Does this Toyota’s FY07 assignment look familiar? Many professors assign topics just like this and our writers custom write each one.
1) How much, if any, would you lend the firm (the credit decision)?
2) How much, if any, would you invest in the firm (the investment decision)? Alternatively, you could ask: What would you recommend for this firm as an investment (buy, hold, sell) and how the investment would fit into a client portfolio (a major portion, small amount, speculative, etc.);
3) How much would you be willing to pay for the firm in a merger/acquisition (the valuation issue)?
In order to come up with the answers to these questions please use quantitative information largely in the form of ratio analysis and financial statement analysis. At a minimum include the following ratio’s in the report:
Debt ratio
Current ratio
Return on Sales
Asset Turnover
Return on Equity
Price-earnings Ratio
Average collection period
Times interest earned
Fixed asset ratio
Key terms and concepts to include in the report include:
GAAP
IASB
AFRS
Comparability
Consistency
Disclosure (footnotes)
Entity concept
Historical cost convention
Relevance
Reliability
Revenue recognition
Time period concept
Leverage
Liquidity
Accrual accounting
Earnings per share
Income from continuing operations
Cost of goods sold
Extraordinary items
Direct method
Indirect method
Write-offs
Cash budget
Cost drivers
FIFO
LIFO
Activity based cost
Full cost method
Fair value method
Annual Report Project Guidelines:
The Annual Report Project is an analysis of the annual report of a company selected by your team. It is a research project and is not limited to the financial statements of the company. The financial statements are only a subset of information that affects user decisions. Accordingly, the analysis should include additional information about the influences of general economic variables (interest rates, exchange rates, business cycle, governmental fiscal policies, inflation, etc.) and industry/competition/technology on the firm.
The Written Report:
The Annual Report Project Checklist (attached) needs to be completed and attached to each written report.
Please use the following format for the written component of the project:
- Executive summary answering the above 3 questions, with a summary of how you arrived at your conclusions;
- Details of supporting calculations, economic and industry influences, methodology (suggested format; methods used for lending, investing and valuation questions, alternative methods, why your methods were selected, and any limitations or critical assumptions to consider that would affect your results);
- Important accounting method issues and the effects of alternative accounting methods (one example is sufficient, it may be necessary to make assumptions about data or provide examples);
- References, properly cited;
- Any handouts used in the presentation.
Please include a copy of the firm’s annual report with your written report.
Due Date – Written Report September 27, 2008.
TEAM ANNUAL REPORT PROJECT
The Annual Report Projects primary purposes are to:
- become familiar with the terminology and develop the analytical skills for financial statement analysis;
- extend the concepts from class and apply them to an example of how financial statement analysis can be used (lending, investing and valuation decisions);
- enhance research, presentation and communication skills;
- address the issue(s) of the ‘quality of financial reporting’ and ‘managed’ earnings
(‘income smoothing’).
The analysis of the firm should specifically answer the following questions:
1. How much, if any, would you lend the firm (the credit decision)?
2. How much, if any, would you invest in the firm (the investment decision)?
alternatively, you could ask: What would you recommend for this firm as an investment (buy, hold, sell) and how the investment would fit into a client portfolio (a major portion, small amount, speculative, etc.);
3. How much would you be willing to pay for the firm in a merger/acquisition (the valuation issue)?
The report should include appropriate explanation and support for how the answers to the above questions were derived.