Following the instructions in the textbook on pp. 1-26 through 1-28, download:
a. Amazon’s Form 10-K from the EDGAR website
i. HTML and XLSX versions
b. Alphabet’s Form 10-K from the EDGAR website
i. HTML and XLSX versions
For each company, do the following:
1. Locate the Balance Sheet, Income Statement, Equity Statement, and Cash Flow Statement
a. Note differences in terminology used for titles and key account totals
b. Note dates and time periods covered
2. Identify the name of the audit firm
a. Note the type of Audit Opinion
3. Prepare a DuPont analysis with Leverage
a. Comment on their strategy
4. Compare the A/R TO and A/P TO
a. What implications for cash flows do you observe?
5. Identify the major sources of cash
a. Inflows
b. Outflows
6. Calculate the Total Debt to Total Assets ratio
7. Calculate ROE
a. Compare to ROA
i. Does the organization have positive or negative leverage?
8. Determine the Net Book Value from the financial statements.
a. Search the web for the current Market price per common share, and total market capitalization
b. Compute (or search for) the Market to Book ratio.
c. Explain why it does not = 1.0.
9. From the financial statements
a. Determine the number of preferred stock shares authorized, issued, and outstanding.
b. Determine the par value of the common stock. Compare it to the Additional Paid in Capital.
c. Why might a company adopt such a par value?
10.Does the company have any Treasury Stock?
a. If so, is the value positive or negative? Why?
11.Should the company ever pay out dividends? Why, or why not?
a. How much profit has the company retained in the business, after paying out all dividends?
12.From the Balance Sheet, identify any items classified as “Unearned Revenue”
a. What might they represent?
13.From the Balance Sheet, identify the amount of Accounts Receivable
a. Identify the amount of the allowance for uncollectible accounts.
b. What percentage of Accounts Receivable do they expect to collect? Is that good or bad?
14.From the Balance Sheet, identify any amounts of deferred revenue.
a. What might they represent?
b. When will they be recognized as “earned” revenue?
15.Identify whether they have any intangible assets on its Balance Sheet.
a. What might they represent?
b. Is their useful life limited, or unlimited?
16.Compute Working Capital, and the Current Ratio.
a. Does the liquidity appear high, or lean?
17.Using Excel, perform a Vertical (common size) Analysis on the Income Statement, and Balance Sheet.
a. Describe any notable proportions identified and indicate why they caught your attention
18.Compute the Interest Coverage Ratio
a. Does it look too high, too low, or somewhat reasonable? Why?
19.Compute the Current Ratio and Acid Test (Quick Ratio)
a. Do the amounts indicate thin liquidity or aggressive cash management?
20.Perform a Horizontal Analysis of the Income Statements for the years available
a. Is GP Growing or shrinking over time?
b. Observe the relationships between GP, A/R, Inventory, and A/P.
c. Are they growing in consistent directions? Why or why not?
21.Examine the Income Statements for the Allowance for Uncollectible Accounts.
a. Evaluate the reasonableness of the amounts in comparison to Accounts Receivable
b. What might be done to improve collectability of the accounts?
22.Examine the Cash Flow Statement for “Foreign Currency Effects on Cash and Cash Equivalents”
a. How significant is the amount compared to Cash and Cash Equivalents on the Balance Sheet?
23.Examine the Income Statement.
a. How much is Basic Earnings per share?
b. How much is Diluted Earnings per Share?
24.Examine the Cash Flow Statement
a. How much is Cash from Operations?
b. How much is Cash from Investing?
c. How much is Cash from Financing?
d. Does the Ending cash balance match the Cash on the balance sheet?
e. Where does the cash mostly come from?
f. Where does the cash mostly go to?
g. What is the ratio of Cash from Operations to Net Income?
1. Is it good or bad?
h. What are two major Capital Expenditures?
i. What is the ratio of Cash from Operations to the sum of the two major Capital Expenditures?
1. Is it good or bad?
25. Describe your overall impressions and conclusions
a. Would you favor investing in either company? Why?