Group project questions number 5
PREFACE Thomas Eccles: Fall, Kulesza Note to the user: This Word document provides a structured template for preparing your responses to the questions in the annual report project. If you did not purchase the workbook you are not permitted to use this template. INTRODUCTION TO THE CORPORATE ANNUAL REPORT: SEC Form 10-K 6th edition Copyright 2022 by Applied Accounting Analytics. All rights reserved. Reproduction or translation of this book beyond that permitted by the applicable copyright law without Applied Accounting Analytics’ permission is prohibited. To be completed by the student and submitted with the completed annual report project according to your instructor’s requirements. Complete the following before you submit your assignment. This step is required to validate your compliance with sections 107 or 108 of the 1976 United States Copyright Act. 1. Remove the front cover of the workbook and identify: Student Name: Thomas Eccles Term: Fall Selected Company: Click here to enter text. Instructor: Kulesza 2. Print out your completed electronic template. 3. Attach the following: · This front cover (completed) if working with a hard copy. · Electronic solution templates per faculty member instructions Chapter 1 - Introduction Select a Company and Gather Documents Chapter 1: Select a Company and Gather Documents – 1 Fill-in the page numbers from the annual report where the fallowing are located. Item number reference SEC Form 10-K Page No. Page No. Financial Highlights (Item 15) Click here to enter text. Statement of Cash Flows (Item 8) Click here to enter text. Management’s Discussion and Analysis (Item 7) Click here to enter text. Notes to Financial Statements (Item 8) Click here to enter text. Income Statement (Item 8) (may be labeled Statement of Earnings or Statement of Operations) Click here to enter text. Report of Independent Accountants or Independent Auditors’ Report (Item 8) Click here to enter text. Balance Sheet (Item 8) (may be labeled Statement of Financial Position Click here to enter text. Management’s Report on Internal Control over Financial Reporting (Item 9A) Click here to enter text. Statement of Change in Stockholders’ Equity (Item 8) Click here to enter text. Investor and Company Information of Shareholders Information Click here to enter text. Chapter 1: Identify Why You Selected This Company – Question 1 What is/are your motivation(s) or interest(s) in selecting this company? Click here to enter text. What question(s) are you seeking to answer? [For example, is the company profitable? Can the company change and develop new products and services to be competitive? Would I invest in this company? Will the company provide rewarding career opportunities? In Chapter 5 you will have pulled together the financial and nonfinancial information to answer the above questions. Click here to enter text. Company and Annual Report Essentials Chapter 1: Company and Annual Report Essentials – Question 1 What is the company’s complete name? Click here to enter text. Chapter 1: Company and Annual Report Essentials – Question 2 What is the address of your company’s corporate headquarters? Click here to enter text. Chapter 1: Company and Annual Report Essentials – Question 3 Identify the company’s website address. Click here to enter text. Chapter 1: Company and Annual Report Essentials – Question 4 Identify the telephone number and e-mail address of the company’s Investor Relations Department. Telephone number: Click here to enter text. E-mail address: Click here to enter text. Chapter 1: Company and Annual Report Essentials – Question 5 Which stock exchange lists your company? Click here to enter text. Chapter 1: Company and Annual Report Essentials – Question 6 What is your company’s stock exchange trading symbol? Click here to enter text. Chapter 1: Company and Annual Report Essentials – Question 7 What is your company’s Standard Industrial Classification (SIC) and sector? Go to: SEC.gov | HOME Search for your company in the “Search SEC.gov box. For example, a search on Home Depot brings up the following: HOME DEPOT, INC. CIK#: 0000354950 (see all company filings) SIC: 5211 - RETAIL-LUMBER & OTHER BUILDING MATERIALS DEALERS Your company SIC Code: Click here to enter text. Your company business sector: Click here to enter text. Chapter 1: Company and Annual Report Essentials – Question 8 Locate the board of directors listing. How many board members does your company have? (Hint: search the website for this information.) Click here to enter text. Chapter 1: Company and Annual Report Essentials – Question 9 How many of the directors are company employees, labeled inside directors? (Hint: inside and outside