Annual Report Group Project
COMM 217, Winter 2011
Annual Report Group Project
The purpose of this group project is to familiarize students with the contents of annual reports, especially the financial section of the report. The project consists of a series or questions that pertain to various topics that are covered in the course.
The class will be divided into a number of groups. Each group will consist of five members. You should start forming your group as soon as possible (see last page of this document). Tell your instructor if you have difficulty finding other people to form a five-person group. He/she will help you form your group.
Each group will be assigned, at random, a company to analyze. A maximum of four groups will be …show more content…
assigned to one of the companies from the following list:
Dorel Industries Inc. www.dorel.com
Empire Company Limited www.empireco.ca
Gildan Activewear Inc. www.gildan.com
High Liner Foods Inc. www.highlinerfoods.com
Lassonde Industries Inc. www.lassonde.com
Loblaw Companies Limited www.loblaw.ca
To find the company’s most recent annual report, access the company’s website using your favourite Internet search engine. Look for “Company Info”, “About Us” or “Investor Relations” on the main page, and search through until you see “Annual Reports”. Then choose the latest annual report issued by the company. Alternatively, you can access www.sedar.com, which includes all the reports and documents filed by public companies and investment funds with the Canadian Securities Administrators (CSA).
After you access SEDAR, click on “English”, click on “Company Profiles”, click on the letter of the alphabet that corresponds to the first letter of the company’s name, search for the company in the list of company names, click on the company’s name, scroll down the screen and click on “view” at the lower left corner of the screen. A long list of documents filed by the company appears on the screen. Scroll down until you see “Annual Report 2009”, or 2010 depending on which is the more recently completed fiscal year. Click on it to download the annual report.
The project’s requirements are listed below. They consist of a series of questions that you need to answer based on the information disclosed in the annual report of the company that your group has been assigned. The requirements are divided into two parts to help you complete the project in an orderly manner. The first set of questions relate to chapters 1 – 4 and 6 – 8. Your answers to these questions should be submitted to your instructor during class week 8 (February 28 – March 4). Your instructor will give you the precise deadline for your section. Your answers to the remaining questions must be submitted during class week 12 (March 28 – April 1). Again, your instructor will give you the precise deadline. Your submissions must be typed. Please include a cover page as suggested on page 8 of this document.
REQUIREMENTS OF THE GROUP PROJECT
Important: For each answer indicate the page number(s) of the annual report where you found the information. Be sure to include with your first and second submissions a copy of the annual report sections that you used in answering the questions, and highlight the numbers and other information that you have used. Do not submit copies of the entire annual report unless you obtained a print copy from the company. Think about the environment before you print pages or documents you may not need. You can always refer to the company’s annual reports on its website or on SEDAR.
Where calculations are requested assume that they relate to the latest fiscal year only, unless otherwise stated.
The questions to be answered are grouped by Chapter for ease of reference. The marks allotted for each chapter are shown in brackets. Show your detailed calculations.
Required:
PART 1
Chapter 1 (7 marks)
1.1 Provide a brief description of the company, and indicate the type of products it sells and/or the services it provides.
1.2 On what day of the year does its fiscal year end?
1.3 For how many years does the company present complete a) balance sheets, b) income statements, and c) cash flow statements in its most recent annual report?
1.4 Are its financial statements audited by independent auditors? If so, by whom?
1.5 Did the company’s total assets increase of decrease over the last year and by how much?
1.6 Did the company’s net income increase of decrease over the last year and by how much?
Chapter 2 (6 marks) 1. For the most recent year, what are the top three asset accounts by size? What percentage is each of total assets? (Computed as Asset A ÷ Total assets)
2. What are the major investing and financing activities (by dollar size) for the most recent year? (Look at the cash flow statement.)
3. Ratio Analysis:
a. What does the debt-to-equity ratio measure in general?
b. Compute the debt-to-equity ratio for the last three years. (You may find prior years’ information in the section in the annual report called “Selected Financial Information,” or you may search for prior years’ annual reports.)
c. What do your results suggest about the company?
