Sie sind auf Seite 1von 3

FINANCIAL ANALYSIS ASSIGNMENT

ACCT 201: CHANEY


FALL 2008

Project Overview

You will analyze the 2007 financial statements of Colgate-Palmolive Company. You will
submit a brief written report in Word and an Excel spreadsheet documenting five Colgate
ratios on December 4. In order to complete the assignment you must obtain Colgate’s
audited financial statements and the audited financial statements of a similar company.

During the semester we will use Colgate and the comparison companies to demonstrate
the calculation and interpretation of financial ratios. It is important that you bring both
sets of financial statements to class on the days we discuss ratios. Your participation in
class discussion is mandatory.

Colgate’s Annual Report

You can obtain Colgate’s annual report from its website. Go to http://www.colgate.com.
http://www.colgate.com
Then click on “For Investors.” Choose “Financial Info” then “Annual Reports.” It will be
useful to download and print the Excel file of the following financial statements: Income
Statement, Balance Sheet, Retained Earnings. You are not required to print the entire
annual report in PDF.

Comparison Company’s Annual Report

Colgate is a domestic, publicly traded company. As such, you should choose a domestic
corporation whose stock is publicly traded for comparison to Colgate.

A domestic corporation is one that is headquartered in the United States. I want you to
use a U.S. company because it will be applying U.S. GAAP (generally accepted
accounting principles) to its financial statements. These are the accounting rules you are
learning this semester. Foreign accounting rules may differ from U.S. GAAP,
complicating your task. Foreign companies that are trading on US stock exchanges have
converted to US GAAP, but the conversion is not 100% transparent for inexperienced
financial statement users. Therefore, make sure your company is based in the U.S.

A publicly traded company is one whose stock is traded on an organized exchange


(NYSE, AMEX, etc.). A broad spectrum of shareholders own the company. Publicly
traded companies are regulated by the Securities and Exchange Commission (SEC) to
protect the investing public. The SEC requires these companies to follow explicit
accounting rules and to provide information to the public in the form of a 10-K and/or a
glossy annual report. That is why you are able to obtain an audited annual report, free
of charge, from any public company. Keep in mind that just because you are able to
obtain an annual report doesn’t mean the company is publicly traded, nor does it mean
that it is audited.

You should obtain the comparison company’s audited financial statements BEFORE

1
September 23. There is a WileyPlus assignment due September 23 designed to capture
your choice of comparison company and give you credit for your choice. You can obtain
an electronic copy of most companies’ annual reports via the Internet. You do not need
to print the entire annual report. Instead, you should print out at least the basic financial
statements. Note that financial information offerred by Yahoo! Finance, Google,
Hoover’s, and other financial sites is NOT an alternative for an audited annual report.

It is entirely up to you how you select your corporation; however, it should have some
similarity to Colgate-Palmolive Company. My favorite way to find company information
is to use Google Finance at http://finance.google.com/finance.
http://finance.google.com/finance (You may also use Yahoo
Finance, MSN Money, Motley Fool, or others.) Scroll down to “Facts” and under
“Links” there is usually a link to the company’s Investor Relations site. On that site there
is usually an option for Annual Reports. Make sure you do not settle for “Selected
Financial Information.” The Management Discussion and Analysis and Notes to the
Financial Statements will be just as valuable as the financial statements when you
interpret the ratios you’ve calculated. Some companies offer their 10-K (filed with the
SEC) rather than an annual report and that is acceptable.

Analysis Requirements

On December 4, you must submit a written financial statement analysis. Late projects
will not be accepted. It will be graded by a peer and then reviewed by me. You must
develop a rough draft by December 1 and ask a student to read and critique it. You must
read and critique another student’s analysis and provide comments by December 2.

Ratio analysis will be the core of your analysis. Use the key relationships identified in
your textbook as a guide. Choose five ratios that you think are the most useful for
analyzing Colgate, making sure to address liquidity, solvency, and profitability. After
calculating the ratios, you must interpret them. Just use common sense and tell me what
you think of this initial information. Remember to use the notes to the financial
statements and any narrative provided by management. You must compare Colgate’s
ratios to your comparison company’s ratios.

I expect a two page, maximum, typewritten report that is double-spaced. Brevity is


crucial in the business world. Decide what is important to say and leave out the rest. Add
a third page Excel schedule that clearly documents the computations of your five ratios.

Start with a very brief introductory paragraph explaining the purpose of your report.
Include a description of the name of your comparison company, its fiscal year end, and
why you believe the company is appropriate for comparison. One or two sentences are
plenty.

Then discuss each of the five ratios that you chose for your analysis. Do not regurgitate
the textbook definition of the ratio, but describe what the ratio means to you given your
studies and comparisons. Leave the construction of the ratio in the third page Excel
schedule and focus on the interpretation.

Last, provide an overall opinion of Colgate’s financial health and support your opinion

2
with a one paragraph summary. Remember, you have to convince me and a peer that
your evaluation is reasonable.

You will be graded on the content of the analysis, your analytical skills, and your ability
to communicate effectively.

SUMMARY OF PROJECT COMPONENTS AND DUE DATES

Sept 23 Company Choice via WileyPlus (5 points toward Other Assignments)


Dec 1 Rough Draft submitted to peer for critique (2 point)
Dec 2 Comments returned to author and critique paperwork completed (1 point)
Dec 4 Financial statement analysis (70 points)
Dec 4 Participation in peer review (2 points)

Note that students will be required to submit their analysis papers to an electronic
portfolio prior to receiving credit for their projects. More information about the
electronic porfolios and instruction for submission will be provided by the end of the
semester.