CCBC: Catonsville
School of Business
Principles of Accounting II
Reading and Using Annual Reports
This purpose of this assignment is to help you synthesize many important aspects of accounting. Just as the title states, you will read and use financial information presented by a company in the form of an annual report. This activity helps you learn to gather information and to be aware of the sources of information and then interpret, analyze and use the information to evaluate a financial entity.
Obtain a copy of the Annual Report for a company (electronic or hard copy). Read the financial statements, notes to the statements and Management Discussion sections. Your assignment is to determine whether or not you would invest in the company or grant them credit based on your analysis. I do not have to agree with you summary, but I must be able to follow your logic.
Your research will culminate in the submission of a report that will consist of four (4) parts. Those sections will include an analysis of: Liquidity, Solvency, Profitability, and Company Report.
Part I – Liquidity
Section I of your report should contain a Liquidity Ratio Analysis. This section should include the numbers and facts, Interpretation of the Ratios, and your Recommendation regarding whether or not to grant them credit based on your calculations. Refer to chapter 17 in your text for a listing of the ratios. Please do not limit yourself to these measures. Prepare the ratios for the three most recent years.
Part II – Solvency
Section II of your report should contain a Solvency Ratio Analysis. This section should include the numbers and facts, Interpretation of the Ratios, and your Recommendation regarding whether or not to grant them credit based on your calculations. Refer to chapter 17 in your text for a listing of the ratios. Please do not limit yourself to these measures. Prepare the ratios for the three most recent years.
Part III –...