An important objective in this class is to build skills in reading and interpreting financial statements. The company project provides an opportunity to learn about and become familiar with a company by analyzing the contents of the financial statements contained in the company’s annual report.

The analysis will require two consecutive annual reports. Those two reports will contain financial statements for at least three years. In your analysis you will use the financial data for these three years to compute measures of performance, both profitability and risk, for the firm. The result of your analysis will be conclusions about the company’s performance and changes in that performance from one year to the next.

I will provide a Financial Statement Analysis handout to provide guidance on how you should go about your analysis. Annual reports contain a section called "Management Discussion & Analysis" containing the analysis of management on the performance of the firm. You will compare your analysis and conclusions to those offered by management. There may be some differences. Why?

Your project should contain the following:

1. A memorandum from you to me summarizing what you did, what you found, and how your conclusions differ from those of management. You should begin with a brief description of the company and its industry. Your discussion should refer to supporting exhibits containing your computations and analysis. Your memo should be clear, concise, grammatically correct, and free of misspellings. The write-up must be typewritten, double-spaced and no more than two pages. Margins should be no less than one inch and the font size should be 12. Papers longer than two pages will not be accepted. Do not include binders. Late papers will not be accepted.
2. Exhibits supporting your memorandum. These exhibits should be in the form of tables containing formulas and computations of your analysis. These tables should be developed using a spreadsheet, i.e., Excel, and should be clearly labeled and described.
3. The annual reports you used.

I will provide a list of companies for which I have available financial statements. You can choose one of those companies or another company of your choice as long as you can get the financial statements. If you choose your own company, you need to check with me so we can avoid duplication as well as specialized financial statements from regulated companies like utilities, banks and insurance.