Chapter 3 (8 marks) 1. For the most recent year, what is/are the major revenue account/s? What percentage is each to total operating revenues? (Computed as Revenue A ÷ Total …show more content…
revenues.)
2. For the most recent year, what is/are the major expense account/s? What percentage is each to total operating expenses? (Computed as Expense A ÷ Total expenses.)
3. Ratio Analysis:
a. What do the total asset turnover and the return on assets ratios measure in general?
b. Compute these ratios for the last three years.
c. What do your results suggest about the company?
4. Describe the company’s revenue recognition policy, if reported. (Usually found in note 1 or 2 to the financial statements titled Significant Accounting Policies.)
Chapter 4 (7 marks) 1. From the income statement, what is the company’s earnings per share for the last three years?
2. Ratio analysis: a. What does the net profit margin measure in general? b. What does the return on equity measure in general? c. Compute these ratios for the last three years. d. Did the company's profitability improve or deteriorate during the past three years? (You may refer to the Management Discussion and Analysis section of the annual report to learn about the company’s stated reasons for any change over time.)
4.3 List the accounts and amounts of accrued expenses payable on the most recent balance sheet. (You may find the detail in the notes to the statements.) What is the ratio of the total accrued expenses payable to total liabilities?
Chapter 6 (7 marks) 1. What formats are used to present the a. Balance sheets? b. Income statements?
6.2 Find a note for each of the following and describe its contents in brief: a. A significant accounting policy applied in the company’s statements. b. Additional detail about a reported financial statement number. c. Relevant information but without numbers reported in the financial statements.
3. Using electronic sources, find one article reporting the company’s annual earnings announcement. When is it dated and how does that date compare to the balance sheet date? Why is there a time lag between the balance sheet date and the date of announcement of the company’s annual earnings?
Chapter 7 (8 marks) 1. If your company lists receivables on its balance sheet, what percentage is this asset of total assets for each of the last three years? If your company does not list receivables, discuss why this is so.
2. Ratio analysis: a. What do the accounts receivable turnover ratio and the average collection period measure in general? b. If your company lists receivables, compute the accounts receivable turnover ratio and the average collection period for the last three years. c. What do your results suggest about the company?
3. If your company lists receivables, determine what additional disclosure is available concerning the allowance for doubtful accounts. If the necessary information is provided, what is bad debt expense as a percentage of sales for the last three years? If the necessary information is not provided, why might this be so?
4. What is the effect of the change in accounts receivable on cash flows from operations for the most recent year (that is, did the change increase or decrease operating cash flows, and by how much)? Explain you answer and identify the direction and amount of the change.
Chapter 8 (9 marks)
8.1 If your company lists inventories on its balance sheet, what percentage is this asset of total assets for each of the last three years? If your company does not list inventories, discuss why this is so.
2. If your company lists inventories, what inventory costing method does it use? What do you think motivated this choice?
3. Ratio analysis:
a. What do the inventory turnover ratio and the average days to sell inventory measure in general?
b. If your company reports inventories, compute these ratios for the last three years. If the company does not report the cost of goods sold (COGS) separately, assume that COGS equal 70 per cent of the sales amount.
c. What do your results suggest about the company?
4. What is the effect of the change in inventories on cash flows from operations for the most recent year (that is, did the change increase or decrease operating cash flows, and by how much)? Explain your answer and identify the direction and amount of the change.
PART 2
Chapter 9 (9 marks)
9.1 List the accounts and net book values of the company’s long-term assets (land, buildings, equipment, intangible assets, natural resources, and other). What is the percentage of each to total assets?
9.2 What cost allocation (amortization) method(s) and estimates (useful lives or amortization rates) does the company use for each type of long-term asset?
9.3 Ratio analysis: a. What does the fixed asset turnover ratio measure in general? b. Compute the ratio for the last three years. c. What do your results suggest about the company?
