As an analyst for a large U.S. multinational corporation, you are assigned to examine a possible acquisition candidate, completing an initial search and review. Your supervisor is a member of the Controller’s team. The Controller reports directly to the Chief Financial Officer (CFO). Your work may be presented to a variety of audiences, so professionalism is essential in all deliverables you create. As you are reviewing historical financial statements you cannot conclude if this company is a good investment.
- Select a publicly traded company from the Fortune 500 list.
- Kimberly-Clark Corp
- The company must have Accounts Receivable and Inventory. You must select a retail or manufacturing company.
- You must research and secure the SEC 10-K Annual Report for the most recent year by visiting and searching the SEC EDGAR system. An alternative path to accessing and downloading the most current 10-K is through the company’s Investor Relations webpage.
- Inline XBRL Viewer (sec.gov)
- Save the 10-K document to your computer for access. Please do not print this file as the report is usually 100 pages or more.
- Use the selected company in the discussion postings throughout the semester. The discussion questions are designed to help you build content for your report and presentation.
ACCT 221 is not identical to ACCT 220. Discussions continue through Week 5.
Your report should include the following headings: Income Statement, Balance Sheet, Statement of Shareholders’ Equity, Statement of Cash Flows, and Conclusion.
• Include a brief introduction of your company. There is no heading for the introduction. The first paragraph is assumed to be the introduction. The introductory paragraph should include the name of the company, the state in which it is incorporated, the location of the corporate headquarters, and a brief comment on the product that they offer. This information can be found in the first paragraph of the SEC 10-K.
•Income Statement: For your discussion of the income statement, use the data on the Consolidated Statement of Income (not the Comprehensive Income). The Net Income amount to use is the last amount for income recorded on this statement. The Net Income should be included in the report.
In this section of your report, include the gross profit margin and net profit margin for 2 years presented in a table similar to the following:
2018 2017
Revenue $200,000 100% $175,000 100%
Less: COGS 175,000 87.5% 154,000 88%
Gross Profit $ 25,000 12.5% $ 21,000 12%
In the income statement section, comment on what the calculations indicate about the performance of the company. If sales increase, COGS is expected to increase. This is where converting to a percentage gives you additional information.
•Balance Sheet: For the discussion of the balance sheet include the current ratio for 2 years and the working capital for 2 years. Present the calculations in tables similar to the one for the gross profit margin. Compare the current year to the previous year. Make comments on the ratios.
•Statement of Shareholders’ Equity: Comment on what caused the balance in Retained Earnings to increase or decrease. This information is available on the Statement of Shareholders’ Equity, not on the Balance Sheet.
•Statement of Cash Flows: Comment on the change in cash from Operating Activities. Has the ending cash balance increased or decreased from the previous year? Comment on how the company used the cash generated by Operating Activities. Did they purchase additional plant assets or did they repay loans and pay dividends? If they purchased additional assets, did they have to borrow in order to make the acquisitions?
In a chart compare the net cash from Operating Activities, Investing Activities, and Financing Activities to the previous year.
•The last paragraph in the body of the paper should be a conclusion.
- You will also be required to include the Income Statement, Balance Sheet, Statement of Shareholders’ Equity, and Statement of Cash Flows as attachments to your report. They should be inserted in your report before the references. You can cut and paste directly from the SEC 10-K Report. (You may need to take a screen shot to copy and paste.) These are considered attachments and are not part of the required page count for the report.
- The last page should be a list of references. APA style is required for citations and a reference list. Proper format for each reference is as follows:
•Each reference is double spaced with double spacing between each reference.
•The first line of each reference is left justified.
•For each reference, the second line and additional lines are indented (hanging indent).
•These are just the most common errors in format. On the CONTENT page, check COURSE RESOURCES / WRITING RESOURCES for information on APA format.
Include in text citations. The reference list is the most important. The references needed for your report and Power Point presentation need only be the SEC 10-K link and the course material for this course. They should be cited as follows:
Form 10-K (year) Company Name. Retrieved from SEC 10-K link.
ACCT 221 6382 UMUC Course Resources (2021). Principles of Accounting II.
Retrieved from: https://learn.umgc.edu/d2l/le/content/352860/Home.
Resources - Visit the Accounting Toolbox in the Course Content > Course Resources of the ACCT 221 LEO classroom. The Accounting Toolbox is a constant resource in our UMGC undergraduate accounting courses.
- Links and explanations to assist you with this report may appear in this resource.
- Additional guidance will be provided by your professor.
Grading Criteria for the SEC 10-K Report
Your report will be graded as stated below. In addition, you need to read the syllabus and adhere to the requirements.
FORMAT (10 points)
As stated in the syllabus:
• 2-3 pages (excluding title page, tables and exhibits, and references),
• Single spaced with double spacing between paragraphs
• One inch margins, justify the text on the left margin with a ragged right edge
• Times New Roman, 12-point font (including the title page and headings),
• Proper format for title page as illustrated in the syllabus.
GRAMMAR, SPELLING AND PUNCTUATION (10 points)
ATTTACHMENTS (10 points)
As stated in the syllabus: the following should be inserted between the body of the paper and the references.
•Income Statement for your SEC 10-K Company
•Balance Sheet for your SEC 10-K Company
•Statement of Shareholders’ Equity
•Statement of Cash Flows
REFERENCES (10 points)
As stated in the syllabus:
•APA format is required for references and citations.
The first line for each reference is left justified.
The second line and all other lines of the reference are indented (hanging indent).
Each reference is double spaced with double spacing between references.
These are the most common errors.
•Include the SEC 10-K report as a reference (see syllabus)
•Include the course resources as a reference (see syllabus)
INTRODUCTION (10 points)
As stated in the syllabus:
• Title sentence (first sentence) which sets the stage and entices the reader to continue.
It should inform the reader of the content of the report. “An analysis of the SEC 10-K financial statements to determine if the company is recommend for acquisition.”
• Name of company
• Location of corporate headquarters
• State in which the company is incorporated
• A brief comment on the product they offer
INCOME STATEMENT (10 points)
As stated in the syllabus:
•Gross profit margin (2 years)
•Net profit margin (2 years)
•Comments on the above
BALANCE SHEET (10 points)
As stated in the syllabus:
•Current ratio (2 years)
•Working capital (2 years)
•Comments on the above
STATEMENT OF STOCKHOLDERS’ EQUITY (10 points)
As stated in the syllabus:
•Retained earnings or accumulated deficit (2 years)
•Comment on the change in the above
STATEMENT OF CASH FLOWS (10 points)
As stated in the syllabus:
•In a chart compare the net cash from Operating Activities, Investing Activities, and
Financing Activities to the previous year.
•Comment on the changes in Operating Activities, Investing Activities, and Financing
Activities to the previous year.
•Comment on how the cash generated by Operating Activities was used
CONCLUSION (10 points)
•Based on the information above, comment on the financial position of the company
Sample Solution
