Purpose of Assignment

This activity helps students recognize the
significant role accounting plays in providing financial information to
management for decision making through the evaluation of financial
statements. This experiential assignment requires students to use ratios
to evaluate and analyze a company’s liquidity, solvency, and
profitability.

Assignment Steps

Resources: Generally
Accepted Accounting Principles (GAAP), U.S. Securities and Exchange
Commission (SEC), University Library, Library resources: Company
Directories and Financials

Tutorial help on Excel^® and Word functions can be found on the Microsoft^® Office website. There are also additional tutorials via the web offering support for Office products.

Select a publicly traded, U.S. corporation with which you are familiar or one where you currently work or have worked in the past.

Research the company on the Internet and download
the Income Statement, Statement of Shareholders’ Equity, Balance Sheet,
and Statement of Cash Flows. The SEC site can be a good source, but
also review the “Investor Relations” section of the company’s own
website. These two sources will likely be the best source to collect
all four required statements.

Develop a minimum 700-word examination of the financial statements and include the following:

• Determine the net income for the current fiscal year (FY). Is this income up or down from the prior year?
• Explain the relevance of changes in net income to investors.
• Determine the ending balance in shareholders’ equity. Why would organizations such as labor unions be interested in this?
• Determine the total value of assets.
• Discuss the relevance of the total value of assets to potential creditors and why this is important.
• Compute the return on assets. Discuss the relative profitability of the company based on your results.
• Compute the working capital and current ratio. Evaluate the relative liquidity of the company based on your results.
• Compute the debt to assets ratio and the free cash flow for your
  company. Analyze the results and comment on the relative solvency of the
  company.
• Discuss how the financial statements are used in your current role
  or a position you would like to hold. How might these aid you in
  managerial decision making?

Show your work in Microsoft^® Word or Excel^®.

Complete calculations/computations using Microsoft^® Word or Excel^®.

Include the four financial statements along with your assignment.

Format your assignment consistent with APA guidelines.