4. What was the effect of amortization expense on cash flows from operating activities? Compute the percentage of amortization expense to cash flows from operating activities for each of the past three years.
5. Refer to the cash flow statement and identify the capital expenditures that the company made over the last three years. Did the company sell any long-term assets? If so, how much cash did the company receive for selling these assets?
Chapter 10 (12 marks)
10.1 List the accounts and amounts of the company’s current liabilities for the last two years. a. What is the percentage of each to the respective year’s total liabilities? b. What do the results of your analysis suggest about the strategy your company has followed with respect to borrowed funds overall and over time?
10.2 Does the company disclose any information on contingent liabilities (i.e., contingencies) in the notes to its financial statements? If so, briefly describe these contingencies.
10.3 Ratio analysis: a. What does the current ratio measure in general? b.
Compute the ratio for the last three years.
a. What do your results suggest about the company?
10.4. Ratio analysis: a. What do the accounts payable turnover ratio and the average age of payables measure in general? b. Compute these ratios for the last three years. c. What do your results suggest about the company?
10.5. What is the effect of the change in accounts payable on cash flows from operating activities for the most recent year (that is, did the change increase or decrease operating cash flows and by how much)? Explain your answer and identify the direction and amount of the change.
Chapter 5 (8 marks) 1. Which of the two basic reporting approaches for cash flows from operating activities did the company adopt?
2. What is the quality of income ratio for the most current year? What are the major causes of differences between net income and cash flow from operations?
3. What is the capital acquisitions ratio for the three-year period in total? (Refer to the ratio computation in the textbook on page 249.) How is the company financing its capital expenditures? 4. What portion of the current year’s cash flow from operations is being paid to shareholders in the form of
dividends?
5. How much cash did the company pay for interest during the year? How much cash did it pay for income taxes? Where did you find these amounts? (Hint: recall that interest expense and income tax expense are not necessarily equal to the cash payments for interest and taxes, respectively.
Chapter 11 (11 marks)
11.1 Has your company issued any long-term bonds or notes? If so, read the note related to long-term debt, identify one of the bonds or notes and list any special features related to that debt issue (e.g., callable, convertible, secured by specific collateral).
11.2 Ratio analysis: a. What does the times interest earned ratio measure in general? b. Compute the ratio for the last three years. c. What do your results suggest about the company?
11.3 Ratio analysis: a. What does the financial leverage ratio measure in general? b. Compute the ratio for the last three years. c. What do your results suggest about the company?
11.4 During the recent year, how much cash did the company receive on issuing debt? How much did it pay on debt principal? What does management suggest were the reasons for issuing and/or repaying debt during the year?
Grading
Evaluation of this project will be based on 100 points allocated as follows:
| |PART 1 |PART 2 |Total |
|Total marks, per above allocation ……………………………………………………. |52 |40 |92 |
|Marks for professional style (presentation, grammar, spelling, etc) ... |4 |4 |8 |
|Total ……………………………....................................................................... |56 |44 |100 |
COMPLETE THIS FORM AND SUBMIT IT TO YOUR INSTRUCTOR BY THE END OF WEEK 3.
COMM 217, Winter 2011
Section ______
Group project members
NAME (print very clearly) E-mail address (print very clearly)
1. ________________________ ___________________________
2. ________________________ ___________________________
3. ________________________ ___________________________
4. ________________________ ___________________________
5. ________________________ ___________________________
Group Project: Suggested cover page
COMM 217 FINANCIAL ACCOUNTING
WINTER 2011
Section (lecture): ………………
Group Project Part 1 (or Part 2)
NAME OF THE COMPANY
Presented to:
Prof. ………………………………..
