Need major accounting help
Microsoft Word - Profiling a Corporation Project Acct205 Bryant & Stratton College Accounting Principles II Authentic Assignment/Portfolio Project PROFILING A CORPORATION Purpose of the Project The most important business organization that a student in accounting can use to learn accounting principles is the corporate form. Although corporations only make up approximately 20% of all business types, they generate 80% of total revenue. Consequently, many of the contemporary rules of accounting evidenced by GAAP, govern what corporations can or cannot do in accounting for financial performance. The fundamental instrument that all corporations prepare and use to communicate accounting information to its existing and potential shareholders is the Annual Report. An annual report is essentially a “resume” prepared for a corporation. Much of the information in domestic corporate annual reports is dictated by GAAP that is overseen by the Securities and Exchange Commission (SEC). The SEC is an agency of the Federal government that regulates the trading of publicly-traded securities [corporations that publicly trade on the New York Stock Exchange (NYSE)]. The SEC and GAAP require annual reports to disclose four financial statements: an income statement, a balance sheet, a statement of cash flows, and a statement of retained earnings, as well as a multitude of supplemental schedules and disclosures, in particular, Notes to Financial Statements. For purposes of this project, you will choose a corporation to profile. The corporation must trade publicly on the NYSE. For that corporation you will answer a series of questions, prepare some graphs or charts relevant to the four major financial statements previously mentioned. You will not address questions or analysis of the Notes to Financial Statements, as that will be part of a future continuation of this project in ACCT220-Financial Analysis course. Annual reports communicate information between corporations and financial statement users. The primary purpose of an annual report is to convince existing stockholders to continue investing in the corporation. As a business/accounting student, you will probably use financial statements frequently in your profession. For example, as a manager or corporate strategist you may use financial statements to evaluate the performance of your own corporation, or your corporation’s competitors. As a bank loan officer you may examine financial statements to decide whether to extend credit. Finally, as an individual investor you may use financial statements to select your personal investments. The purpose of this project is to help you understand corporate financial statements and to utilize BSC’s virtual library resources to search and obtain financial information, as well as, become familiar with a corporation of your choosing. This project will serve as the foundation for a lengthier project in ACCT220-Financial Analysis course. The course outcome served by this project is to select and utilize appropriate technology to complete a real world accounting project that requires the construction of a multiple-step income statement and a classified balance sheet. This is the designated Portfolio piece for the course. Bryant & Stratton College Accounting Principles II Authentic Assignment/Portfolio Project PROFILING A CORPORATION Questions in this project are completed using the most recent annual financial data of a corporation. This data will be obtained by using BSC’s virtual library business resources. The campus librarian may assist you in learning how to utilize various mechanisms available to access financial information on the corporation you have chosen using BSC’s virtual library resources. When you choose a corporation, try to select one that interests you in some way. For example, if you enjoy the cars, you may want to select a corporation that manufactures cars. You may want to select the corporation that produces a beverage you particularly enjoy, or perhaps a product that you regularly use. Or you may want to select a corporation located in your community or state which you might already be familiar with. The SEC requires corporations to file an annual report which is known as Form 10-K which can be obtained directly from www.sec.gov. Corporations also produce a glossy annual report to shareholders in addition to the SEC 10-K which becomes a marketing document to attract potential investors and also to inform current owners as to the future direction and potential to which management feels that corporation is headed. Usually, the glossy annual report can be found at the corporation’s main web site. For this project you may want to download this glossy annual report in addition to the SEC 10-K, as it may provide information that will help you to answer some of the questions required. Note: “Download” is emphasized here. You do not want to print out the Form 10-K. It typically ranges in size over 400 pages, depending upon the company. It is more efficient and practical to leave it in electronic form so that you can perform searches to find the information you need rather than leaf through 400 pages of text. Requirements for Completing the Project First of all, you are to render this assignment, in its entirety, using MSExcel. Set it up as a workbook containing Tabs for each section outlined below. As you complete each of the individual steps check them off. When complete, you will upload the workbook into Bb, accordingly. Please do not submit a printed copy. HINT: For any narrative portions of the project where you are asked to explain your answers, use text boxes for these narrations. A. GENERAL INFORMATION [15 Points] General information may be in several places of annual reports. This information may appear at the beginning of the report, the end of the annual report, or on or near the inside back cover of the annual report. Answer the following questions about the annual report you have selected: 1. What is the name of the corporation you will profile? 2. Where are the corporate headquarters located? 3. When is the fiscal year end of the corporation? 4. List the primary product(s) and/or service(s) of the corporation. Bryant & Stratton College Accounting Principles II Authentic Assignment/Portfolio Project PROFILING A CORPORATION 5. The corporation must show high/low selling prices per share of common stock each quarter for the last two years. Using MS Excel chart the common stock prices over the last two years. Use a line chart that will show the following: 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Previous Year Current Year 6. Describe the trend in the price of the common stock over the last two years (for example, was it upward, downward, volatile, or constant). 7. Did the stock trade within a narrow or wide price range? (For a two-year period, a range in excess of 15% of the lowest price would likely be considered wide.) B. INCOME STATEMENT ANALYSIS [20 Points] The Income Statement is usually the first major financial statement appearing in the 10-K report. The income statement summarizes corporate revenues and expenses for a period of time. Corporations provide three years of income statements for comparative purposes assuming the corporation has been in operation for three years. 1. Copy and paste the Income Statement to an MS Excel worksheet. You may have to play around with formatting to get this just right. 2. Revenue growth is determined by the percentage increase(decrease) of revenues in comparison with the previous year: Percentage of Revenue Growth = (Current Yr Revenue – Previous Yr Revenue) / Previous Yr Revenue Calculate the growth in revenue during the current year 3. Corporations are required to show summarized historical data. Show the trend in total revenue for the last five (5) years by creating a line chart in MS Excel. 4. Did revenue increase or decrease over the last 5 years? An explanation of the change in revenue is often contained in the management discussion and analysis section of the 10K report and/or the glossy marketing piece discussed earlier. Summarize the reasons management gave for the change in revenue. 5. Trends in corporate profits are determined by calculating the percentage of increase (decrease) in income from continuing operations over the previous year. Income from continuing operations is net income without the effects of any discontinued operations or extraordinary items. Determine the percentage growth in profits during the current year using the following formula: % Growth in Profit = Current Yr Net Income – Previous Yr Net Income / Previous Yr Net Income Bryant & Stratton College Accounting Principles II Authentic Assignment/Portfolio Project PROFILING A CORPORATION 6. Using the Income Statement you copied and pasted in 1 above, prepare a Common-Size Analysis. A common-size analysis expresses items in a financial statement as a percentage of a single item. Such an analysis on an income statement uses Total revenue (100%) as the single item, and every other item on the income statement is expressed as a percent of Total Revenue. To do this most effectively, insert one column between each Year’s amounts on the income statement for the %s. With revenue serving as 100% calculate and display the % that each item is to total revenue as you proceed vertically down the column and display the % accordingly. Based on your common size analysis in 6, answer the following questions: 7. Did the percent of cost of goods or services to revenue change in the current year in comparison to the previous year? What are possible explanations for changes, if any, that may have occurred? 8. Did the percent of selling and administrative expense to revenue change in the current year in comparison to the previous year? What are possible explanations for changes, if any, that may have occurred? 9. How did net income as a percentage of revenue change in the current year? What items in the income statement might explain this change? C. BALANCE SHEET ANALYSIS [20 Points] The Balance Sheet summarizes assets, liabilities and stockholders’ equity of a corporation. Assets are