Team Project: Examining an Annual ReportAs a team, select an industry to analyze. Reuters...

Team Project: Examining an Annual Report

As a team, select an industry to analyze. Reuters provides lists of industries and their makeup at www.reuters.com. Each team member should acquire the annual report or 10-K for one publicly traded company in the industry, with each member selecting a different company. (Library files, the SEC EDGAR service at w ww.sec.gov. Compustat CD. or the company itself are good sources.)

Required:

On an individual basis, each team member should write a short report answering the following questions about the selected company. Discuss any patterns across the companies that you as a team observe. Then, as a team, write a short report comparing and contrasting your companies.

1. List the accounts and amounts of the company's liabilities for the last three years.

a. What is the percentage of each to the respective year's total liabilities?

b. What do the results of your analysis suggest about the strategy your company has followed with respect to borrowed funds overall and over time?

c. Does the company disclose any lease liabilities in the footnotes? If so. compute the percentage of lease commitments to total liabilities.

2. What, if any. contingent liabilities are reported by the company for the most recent year and what is your assessment of the risk of each after reading the footnote(s)?

3. Ratio Analysis:

a. What does the quick ratio measure in general?

b. Compute the ratio for the last three years.

c. What do your results suggest about the company?

d. If available, find the industry ratio for the most recent year, compare it to your results, and discuss why you believe your company differs or is similar to the industry ratio.

4. Ratio Analysis:

a. What does the accounts payable turnover ratio measure in general?

b. Compute the ratio for the last three years.

c. What do your results suggest about the company?

d. If available, find the industry ratio for the most recent year, compare it to your results, and discuss why you believe your company differs from or is similar to the industry ratio.

5. What is the effect of the change in accounts payable on cash flows from operating activities for the most recent year (that is, did the change increase or decrease operating cash flows)? Explain your answer.