Prepared by:
Group number / Group name (if applicable): ………………… ………………………………
|Student names |Student ID |
| | |
| | |
| | |
| | |
| | |
Date: ………………………
John Molson School of Business – Concordia University
Annual Report Group Project
The purpose of this group project is to familiarize students with the contents of annual reports, especially the financial section of the report. The project consists of a series or questions that pertain to various topics that are covered in the course.
The class will be divided into a number of groups. Each group will consist of five members. You should start forming your group as soon as possible (see last page of this document). Tell your instructor if you have difficulty finding other people to form a five-person group. He/she will help you form your group.
Each group will be assigned, at random, a company to analyze. A maximum of four groups will be …show more content…
assigned to one of the companies from the following list:
Dorel Industries Inc. www.dorel.com
Empire Company Limited www.empireco.ca
Gildan Activewear Inc. www.gildan.com
High Liner Foods Inc. www.highlinerfoods.com
Lassonde Industries Inc. www.lassonde.com
Loblaw Companies Limited www.loblaw.ca
To find the company’s most recent annual report, access the company’s website using your favourite Internet search engine. Look for “Company Info”, “About Us” or “Investor Relations” on the main page, and search through until you see “Annual Reports”. Then choose the latest annual report issued by the company. Alternatively, you can access www.sedar.com, which includes all the reports and documents filed by public companies and investment funds with the Canadian Securities Administrators (CSA).
After you access SEDAR, click on “English”, click on “Company Profiles”, click on the letter of the alphabet that corresponds to the first letter of the company’s name, search for the company in the list of company names, click on the company’s name, scroll down the screen and click on “view” at the lower left corner of the screen. A long list of documents filed by the company appears on the screen. Scroll down until you see “Annual Report 2009”, or 2010 depending on which is the more recently completed fiscal year. Click on it to download the annual report.
The project’s requirements are listed below. They consist of a series of questions that you need to answer based on the information disclosed in the annual report of the company that your group has been assigned. The requirements are divided into two parts to help you complete the project in an orderly manner. The first set of questions relate to chapters 1 – 4 and 6 – 8. Your answers to these questions should be submitted to your instructor during class week 8 (February 28 – March 4). Your instructor will give you the precise deadline for your section. Your answers to the remaining questions must be submitted during class week 12 (March 28 – April 1). Again, your instructor will give you the precise deadline. Your submissions must be typed. Please include a cover page as suggested on page 8 of this document.
REQUIREMENTS OF THE GROUP PROJECT
Important: For each answer indicate the page number(s) of the annual report where you found the information. Be sure to include with your first and second submissions a copy of the annual report sections that you used in answering the questions, and highlight the numbers and other information that you have used. Do not submit copies of the entire annual report unless you obtained a print copy from the company. Think about the environment before you print pages or documents you may not need. You can always refer to the company’s annual reports on its website or on SEDAR.
Where calculations are requested assume that they relate to the latest fiscal year only, unless otherwise stated.
The questions to be answered are grouped by Chapter for ease of reference. The marks allotted for each chapter are shown in brackets. Show your detailed calculations.
Required:
PART 1
Chapter 1 (7 marks)
1.1 Provide a brief description of the company, and indicate the type of products it sells and/or the services it provides.
1.2 On what day of the year does its fiscal year end?
1.3 For how many years does the company present complete a) balance sheets, b) income statements, and c) cash flow statements in its most recent annual report?
1.4 Are its financial statements audited by independent auditors? If so, by whom?
1.5 Did the company’s total assets increase of decrease over the last year and by how much?
1.6 Did the company’s net income increase of decrease over the last year and by how much?
Chapter 2 (6 marks) 1. For the most recent year, what are the top three asset accounts by size? What percentage is each of total assets? (Computed as Asset A ÷ Total assets)
2. What are the major investing and financing activities (by dollar size) for the most recent year? (Look at the cash flow statement.)
3. Ratio Analysis:
a. What does the debt-to-equity ratio measure in general?
b. Compute the debt-to-equity ratio for the last three years. (You may find prior years’ information in the section in the annual report called “Selected Financial Information,” or you may search for prior years’ annual reports.)
c. What do your results suggest about the company?
