select one company to study. It can be any company that is traded on a U.S. Stock Exchange and files a form 10-K annual report. A process for selecting the company will be included to insure there are no duplicates.
2. Students will access the most recent Annual Report (Form 10-K) for their selected company from either the company’s website or the SEC website and use it to complete the requirements of this project.
3. The project requires submission of a document that must be typed using word processing software and submitted electronically as a word document or pdf file.
4. The document must be single spaced, using Times New Roman 12 point font, with one inch margins on all four sides and be prepared using a general business writing style that is appropriate to meet the individual requirements discussed below.
5. Tables and graphs may be appropriate, depending on the specific requirement and their use is strongly encouraged. They should be labeled and referenced in the narrative portion of the document in such a way as to make it easy to follow (e.g. Table 1, or Figure 1). Do not just provide pages of numbers and charts without any explanation or discussion of what the numbers mean.
6. Large tables that take up the majority of a page should be placed as an exhibit, at the back of the document, and referenced in the narrative. Smaller tables and charts should be professionally presented within the text at about the place in the text where the results are discussed.
7. Some of the requirements may be suitable for use of an electronic spreadsheet, which is encouraged. If you are using Microsoft products (i.e. Word/Excel) you may cut and paste your results from Excel into Word. If you do this, you are encouraged to format your spreadsheet tables so they look professional before they are copied into the Word document. Do not submit the actual spreadsheet, only the results as copied and pasted into the word document or pdf file.
8. This should be a document that you would be proud to give to your employer or a prospective employer as an example of the work you are capable of doing
Specific Requirements:
1. Cover Page – The submission should include a cover page with the student’s name, course information, the name of the company, and the due date.
2. Table of Contents – A professional looking table of contents should include, at a minimum, reference to each of the following major topics. Reference to sub-topics within each topic is also encouraged, but not required.
3. Executive Summary – A maximum of two pages written in such a way that a busy executive could read it and have a complete understanding of the major issues that impact your company. It should start with an introductory paragraph that includes a brief overview of the company, including a discussion of the industry and the products and/or services that the company provides. The body of this section should highlight key issues from your detail analysis that follows, and it should end with a concluding paragraph that summarizes your analysis of the financial viability of your company.
4. Balance Sheet Analysis – After reviewing the balance sheet, briefly address each of the following at a minimum:
1. Identify trends or unusual amounts in major balance sheet categories (i.e. current assets, property & equipment, etc.) and discuss what may be driving these trends and what implications they may have for the future.
2. Does the company have any short-term or long-term investments? How do they account for unrealized gains or losses (i.e. available-for-sale or investing)?
3. What method does the company use to value its inventory?
4. What method does the company use to depreciate its property plant and equipment?
5. Does the company have any intangible and/or goodwill assets? If so, how are they amortized or evaluated for impairment?
6. Is the company principally debt financed or equity financed? Is the company subject to any debt covenants? If so, what are they and is the company in compliance with them?
7. Discuss any other balance sheet items that you feel may be of concern to stakeholders.
5. Income Statement Analysis – After reviewing the income statement, briefly address each of the following at a minimum:
1. Identify trends in sales, gross profit, operating profit and net income, both in amounts and percentages. Discuss what may be driving these trends and implications they may have for the future.
2. Review the company’s “Summary of Significant Accounting Policies.” Identify how the company recognizes revenue. Identify if the company uses any estimates in the preparation of its financial statements, and if so, the types of estimates used.
3. Identify the company’s basic and diluted earnings per share (EPS). Identify any dilutive claims that are responsible for the difference between the two amounts.
4. Identify any extraordinary or special items, restructuring charges, changes in accounting principles, or discontinued operations and discuss the impact they have on sustainable earnings.
5. Determine if the company paid dividends to its shareholders. (Hint: You may need to look at the statement of shareholders’ equity or cash flow). If so, what is the dividend payout ratio (dividends divided by net income), and comment about what dividend policy says about the company and the implications for the future.
6. Discuss any other income statement items that you feel may be of concern to stakeholders.
6. Cash Flow Statement Analysis – After reviewing the cash flow statement, briefly address each of the following at a minimum:
1. Identify overall trends in cash flow provided by (or used in) operations, investing and financing. What conclusions can you draw from these trends?
2. Identify the major reasons why cash flow provided by (or used in) operations is different from net income. Discuss the implications of this difference and why it’s important to understand these differences.
3. Identify the major investing activities of the company over the past two years and comment on how they may impact the future of the business.
4. Identify the major financing activities of the company over the past two years and comment on how they may impact the future of the business.
5. Discuss any other cash flow items that you feel may be of concern to stakeholders.
7. Ratio Analysis – Using the various financial ratios discussed in video lecture M4-L5, prepare an analysis of each of the following categories for the most recent two years by preparing a small table showing the ratios followed by a discussion of what the ratios indicate about the health of the company, including past trends and future implications (not all ratios may apply to all companies):
1. Liquidity Ratios
2. Solvency Ratios
3. Asset Management Ratios
4. Profitability Ratios
5. Cash Flow Ratios
8. Benchmark Analysis – Identify several key competitors of your company. Go to http://finance.yahoo.com/ and prepare a small table that shows how your company compares to its key competitors for the following ratios for the most recent year, and discuss the implications:
1. Return on Sales
2. Return on Assets
3. Return on Equity
9. Audit Report Analysis – Identify which accounting firm audited the company’s financial data. What opinion did they issue for the financial statements as a whole? What opinion did they issue on the company’s internal control over financial reporting? Are there any issues in the report that raise concerns about the company?
10. Financial Statements & Other Exhibits – Prepare exhibits that combine basic financial statements and common size financial statements into one schedule using the formats demonstrated in video lecture M4-L4.
o Use five columns for each schedule including: actual results for each of the past two years, common size columns for each of the past two years, and the percent of change. The common size columns should be expressed as a percent of total assets for the balance sheet, net sales for the income statement and operating cash flow for the cash flow stt end of year cash balance. Following is an example of the column headings:
Current Prior Current Prior Change
Amount Amount Percent Percent Percent
o Schedules should be prepared with amounts expressed in millions or thousands depending on the size of the company so that all six columns will fit comfortably on the page in portrait style.
o Prepare separate schedules for each of the following statements: income statement, balance sheet, and statement of cash flow. The schedules should be labeled as Exhibits and placed at the end of your document.
11. References – You may use any source of information you feel is relevant, including: the online textbook, your company’s Form 10-K Annual Report, financial analyst reports, online financial resources such as Yahoo Finance, K-State Library resources, etc. You must provide proper reference citations for any of these sources within the text and identified in a reference section at the end of the report in such a manner that they can be located and verified. Failure to properly cite outside sources is considered an honor code violation. The APA or Chicago methods of citation is recommended, which includes citations within the text to references listed in alphabetical order by first author. The in-text citation should be in the form of (Author, Year). Be sure to include quotation marks around direct quotes.
Form 10K of Nvidia Corporation https://www.sec.gov/Archives/edgar/data/1045810/000104581018000010/nvda-2018x10k.htm
