1. I chose Blackstone Company in USA and I attached the recent annual report.
2. Prepare a report on the selected company describing its financial performance and health over a period not less than three years.
4. Report should contain three parts as follows:
Part A: provide a background and summary of the company and its business, for example it should contain:
a. Name of chairman and CEO
b. List of the products sold or services performed
c. Date of the financial statements
d. Name of the auditors of the financial statements
e. Name of the stock exchange where the company is listed
Part B: Answer the following questions: show the change in dollar and percentage:
1. Who is responsible for the preparation of the financial statements? Support your answer with evidence from the annual report.
2. Which Big-Four accounting firm audited the company? What impression does the auditor’s report convey?
3. For the recent three years, list the amounts reported for Revenue, Operating Income (EBIT), Net Income and Dividends. Comment whether the three years trend of revenues is favourable or unfavourable.
4. Is the balance sheet presented in a classified and comparative format? How can you tell?
5. For the recent three years, list the amounts reported for “Current Assets”, “Long term Assets. PPE”, “Intangibles”, “Current Liabilities”, “Long term debt” and “Stockholders’ Equity”. Does the accounting equation hold true for this company? Is the company growing and expanding?
6. Does the company use cash-base or accrual-base accounting? How can you tell?
7. Find the cash flow statement for the recent three years. List the net cash flows from each of the three activities; operating, investing and financing. Comment on your results.
8. Are assets primarily financed by debt or owner’s equity? Please explain the capital structure over the recent three years.
9. For the recent three years, how much the Earnings per Share (EPS)? What is meant by EPS?
Provide a report evaluating the financial performance of the company: its liquidity, profitability, financial leverage, asset management and market value ratios. You may calculate the ratios listed below from the financial statements of your company for both the most recent year and the year before.
Required ratio (as a minimum):
a) Liquidity (Short term solvency) Ratios:
1. Current Ratio
2. Quick Ratio
3. Net Working Capital
b) Profitability Ratios:
1. Return on Assets (ROA)
2. Return on Sales, (profit margin percent)
3. Return on Equity (ROE)
c) Leverage Ratios:
1. Debt Ratio
2. Debt-to-Equity Ratio
3. Times Interest Earned
d) Efficiency Ratios:
1. A/R Turnover
2. Inventory Turnover
3. Fixed Asset Turnover
4. Total Asset Turnover
e) Market Value Ratios:
1. Price – Earnings Ratio
2. Market to book Ratio
1. Be sure to provide what the scale of your numbers is (i.e., thousands, millions, or whatever scale you choose).
2. Provide support for your answer and show relevant formulas.
3. Note that company web pages may be a source of additional information but please keep in mind the date of the annual report that you analyze.
4. Other sources of information include the chairman/director’s report (also known as MD&A) as well as the footnotes to the financial statements.