Chapter 3 (8 marks) 1. For the most recent year, what is/are the major revenue account/s? What percentage is each to total operating revenues? (Computed as Revenue A ÷ Total …show more content…
revenues.)
2. For the most recent year, what is/are the major expense account/s? What percentage is each to total operating expenses? (Computed as Expense A ÷ Total expenses.)
3. Ratio Analysis:
a. What do the total asset turnover and the return on assets ratios measure in general?
b. Compute these ratios for the last three years.
c. What do your results suggest about the company?
4. Describe the company’s revenue recognition policy, if reported. (Usually found in note 1 or 2 to the financial statements titled Significant Accounting Policies.)
Chapter 4 (7 marks) 1. From the income statement, what is the company’s earnings per share for the last three years?
2. Ratio analysis: a. What does the net profit margin measure in general? b. What does the return on equity measure in general? c. Compute these ratios for the last three years. d. Did the company's profitability improve or deteriorate during the past three years? (You may refer to the Management Discussion and Analysis section of the annual report to learn about the company’s stated reasons for any change over time.)
4.3 List the accounts and amounts of accrued expenses payable on the most recent balance sheet. (You may find the detail in the notes to the statements.) What is the ratio of the total accrued expenses payable to total liabilities?
Chapter 6 (7 marks) 1. What formats are used to present the a. Balance sheets? b. Income statements?
6.2 Find a note for each of the following and describe its contents in brief: a. A significant accounting policy applied in the company’s statements. b. Additional detail about a reported financial statement number. c. Relevant information but without numbers reported in the financial statements.
3. Using electronic sources, find one article reporting the company’s annual earnings announcement. When is it dated and how does that date compare to the balance sheet date? Why is there a time lag between the balance sheet date and the date of announcement of the company’s annual earnings?
Chapter 7 (8 marks) 1. If your company lists receivables on its balance sheet, what percentage is this asset of total assets for each of the last three years? If your company does not list receivables, discuss why this is so.
2. Ratio analysis: a. What do the accounts receivable turnover ratio and the average collection period measure in general? b. If your company lists receivables, compute the accounts receivable turnover ratio and the average collection period for the last three years. c. What do your results suggest about the company?
3. If your company lists receivables, determine what additional disclosure is available concerning the allowance for doubtful accounts. If the necessary information is provided, what is bad debt expense as a percentage of sales for the last three years? If the necessary information is not provided, why might this be so?
4. What is the effect of the change in accounts receivable on cash flows from operations for the most recent year (that is, did the change increase or decrease operating cash flows, and by how much)? Explain you answer and identify the direction and amount of the change.
Chapter 8 (9 marks)
8.1 If your company lists inventories on its balance sheet, what percentage is this asset of total assets for each of the last three years? If your company does not list inventories, discuss why this is so.
2. If your company lists inventories, what inventory costing method does it use? What do you think motivated this choice?
3. Ratio analysis:
a. What do the inventory turnover ratio and the average days to sell inventory measure in general?
b. If your company reports inventories, compute these ratios for the last three years. If the company does not report the cost of goods sold (COGS) separately, assume that COGS equal 70 per cent of the sales amount.
c. What do your results suggest about the company?
4. What is the effect of the change in inventories on cash flows from operations for the most recent year (that is, did the change increase or decrease operating cash flows, and by how much)? Explain your answer and identify the direction and amount of the change.
PART 2
Chapter 9 (9 marks)
9.1 List the accounts and net book values of the company’s long-term assets (land, buildings, equipment, intangible assets, natural resources, and other). What is the percentage of each to total assets?
9.2 What cost allocation (amortization) method(s) and estimates (useful lives or amortization rates) does the company use for each type of long-term asset?
9.3 Ratio analysis: a. What does the fixed asset turnover ratio measure in general? b. Compute the ratio for the last three years. c. What do your results suggest about the company?
