Question: Analysis Exercise

For this week's 10-K activity, you are to perform a ratio or cash flow analysis and provide a section of your paper on either one of these topics. Detailed instructions are attached. Please choose one or the other, but not both.

In the title to your posting, please indicate "Ratio Analysis" or "Cash Flow Analysis" along with the name of your chosen company.

Part 1: Ratio Analysis

This activity is designed to help you prepare your paper and is to be written in proper APA format. Before providing your write-up, please perform the following analysis for your chosen company.

Calculate the following ratios for your chosen company:

Current Ratio

Return on common stockholder's equity

Profit Margin

Return on Assets

Equity Ratio

Calculate these same ratios for another company in the same industry for the same period of time. Use at least 2 years of data. You can either choose another company and search the internet for the information, or choose another company in the same industry that one of your classmembers has chosen and use their posted information. You do not need to include or show your actual calculations, just the results.

Provide an analysis on the ratios that you calculated - what do they mean? How do they compare to the other company? Are there any trends of interest from year to year? Explore the details behind the numbers to explain them (this is what analysis is about).

Please write as if you were preparing a major section of your paper, using proper APA formatting (topic headings and in-text citations) and include references. Feel free to use tables, charts and graphs if you desire. It is suggested that you include a section for each ratio to discuss the nature of the ratio itself as well as your analysis.

Here are some pointers for writing this section of your paper:

• You should describe each ratio you are presenting and what it is used for.

• Avoid informal, conversational writing style (no slang terms, writing in the first person, etc.)

• Analysis goes beyond stating the obvious. So if you are including tables, or narrative, that show increases or decreases from year to year or differences between your chosen company and a competitor, don't just note the differences. The reader can already deduce this from the table. Instead, focus on analyzing why there are differences or changes and research the details. Discuss what the differences mean (for example, is it better to have a higher or lower current ratio?) Even a "B" paper will need some level of analysis rather than just stating the numbers and whether or not they went up or down.

• Use more than one year of data. Ratio analysis is not as meaningful when it is based on one year alone.

• Include in-text citations in APA format when using information from another source. This does not just include direct quotes. And try not to use lengthy direct quotes unless there is something unique about the wording that needs to be preserved. Write in your own words.

• Make sure you use headers (in APA format) for each topic area.
Include the Balance Sheet and Income Statement (extracted from the 10-K report) for your company and your competitor company an attachment to your posting.

Part 2: Cash Flow Analysis

Project: Statement of Cash Flow

This activity is designed to help you prepare your paper and is to be written in proper APA format. Before providing your write-up, find the cash flow statement for your chosen company as well as the cash flow for a competitor company. Compare the cash flow for both companies. and compare/comment on each. Attach the cash flow statements as a Word document, to your posting.

Provide a written analysis of the cash flow statements. Please focus on the elements of the cash flow statement and compare each major section (Cash Flow from Operating Activities, Investing Activities and Financing Activities). The analysis is not to compare the volume of cash flow. Many companies that are competitors of each other are very different in size. Concentrate on how each company is obtaining its cash and how they are using that cash and note similarities and differences. Compare year-over-year numbers and note and research any significant trends or differences from year to year.

A reminder - this exercise is designed to help you write your SEC 10-K paper. Please respond to this conference as if you were submitting a section of your paper, using proper APA formatting (with in-text citations and reference list), headers, etc. Please do not respond in a conversational and casual style (no writing in the first person, using slang terminology, etc.)

Here are some pointers to help you write this section of your paper:

o The numbers in the Operating Activities section relating to current assets and liabilities are not balances. These are merely the changes in these accounts from one year to the next. Because this section starts with accrual basis net income, it is necessary to convert this to cash basis in order to compute the cash flow from operating activities. For example, if accounts receivable increased from one year to the next, then that means that there was net income recognized that was not received as cash, so increases in accounts receivable are subtracted from accrual basis net income. Other adjustments in this section are for non-cash related expenses or differences in accrual versus cash basis expenses.

o When comparing your company's cash flow with another's, focus more on the sources and uses of cash for each, as well as notable trends from year to year. It is ok to mention the size of one company versus the other, but this should not be the main driver of your analysis.

o "Negative" numbers in the Finance and Investing sections do not represent losses. Gains and losses are reported on the income statement. Cash flow statements deal with the sources and uses of cash. Negative numbers in these sections indicate that the company used cash for these activities and positive numbers means that they received cash from these activities.

o Organize your write up by the major sections of the cash flow statement. This will make your paper flow better and make it easier for the reader to relate your analysis to the statements themselves.

o Use the details provided in the financial statements, read the notes and review other details provided in the 10-K (and you can use other sources as well) in order to gain more insight in order to better explain the numbers. Do not limit your analysis to just reviewing the numbers on the statement and trying to guess what happened. Just stating what the numbers are and whether they went up or down is not an analysis. An analysis explains the numbers and draws conclusions. You are expected to include some level of analysis of the numbers in your paper.

o Make sure your paper is in APA format with in-text citations and a reference list.