numbers, calculations, and answer. 10 points
- Current ratio
- Debt/asset ratio
- Return on S/H Equity
- Days to collect
- Receivables Turnover
- Days to sell inventory
- Inventory turnover
- Fixed Asset Turnover
- Net Profit Margin
- Finally, discuss the importance of the three main financial statements (Income Statement, Balance Sheet, 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? Limit discussion of this question to one page maximum. 5 points
Overall format, spelling, punctuation, grammar, citations 5 points
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