directors are typically identified as such by their title and company.) Number of inside directors: Click here to enter text. Number of outside directors: Click here to enter text. Why does a company want and need outside directors? Click here to enter text. Chapter 1: Company and Annual Report Essentials – Question 10 Leadership addresses the stockholders once a year at the annual stockholders meeting. Identify where and when this occurred, as reported in SEC Form 10-K. (Hint: search on the words annual meeting. Typically, this information is found on the last page of the 10-K) Click here to enter text. Company Strategy and Business Environment Chapter 1: Company Strategy and Business Environment – Question 1 Review the chief executive’s message. Does it appear to be uplifting or somewhat apologetic? Identify phrases that support your position. (Hint: The message may be found in the opening pages of SEC Form 10-K and/or company website.) Click here to enter text. Chapter 1: Company Strategy and Business Environment – Question 2 Check below the one primary company strategy identified in the chair’s message and SEC Form 10-K. Support your answer with phrases found in the message that pointed you to the identified corporate strategy. Growth: Vertical Click here to enter text. Growth: Horizontal Click here to enter text. Growth: Concentric Click here to enter text. Growth: Conglomerate Click here to enter text. Stability: Click here to enter text. Retrenchment: Click here to enter text. Phrases found to support your responses: Click here to enter text. Chapter 1: Company Strategy and Business Environment – Question 3 Briefly summarize the company’s discussion found in Item 1 of SEC Form 10-K. Type of business: Click here to enter text. Major business segments: Click here to enter text. Primary customers: Click here to enter text. Primary products and/or services: Click here to enter text. Other: Click here to enter text. Chapter 1: Company Strategy and Business Environment – Question 4 Identify broad-based social, political, economic, and technology concerns that may affect your company. Put N/A in the response box for a category that does not apply. Social: Click here to enter text. Political: Click here to enter text. Economic: Click here to enter text. Technology: Click here to enter text. Chapter 2 - Annual Report structure Company and Marketing Information Chapter 2: General Company and Marketing Information – Question 1 Category Example: Volunteer Activities Message Ongoing and contributing to the success of the community Click here to enter text. Click here to enter text. Click here to enter text. Click here to enter text. Click here to enter text. Click here to enter text. What is the broader message from this information? Click here to enter text. Management’s Discussion and Analysis Chapter 2: Management’s Discussion and Analysis – Question 1 Results of Operations: Identify the primary drivers/issues that explain current and future results of operations discussed in the MD&A. For example, the gross profit percentage increased because of improved buyer/supplier relations resulting in greater overall operating performance. Or an increase in operating expenses because of increased fuel costs reduced profits. List the three major drivers/issues of performance you find in the MD&A section of the annual report. Click here to enter text. Click here to enter text. Click here to enter text. Liquidity: Recap what you find about your company’s liquidity in the MD&A section of the annual report. Look for information about the ability of the company to satisfy short-term cash needs and the ability to generate operating cash flows, for example. Click here to enter text. Capital resources: Recap what you find about your company’s capital resources in the MD&A section of the annual report. Look for information about cash reserves and credit availability. For example, your company’s MD&A section may have disclosure about an established line of credit to fund future growth. Click here to enter text. Independent Auditors’ Report Chapter 2: Independent Auditors’ Report – Question 1 Review the Independent Auditors’ Report of your company’s annual report and answer the following questions. (Hint: found under Item 8 of SEC Form 10-K) Who was the company’s auditor and where is it located? Click here to enter text. What is the responsibility of the auditor? Click here to enter text. Who is responsible for the preparation of and information within the company’s financial statement? Click here to enter text. The audit was conducted in accordance with what? Click here to enter text. What was the opinion of the auditor? Click here to enter text. Controls and Procedures