4. What was the effect of amortization expense on cash flows from operating activities? Compute the percentage of amortization expense to cash flows from operating activities for each of the past three years.
5. Refer to the cash flow statement and identify the capital expenditures that the company made over the last three years. Did the company sell any long-term assets? If so, how much cash did the company receive for selling these assets?
Chapter 10 (12 marks)
10.1 List the accounts and amounts of the company’s current liabilities for the last two years. a. What is the percentage of each to the respective year’s total liabilities? b. What do the results of your analysis suggest about the strategy your company has followed with respect to borrowed funds overall and over time?
10.2 Does the company disclose any information on contingent liabilities (i.e., contingencies) in the notes to its financial statements? If so, briefly describe these contingencies.
10.3 Ratio analysis: a. What does the current ratio measure in general? b.
Compute the ratio for the last three years.
a. What do your results suggest about the company?
10.4. Ratio analysis: a. What do the accounts payable turnover ratio and the average age of payables measure in general? b. Compute these ratios for the last three years. c. What do your results suggest about the company?
10.5. What is the effect of the change in accounts payable on cash flows from operating activities for the most recent year (that is, did the change increase or decrease operating cash flows and by how much)? Explain your answer and identify the direction and amount of the change.
Chapter 5 (8 marks) 1. Which of the two basic reporting approaches for cash flows from operating activities did the company adopt?
2. What is the quality of income ratio for the most current year? What are the major causes of differences between net income and cash flow from operations?
3. What is the capital acquisitions ratio for the three-year period in total? (Refer to the ratio computation in the textbook on page 249.) How is the company financing its capital expenditures? 4. What portion of the current year’s cash flow from operations is being paid to shareholders in the form of
dividends?
5. How much cash did the company pay for interest during the year? How much cash did it pay for income taxes? Where did you find these amounts? (Hint: recall that interest expense and income tax expense are not necessarily equal to the cash payments for interest and taxes, respectively.
Chapter 11 (11 marks)
11.1 Has your company issued any long-term bonds or notes? If so, read the note related to long-term debt, identify one of the bonds or notes and list any special features related to that debt issue (e.g., callable, convertible, secured by specific collateral).
11.2 Ratio analysis: a. What does the times interest earned ratio measure in general? b. Compute the ratio for the last three years. c. What do your results suggest about the company?
11.3 Ratio analysis: a. What does the financial leverage ratio measure in general? b. Compute the ratio for the last three years. c. What do your results suggest about the company?
11.4 During the recent year, how much cash did the company receive on issuing debt? How much did it pay on debt principal? What does management suggest were the reasons for issuing and/or repaying debt during the year?
Grading
Evaluation of this project will be based on 100 points allocated as follows:
| |PART 1 |PART 2 |Total |
|Total marks, per above allocation ……………………………………………………. |52 |40 |92 |
|Marks for professional style (presentation, grammar, spelling, etc) ... |4 |4 |8 |
|Total ……………………………....................................................................... |56 |44 |100 |
COMPLETE THIS FORM AND SUBMIT IT TO YOUR INSTRUCTOR BY THE END OF WEEK 3.
COMM 217, Winter 2011
Section ______
Group project members
NAME (print very clearly) E-mail address (print very clearly)
1. ________________________ ___________________________
2. ________________________ ___________________________
3. ________________________ ___________________________
4. ________________________ ___________________________
5. ________________________ ___________________________
Group Project: Suggested cover page
COMM 217 FINANCIAL ACCOUNTING
WINTER 2011
Section (lecture): ………………
Group Project Part 1 (or Part 2)
NAME OF THE COMPANY
Presented to:
Prof. ………………………………..
Prepared by:
Group number / Group name (if applicable): ………………… ………………………………
|Student names |Student ID |
| | |
| | |
| | |
| | |
| | |
Date: ………………………
John Molson School of Business – Concordia University