Project 1 financial analyses, interpretation, and presentation | Financial Accounting 610
Introduction: This project is designed to assess your ability to research corporate data, analyze and interpret financial statements and make a presentation to your boss and colleagues. You graduated with a MS in accounting from UMGC and have recently been hired by a large accounting firm in Washington, D.C. You report directly to the senior accountant, Kathryn Cowgal, who is originally from Colorado and loves to ski when she is not riding horses. Fortunately, you and Kathryn hit it off right away and you are excited to be part of her team. It is Monday morning, you’re at your desk with a cup of coffee and a Danish staring at your long list of emails wondering how you’ll ever have time to catch up on last week’s projects. Your boss Kathryn briskly enters your office, sits down, and says, you are going to love this assignment. I have hand-picked you to prepare a financial analysis of our two newest clients. Kathryn goes on to say your report will be part of a company-wide analyses of the various business sectors in the US. For the analysis, she instructs you to choose from a list of paired public companies that are among the Fortune 500 and to be prepared to present your findings to the client. Kathryn hands you the list of paired public companies, suggested steps to follow, and a list of deliverables. Further, Kathryn informs you that she and the CFO will also be attending your presentation to each client. They plan to use your presentation as part of the first quarter review all new employees undergo during the probation period with company. Realizing this project could make or break your opportunity to stay employed beyond the probation period, you decide to collaborate with some of the other new hires as a group. In addition, you plan to review financial analyses techniques, interpreting SEC 10-K reports, and other resources to prepare the report and make a stellar presentation (Appendix A). III. Steps to Completion: Step 1: Decision making – Select two companies to analyze Select any pair of companies found in the Project 1 Fortune 500 Paired Companies List (Excel). Post your selection in the Subject Line of the Week 8 discussion topic. Each paired company can only be selected by one student. Before making your selection, check the discussion to learn which paired companies have already been selected by a colleague, and therefore no longer an option for you. Step 2: Collaboration Your participation in the study group contributes to your grade on Project 1. Be helpful but do not provide the answers to other students. For example, it is fine to explain how to compute Earnings per Share, but do not perform the calculation for other group members. Step 3: Review Begin by logging into Becker’s Curriculum Assistance (cpa.becker.com) and reviewing FAR Unit 2: Financial 2: Financial Reporting and Disclosures: Module 8: Ratio Analysis. Page 2 of 5 Step 4: Research Click Edgar to search for the SEC filings of your chosen paired corporations. Download and review the SEC Forms 10-K for the most recent year. If you are unfamiliar with the corporations you selected, learn more about each company by reading Part I of its SEC Form 10-K. To learn more about the corporations, the following resources will be helpful: UMGC Library: Research Guide for Business and Management: Resources o Browse all databases in this guide to find the most relevant resources o D&B Hoovers – requires a subscription, thus you must access it through the UMGC library. It provides industry averages. Academic journals o ABI/Inform is the best starting point o Click Peer Reviewed Federal government Websites Big 4 Accounting firm articles published within the last 3 years Step 5: Using technology and tools to measure, analyze, and interpret In Excel: 1. Perform a horizontal analysis of the Balance Sheet and Income Statement for the most recent 2 years. Embed formulas in all cells requiring computations. Reference different sheets in your formulas when necessary. 2. Perform a vertical analysis of the Balance Sheet and Income Statement for the most recent 2 years. Embed formulas in all cells requiring computations. Reference different sheets in your formulas when necessary. 3. Perform ratio analyses using the same 20 ratios for each corporation. Embed formulas in all cells requiring computations. Reference different sheets in your formulas when necessary. 4. Compare the horizontal analysis, vertical analysis, financial ratio analysis of both corporations and the industry averages, which can be found in D&B Hoovers, to detect trends and outliers, if any. Make note of trends or data you found unusual or interesting. Page 3 of 5 Step 6: Reporting Prepare one Excel file with multiple sheets labeled as follows: Excel Sheet # Label each Sheet as follows: Contents Notes 1 Name of your Corp A BS & IS of Corp A Copy & paste from Edgars – do not paste a screenshot Cite all sources 2 Name of your Corp B BS & IS of Corp B Copy & paste from Edgars – do not paste a screenshot Cite all sources 3 Industry Averages Industry averages Copy & paste from D&B Hoovers – do not paste a screenshot. There will be only one set of industry averages. Cite all sources. 