ACCT 240 Principles of Financial Accounting – Fall 2017 Semester Project
Analyzing the Accounting Communication Process
Due Date: Your paper is due no later than the start of class on Wednesday, November 29th. You may
turn your assignment in sooner. However, no assignments will be accepted after Wednesday,
November 29th.
Required:
This is an individual assignment worth 7% of your total course grade. You will be able to complete this
project after finishing Chapter 5 (Communicating and Interpreting Accounting Information) of your text.
Select a publicly traded company to analyze that meets ALL the following criteria:
• Company’s name begins with the same letter as the first letter in your first or last name.
• Company prepares financial statements in accordance with US GAAP.
• Company is currently traded actively on a US Stock Exchange.
• Only one student in the class can select a company (we will have a class sign-up sheet).
Yahoo!Finance provides lists of industries at biz.yahoo.com/p/industries.html. Click on an industry for a
list of companies in that industry. Alternatively, go to Google Finance at www.google.com/finance and
search for a company. You will be presented with a list including that company and its competitors.
You must acquire the most recent Form 10-K (i.e., annual report) for the publicly traded company that
you selected. You should download this Form 10-K so that you can reference it easily as you work on
this assignment.
You should be able to work on most of the requirements of this project after we complete Chapter 5 on
the accounting communication process.
Write a business report that answers the following questions about the selected company. The most
recent annual report (Form 10-K) should be the primary source of your information.
1. What formats are used to present the
a. Balance Sheets?
b. Income Statements?
c. Operating Activities section of the Statement of Cash Flows?
2. Find one footnote for each of the following and describe its contents in brief:
a. An accounting rule applied in the company’s statements.
b. Additional detail about a reported financial statement number.
c. Relevant financial information but with no number reported in the financial statements.
3. Using electronic sources, find one article reporting the company’s annual earnings
announcement. When is it dated and how does that date compare to the balance sheet date?
a. Give the title, author and date of the report.
4. Using electronic sources, find one analyst’s report for your company.
a. Give the date, name of the analyst, and his or her recommendation from the report.
5. Using the SEC EDGAR website (www.sec.gov), what is the most recent document filed by your
company with the SEC (e.g., 8-K, S-1) and what did it say in brief?
6. Ratio analysis:
a. What does the return on total assets ratio measure in general?
b. Compute the ROA ratio for the last two years. (Showing formulas and calculations)
c. What do your results suggest about the company?
d. Find the industry ratio or calculate the chief competitor’s ratio, compare it to your
company’s results, and discuss why you believe your company differs from or is similar
to the industry/chief competitor ratio.
1. Don’t just describe what accounts cause the difference, but discuss the business
strategies or events that may have caused differences in the ratios.
2. Reasons can often be found by reading the Management Discussion and
Analysis section of the 10-K (i.e., annual report)
7. Use the ROA profit driver analysis to determine the cause(s) of any differences in the ROA ratio
over the last two years, showing formulas and calculations. (Remember that you computed the
three profit driver ratios in Chapters 2, 3, and 4 of your text.)
Remember to use Ch. 5 as a resource throughout this project as it can provide you with
sources for information and help you in analyzing the financial statements.
ACCT 240 Principles of Financial Accounting – Semester Project
Analyzing the Accounting Communication Process – GRADING RUBRIC
STUDENT NAME ______________________________________
Maximum
Points
Points
Earned
1.a Correctly identified format used to present the Balance Sheet 3
1.b. Correctly identified format used to present the Income Statement 3
1.c. Correctly identified format used to present the Statement of Cash Flows 3
2.a Found one footnote related to an accounting rule applied in the company’s
statements, and described its contents in brief.
5
2.b. Found one footnote related to an additional detail about a reported
financial statement number, and described its contents in brief.
5
2.c. Found one footnote related to relevant financial information but with no
number reported in the financial statements, and described its contents in
brief.
5
3. Using electronic sources, found one article reporting the company’s annual
earnings announcement for the period reported in your company’s 10-K.
Identified when it was dated and noted how that date compared to the
balance sheet date?
10
4. Using electronic sources, found one analyst’s report for the selected
company, and give the date, name of the analyst, and the analyst’s
recommendation.
10
5. Used the SEC EDGAR website (www.sec.gov), and identified the most
recent document filed by the selected company with the SEC (e.g., 8-K, S1)
and noted what it said in brief.
10
6.a. Described what the return on total assets ratio measures in general. 6
6.b. Computed the ROA ratio for the last two years showing the formula and
your calculations.
10
6.c. Described what the results suggest about the selected company. 10
6.d. Found the industry ratio (can go to Thomson in the FSIT lab) or calculated
the ratio for the chief competitor, compared it to the selected company
results, and discussed why the selected company differs from or is similar
to the industry ratio/chief competitor.
10
7. Used the ROA profit driver analysis and determined the cause(s) of any
differences in the ROA ratio over the last two years, again providing the
formulas and calculations.
10
TOTAL POINTS 100
