Part #1
1. Use the Pitchbook Database and download the most recent 3 years of financial statements. In your report make sure you discuss the following:
• Company background: Name of company, Auditor, Industry, Market Capitalization, & name of Stock Exchange where the company is listed.
• Accounting Analysis: Use the answers of the questions below &evaluate the company’s accounting choices and accrual estimates. Describe whether the management of your company has been Liberal or Conservative in choosing among alternative revenues & expenses, and assets valuation policies.
• Performance & Financing: Analyze the company’s ROE and determine the relative contribution of operational & financing activities. Use the results to describe the interrelationship among financing, investing & operating activities,
• ESG: Does you company implement an ESG framework? How much was your company’s ESG score over the last 3 years? What does it mean to you as an investor? How does your company compare to competitors?
Part #2
a. How much did your company report of Total Assets, Total Liabilities, Retained Earnings & Owners’ Equity over the last 2 years?
Total Assets
Total Liabilities
Owners’ Equity
Retained Earnings
b. How much did your company retained of its earning in the last year?
Earnings Retained in the last year.
Explain how you got the above number.
c. Construct the extended accounting equations for the last two years. Explain how the changes in total assets were financed, if any.
d. Determine Total Revenues, Gross Profit, Operating Income (EBIT) & EBITDA for each of the last 3 years. Collectively, what do the above accounts tell you? What does EBITDA tell you that EBIT doesn’t?
Revenues
Gross Profit
EBIT
EBITDA
Comments …
EBITDA ……
e. Briefly describe the Revenue Recognition Principe(s) your company used. List the different types of revenues your company listed.
f. List the cash flows from the three major activities your company reported over the last 2 years. Explain what those numbers tell you as a user of accounting information.
g.
Operating Activities
Investing Activities
Financing Activities
Net Change
Comments ..
h. How much your company reported of Net Income & Cash Flow from Operating Activities over the last 3 years. What can you imply about the quality of earning?
Net Income
Cash flow from Operating Activities
Implication ..
i. How much did your company report in receivables and allowance for doubtful accounts over the last two years? Did the allowance increase or decrease relative to Receivables? Explain the impact of changes in reported values on the profitability of the company.
Receivables
Allowance for Doubtful Accounts
%
Discuss:
j. What inventory valuation method(s) did your company use? Is/ are the method(s) used appropriate given the general price level changes over the last year? Explain the impact of the management’s choice on the quality of reported income figures.
k. List Long-term assets by category and determine the depreciation/ depletion/ amortization methods used.
l. Did your company report any intangible assets? How did they come to exist, if any?
m. Use the operating leverage concept we learned in management accounting & prepare your company’s income statement using the contribution margin approach.