Chapter 2: Controls and Procedures – Question 1 Identify one or more themes addressed in the company’s compliance as reported in Item 9A, SEC Form 10-K? Click here to enter text. Locate the report titled “Management’s Report on Internal Control Over Financial Reporting.” (Hint: may be included in Item 8 or 9A. A company can elect where to provide this report.) Fill-in the sentence below identifying who is responsible for internal control: Our Click here to enter text. is responsible for establishing and maintaining adequate internal control over financial reporting … Identify the two highest ranking company officers that are responsible for internal control over financial reporting. Click here to enter text. Fill-in the words to complete the sentence below: Based on our evaluation, our Click here to enter text. concluded that our internal control over financial reporting was effective as of January 31, 2021, in providing Click here to enter text. regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Chapter 3 - Financial Statements The Balance Sheet Chapter 3: Balance Sheet – Question 1 Identify the date shown at the top of your selected company’s balance sheet. Current Year Prior Year Click here to enter text. Click here to enter text. Does the company’s fiscal year follow the calendar year? Answer Yes or No: Click here to enter text. If not, why do you think it is different? Click here to enter text. Classification of the Balance Sheet Assets Chapter 3: Balance Sheet – Question 2 Review the current asset section of your selected company’s balance sheet. Explain why the order of individual items begins with cash. In your opinion, would it be appropriate to order these items according to dollar magnitude? Explain Click here to enter text. Chapter 3: Balance Sheet – Question 3 Review your company’s balance sheet and notes to the financial statements and compare accumulated depreciation to the historical cost of Plant and Equipment (PE) using the following ratio. Compute the following: Accumulated depreciation / Plant and Equipment Are the assets older or newer? High percentage means older assets. Low percentage means newer assets. Click here to enter text. Click here to enter text. Is the investment in fixed assets, on average, relatively recent? If not, can we assume that these assets will be replaced shortly? Click here to enter text. Chapter 3: Balance Sheet – Question 4 Since property, plant, and equipment (PPE) and operating lease right-of-use assets represent a company’s investment, why do we distinguish between them in the balance sheet? Click here to enter text. Chapter 3: Balance Sheet – Question 5 Review the noncurrent asset section of your company’s balance sheet. Are any intangible assets listed? If so, identify the types of intangible assets and the percent of total assets that the intangible assets represent. Intangible Asset 1: Click here to enter text. Intangible Asset 2: Click here to enter text. Intangible Asset 3: Click here to enter text. Total Intangible Assets Total Assets = Click here to enter text. If this company were to be acquired by another company, would the intangible assets influence the purchase price? Explain your answer. Click here to enter text. Chapter 3: Balance Sheet – Question 6 Now review your company’s total assets for the most recent year. What percentage of total assets are current? Noncurrent? Current Noncurrent Click here to enter text. Click here to enter text. Should companies have a greater investment in current assets or noncurrent assets, or does it depend on the nature of their business? Explain your answer. Click here to enter text. Liabilities Chapter 3: Balance Sheet – Question 7 Review your company’s balance sheet. Does it report a deferred tax asset? A deferred tax liability? If so, are the deferred tax assets and/or liabilities reported as current or noncurrent? Deferred tax asset? Yes or No Click here to enter text. Current or Noncurrent* Click here to enter text. Deferred tax liability? Yes or No Click here to enter text. Current or Noncurrent* Click here to enter text. Stockholders’ Equity Chapter 3: Balance Sheet – Question 8 Identify the information that relates to the stockholders’ equity section of your company’s balance sheet. Par value per share of common stock? Click here to enter text. Number of common shares authorized? Click here to enter text. Number of common shares issued? Click here to enter text. Number of common shares outstanding? Click here to enter text. Number of treasury shares held by the company? Click here to enter text. Chapter 3: Balance Sheet – Question 9 Answer the following questions relative to the stockholders’ equity section of the balance sheet. By