4 Horizontal Horizontal analyses of the BS & IS for Corp A and Corp B You must use formulas to demonstrate your knowledge of Excel 5 Vertical Vertical analyses of the BS & IS for Corp A and Corp B You must use formulas to demonstrate your knowledge of Excel 6 Ratios Select and compute 20 of the most relevant financial ratios. Be able to justify why you chose each ratio. Use the same ratios for both Corp A & B. Embed formulas into the cells. If a ratio cannot be computed for one corporation, select a different ratio for both. 7 Summary Present your findings and conclusions in bullet points. Hints: Which figures are red flags? Note similarities, differences, and outliers. Note your ideas to improve metrics directly related to profitability. These are your ideas written in your words. You will use this sheet to prepare your presentation. Page 4 of 5 Step 6: Communication: Present using written and oral communication with an Industry perspective that engages your effective decision-making skills I. Prepare a Power Point presentation that includes the following: Title slide that includes your name Overview slide that summarizes the topic of the presentation Information about corporation A Information about corporation B A side-by-side comparison of the two corporations and industry averages in table format. Select and present relevant data only. Your findings based on your Excel sheet and research you conducted. Your recommendations to improve profitability in both corporations based on your findings o Offer specific recommendations that you can support with the data you collected, analyzed, and presented. More slides if needed. Final slide concluding the presentation. Reference list. Important notes: Speaker’s notes must be written under each slide. All slide content and speaker’s notes must be in your own words. Graphs, tables, and other data visualization tools to explain your findings If you include data visualization graphs/tables/tools that you did not create, cite the source on the slide. II. Present the PowerPoint presentation There are a maximum of three presentation options, at your professor’s discretion. Option 1: An audio-enhanced PowerPoint presentation (file) with accurate transcriptions (or accurate Closed Captioning) suitable to present to your boss and colleagues. o The audio enhancement must be embedded and run without requiring your professor to click the “Play” button on each slide. When you click “Play from Start” on slide 1, the slides advance automatically, the closed captioning is shown below each slide, there are no background distractions, and the presenter speaks clearly at a reasonable pace. o The sample PowerPoint presentation posted in Project 1 is an example of one way to create the audio-enhanced file. Note, the main objective of the sample presentation was different from the main objective of this project because the objective changes every semester. It is not mandatory to include a video of your face while presenting. If you do not know how to add continuous audio to your presentation file, there are many lessons on YouTube. You may also ask a study group member or other students for help in the Ask the Professor forum. Option 2: Use a tripod or have someone make a video (file) of you presenting your slides to the audience of your choice or an empty room, other than the videographer. The slides must be visible to the audience while you are presenting. Page 5 of 5 Option 3: At your professor’s discretion, you may schedule a live ZOOM presentation to your professor and classmates. This option omits the requirement to add audio to your PowerPoint presentation file. IV. Deliverables: This project has two deliverables: 1. Excel workbook with 7 tabs (Sheets) as described above o Original SEC Forms 10-K for each corporation used for the analyses. The 2 SEC 10-Ks will be included in the Excel file as Tabs 1 and 2. Your professor will review the 10-Ks to verify figures in your analyses. o Highlight figures on the Form 10-K’s used in your analyses o Note: all computations must be computed via an Excel formula that references other sheets when necessary. The Excel file must be prepared by you without the assistance of anyone else. 2. PowerPoint presentation using one of the three options as described above. Your recommendations must include your ideas to improve profitability. The presentation file must be prepared by you without the assistance of anyone else. V. Hints and Tips: Actively participate in your Study Group. Read the grading rubric before beginning the project to fully understand the requirements; ask questions about the requirements if needed. Your professor is interested in reading and hearing what you created. You may quote and cite sources to illustrate or support your own thoughts. Use spell check and grammar check. Seek feedback before submitting your deliverables o Ask a friend or family member to watch your presentation and share constructive feedback to help improve your grade. Submit all required files on or before the due date. Late assignment policies can be found in Course Resources/Late Policy. University rule – no assignments can be accepted after the last day of class.