1 Financial Statement Analysis Group Project 2 ACCT3303 Fall 2013 Due Date: Dec 08 (by the end of the day) The specific purposes of this project are: 1. Apply to actual companies the basic knowledge and analytical techniques learned from our course. 2. Prepare vertical common-size financial statements, horizontal common-size financial statements, and various profitability and risk ratios. 3. Detect the time trend of the firm’s profitability and riskiness, and compare the calculated results with competitors. 4. Summarize/present the analyses and make investment recommendations. You will be analyzing the following firms: a. Costco Wholesale Corp (ticker: COST). b. Wal-Mart Stores, Inc (ticker: WMT). For these firms, download the most recent annual report to begin your work, including financial statements, footnotes to the financials, and the management discussions and analyses. Alternatively, you may use the 10-K report. You can download the 10-K from the company’s website or the SEC’s website (i.e., EDGAR online http://www.sec.gov/edgar/searchedgar/companysearch.html). Tips: 1. Public companies usually publish annual reports at investor relation web pages. 2. You may search EDGAR by company name or by trading ticker symbol. An advantage of using EDGAR 10-K report is that you may quickly copy those tables into Excel. Use the filter (filing type) to show 10-K filings only. Click the “document” button and the first htm file will be the 10-K report. 3. Free reference is available at Yahoo finance (http://finance.yahoo.com) or Google finance (http://finance.google.com). Hoover’s is also available (http://www.hoovers.com) for you to browse the company information (other content is for paid users). The required tasks are detailed below: (1) Prepare vertical common-size balance sheets and income statements for both companies. Note: Compute for the most recent THREE years, i.e., 2010, 2011, and 2012.
2 (2) Prepare horizontal common-size income statement and balance sheet…