Internet financial statement analysis ratio project

Assignment Help Accounting Basics

Reference no: EM131278010

The goal of this assignment is for you to experience finding out relevant accounting and other information about a corporation as if you were an investor. You will find out that it is relatively easy to look up information about any publicly traded company on line.

Instructions:

Follow the directions for each question below to look up the answers to the questions on the worksheet. Write the appropriate response in the spaces provided on the worksheet

Project Worksheet

The following assignment is designed to introduce you to some of the FREE financial information that is available on the web. This can be especially useful for personal investing decisions. We focus on a single site, Yahoo! Finance. There are, however, various other good sites such as Google Finance. We encourage you to explore these web sites on your own. Use the glossary of terms for any items that are new to you.

For the purposes of this exercise, we will be examining IBM and in the second part of the project comparing it to Apple. The fiscal year end of IBM is December 31, and the fiscal year end of Apple is September 24. In order to use recent comparable information in the second part of the project you will gather financial statement facts from the 3rd quarterly report (of fiscal year 2016) of IBM ending September 30, 2016 and compare those with the 3rd quarter (of fiscal year 2016) of Apple ending June 25, 2016.

FIRST PART OF THE PROJECT

First, go to the following web site:

https://finance.yahoo.com

Type "IBM" in the box next to "get quotes"

Then click on "get quotes"

Select the ticker symbol "IBM" from the menu of choices

This will take you to a page of basic information about IBM's stock. It will show you the current price and the volume of trading. There are several links to other information about IBM in the left column of the page you will find the links menu. From this menu, you will click on the following links to obtain the necessary information:

(NOTE: The ticker symbol for International Business Machines Corporation is IBM. The ticker symbol is a letter designation that is assigned to stocks and mutual funds traded on U.S. exchanges. You may use it to "get quotes" instead of typing in the whole company name)

- Profile (under company)
- Historical Prices (under quotes)
- Income Statement and Balance Sheet (under financials - quarterly data)
- Competitors (under company)
- Analyst Estimates (under analyst coverage)

Each of the above links will be discussed in the following pages. You will be asked to go to each of the linked pages and record information in the spaces provided.

Basic Information

The earnings per share of a company measures the amount of income earned for each share of stock, which is net income divided by shares of common stock outstanding Earnings per share are abbreviated as "EPS"

The earnings per share (EPS) for IBM for the most recent year shown on this page are (Note: ttm = trailing twelve months (the past 12 months)

_____________

The current price of IBM's common stock is? _____________ on

Date:____________________(Record the Last Trade price and the date you looked at it)

Profile
From this page, you can obtain a brief Business Summary and Financial Summary. There is also general contact information as well as links to several other items, such as the company web site.

From this page, answer the following questions about IBM:

1. What Industry is IBM in?

___________________

2. How many full time employees work for IBM?

__________________

3. Who is the Chief Executive Officer? _______________________

4. Who is the Chief Financial Officer? ________________________

Historical Prices
From this page, you can obtain daily, weekly, and monthly prices for your company for a range of dates. You can also obtain information on dividends. Select December 31, 2015 as the start and end date to capture the historical price at the end of last year.

Make sure that the daily price quote is chosen:

Daily
Weekly
Monthly
Dividends

Look at the column listing the adjusted closing price (this price is adjusted for stock splits and stock dividends).

What was the adjusted Closing price of the company for December 31, 2015?

Closing Price

How much money would you have made or lost from the price change if you had purchased 1 share of IBM stock on December 31, and sold it on the day you looked up the current price?

Analyst Estimates From this page, you can see current broker recommendations and estimates of future earnings. (See "growth estimates")

What is the consensus estimate for the rate of growth of IBM's earnings over the next five years?

What is the consensus estimate for the rate of growth of the Industry's earnings over the next five years?

Financials From these pages, you can view the recent quarterly financial statements of the company. In order to compare IBM to a close competitor we will use data for the quarter ending September 30, 2016.

Click on income statement or balance sheet of IBM as requested below. Then be sure you are viewing Quarterly Data. If you get "Annual Data" then switch to quarterly by clicking on the Quarterly Data link at the top. Notice that all numbers are in thousands of dollars (for example 200,000 is really 200,000 x 1,000 or 200 million), but write them on your worksheet just as they are. If it says 200,000 just write 200,000. Questions 1 through 16 pertain to IBM.

1. From the quarterly Income Statement, what was the total revenue for the quarter ending on September 30, 2016?

2. From the quarterly Income Statement, what was the total revenue for the previous quarter ending on June 30, 2016?

3. Now use your answers to 1 and 2 to calculate the % growth in revenue for the quarter (subtract revenues for the quarter ending June 30, 2016 from revenues for the quarter ending September 30, 2016 and divide the result by the revenues for the quarter ending June 30, 2016. Then express the result as a percentage).

% Growth in Revenue = ______________________________

4. From the quarterly Income Statement, what was Net Income for the quarter ending on September 30, 2016?

5. From the quarterly Income Statement, what was the Gross Profit for the quarter ending on September 30, 2016?

6. From the quarterly Income Statement, what was the Cost of Revenues (cost of goods sold) for the quarter ending on September 30, 2016?

7. From the quarterly Balance Sheet, what was the value of inventories as of September 30, 2016?

8. From the quarterly Balance Sheet, what was the value of inventories as of June 30, 2016?

9. From the quarterly Balance Sheet, what was the total asset value as of September 30, 2016?

10. From the quarterly Balance Sheet, what were the total liabilities as of September 30, 2016?

11. From the quarterly Balance Sheet, what was the total current assets value as of September 30, 2016?

12. From the quarterly Balance Sheet, what was the total current liabilities value as of September 30, 2016?

13. The largest current asset category is: __________

14. The largest current liability category is: __________

15. The largest non-current asset category is: ___________

16. The largest non-current liability category is: ___

FINANCIAL RATIOS:
Use the information gathered from IBM's Financials on the previous pages to calculate the following ratios for IBM. Do not try to look these up on the website. Instead you must make the calculation yourself.

Inventory Turnover ___________________
(Cost of Goods Sold / Average Inventory)
Gross profit % __________________
(Gross Profit / Revenues)*100

Debt Ratio ________________________
(Total Liabilities/Total Asset)

Current Ratio _______________________
(Current Asset/Current Liabilities)

COMPARISON OF IBM TO A CLOSE COMPETITOR- APPLE, INC.

Now open up the income statement and balance sheet for Apple: In "get quotes" enter AAPL for Apple. On the left menu find the income statement and the balance sheet under Financials. Look up the following income statement information:

Total Quarter Revenues (June 25, 2016) _______________

Total Quarter Revenues (March 26, 2016) ______________

Quarter Gross Profit (June 25, 2016) ________________

Look up the following balance sheet information for June 25, 2016

Total Assets ____________________

Total Liabilities ___________________

Current Assets ___________________

Current Liabilities ___________________

Now use these 7 values (above) to calculate the following ratios for Apple in order to compare them to IBM. Use the same calculation methods as for IBM.

Revenue Growth _______________________ (it could be negative)

Gross Profit Margin ________________________

Debt (total liabilities) to Total Assets ____________________

Current Ratio _______________________

Based on a comparison of these two ratios between IBM and Apple which company seems to have better liquidity, which has better margin which has better solvency and which has better revenue growth?

Revenue Growth? ____________________

Margin? __________________

Solvency? __________________

Liquidity? __________________

Reference no: EM131278010

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