I have been assigned Version 1. The version 1 template must be filled out and a PDF that looks like the Version 3 template but with Version 1's information also must be done.
Final Case Study
Fall 2020
Instructions
The following case study counts as 25% of your final grade.
The work should be done independently. If you would like, it is okay to discuss issues you are stuck on with your case study partner. However, you should not be sharing answers and you should both turn in your own work.
It is against the honor code to turn in anyone else’s work.
There are four different versions of this case study.
You must do the version assigned to you based on the first letter of your first name.
If you have a Chinese first name and an American first name, use the name that identifies you in Opus.
Version
|
First Letter of First Name
|
1
|
A-D
|
2
|
E-I and X -Z
|
3
|
J- M
|
4
|
N - W
|
Part I Financial Statement Exercise
Use the trial balance provided to do the following:
Make a multi-step income statement for the year ending 12/31/2020 with appropriate subtotals.
Make a retained earnings rollforward for the year ending 12/31/2020.
Make a classified and detailed balance sheet as of 12/31/2020.
Make a classified and detailed statement of cash flows using the indirect method for the year ending 12/31/2020.
Be sure to link all of your work.
Parts II- IV
For the rest of this assignment you will compare the following firms:
Dell Technologies (1/31/2020 and 2/1/2019) and IBM (12/31/2019 and 12/31/2019)
To save you time and energy, I already created common sized financial statements for the two companies. I also downloaded each company’s non common sized financial statements. Use both for the questions asked below.
Respond to the following questions in the template provided on Canvas. Focus on answering the question at hand rather than speculating about other things.
For all calculations, be sure to link your work back to the source documents provided.
Also, for any calculations, calculate and label the calculation but there is no need to provide a written sentence to accompany it unless I explicitly ask for an analysis.
Part II Stockholders’ Equity
For this section, do all of your calculations in excel. Link cells that you have access to, type in numbers that you do not but either way keep all calculations within excel cells so that we can see your work.
On average, at what price did IBM originally sell its common stock? (calculate)
On average, at what price did IBM buy back its treasury stock? (calculate)
What was the price of IBM common stock on 12/31/2019? (calculate)
IBM reports the following information regarding stock splits and dividends on its website (https://www.ibm.com/investor/att/pdf/IBM-Stock-Splits-and-Stock-Dividends.pdf). Using this information (and assuming nothing else has changed), what do you estimate IBM’s common stock’s par value was in 1925? (calculation)
Hint: In a 2 for 1 stock split you end up with twice as many shares. In a 25% stock split you end up with 1.25 as many shares.
Has IBM reinvested its retained earnings? In other words, has IBM used its retained earnings to fund additional assets? How do you know? (2-4 sentences)
What does Dell’s accumulated deficit represent? (2-4 sentences)
Both companies were profitable last year. What did they do with the money they earned? How do you know? (2-4 sentences)
Part III Cash Flows
For this section do not worry about reconciling the values back to the balance sheet. You will end up frustrated. Focus on what you know the adjustment means even if the balance sheet numbers do not line up exactly.
How do you interpret Dell’s adjustment for accounts receivable (-286) in its operating cash flows? (2-3 sentences)
How do you interpret IBM’s adjustment for accounts receivable (502) in its operating cash flows (don’t worry about the distinguishment between financing and non financing receivables)? (2-3 sentences)
How do you interpret Dell’s adjustment for accounts payable (894) in its operating cash flows? (2-3 sentences)
How do you interpret IBM’s adjustment for accounts payable (-503) in its operating cash flows? (2-3 sentences)
Part IV Valuation
For each company calculate the following for the most recent year:
Market to Book ratio
Price to Earnings Ratio
ROE, AT, PM, FL
Using the ratios you just calculated,
compare and contrast the two companies’ valuations in terms of their market to book and price to earnings ratios. This should be no more than 300 words (and 200 is totally acceptable as well).
Please follow the following instructions very carefully when turning in your work:
Name your File:
Version#_LastName.xlsx
For example, my first name is Allison so I would do Version 1. The name of my file would be ‘Version1_Kays.xlsx’
In addition to your excel file please also turn in a pdf of your answers.
To turn your excel file into a pdf follow these instructions:
Windows
Click on one of the blue tabs. Then, use ctrl + mouse click to only select the tabs with your work on them (blue tabs)
Part I Statements (4 tabs)
Part II Stockholders Equity
Part III Cash Flows
Part IV Valuation
Click on Fileà Print
For Printer, select ‘Print to PDF’
Choose- Print Active Sheets
Choose Landscape Orientation
Under scaling choose – Fit Sheet on One Page
Your resulting pdf should be
7 pages
and include all of your answers. I have attached a blank example
Name it in the same manner as your excel file ‘Version#_LastName.pdf’
Mac
Click on one of the blue tabs. Then, use command + mouse click to only select the tabs with your work on them (blue tabs)
Part I Statements (4 tabs)
Part II Stockholders Equity
Part III Cash Flows
Part IV Valuation
Click on Fileà Print
Choose Landscape Orientation (sideways man)
Print: Active Sheets
Check the box to ‘scale to fit’ 1 pages wide by 1 pages tall
Bottom left corner choose Save to PDF
Your resulting pdf should be
7 pages
and include all of your answers. I have attached a blank example
Name it in the same manner as your excel file ‘Version#_LastName.pdf’