Experiential Data Analytics Project

ACCT 2301

Experiential Data Analytics Project

Why Financial Statement Analysis?

“Financial statements are the primary information that firms publish about themselves, and investors are the primary users of financial statements. Firms seek capital from investors and prepare financial statements to help investors decide whether to invest. Investors expect the firm to add value to their investment-to return more than was invested- and read financial statements to evaluate the firm’s ability to do so. Financial statements are also used for other purposes. Governments use them in social and economic policy- making. Regulators such as the antitrust authorities, financial market regulators, and bank inspectors use them to control business activity. Employees use them in wage negotiations. Senior managers use them to evaluate subordinates. Courts, and the expert witnesses who testify in court, use financial statements to assess damages in litigation. Each type of user needs to understand financial statements. Each needs to know the statements’ deficiencies, what they reveal, and what they don’t reveal. Financial statement analysis is the method by which users extract information to answer their questions about the firm.”

– Stephen H. Penman

This project covers the principles of financial statement analysis. The goal of this assignment is for you to experience finding out relevant accounting and other information about a corporation as if you were an investor. You will find out that it is relatively easy to look up information about any publicly traded company online.

Instructions:

Follow the directions for each question below to look up the answers to the questions on the worksheet. Write the appropriate response in the spaces provided on the worksheet. Then starting April 14th use the worksheet to answer the questions on BLACKBOARD ONLINE ASSESSMENT. The worksheet is for you to look up your answers and write them down so that you can answer the assessment questions without guessing. The worksheet is NOT to be submitted. To receive credits, you must complete the BLACKBOARD ONLINE ASSESSMENT on or before 11 PM CST May 1st, 2022. There are 14 multiple choice questions and 2 free response questions. Thus, there are 16 questions total with each question carrying 0.625 points to add up to a total of 10 points.

Please be sure to look up the answers and fill out the worksheet before doing the online assessment. If you just guess you will probably end up with a low score.

Project Worksheet

The following assignment is designed to introduce you to some of the FREE financial information that is available on the web. This can be especially useful for personal investing decisions. For the first part of the project, we focus on a single site, Yahoo! Finance. There are, however, various other good sites such as Google Finance. We encourage you to explore these web sites on your own. Use the glossary of terms for any items that are new to you.

For the second part of the project, you should use the 10-Q report (quarterly report) of Ford Motor Company, and General Motors Company (GM). You can go to the Investor Relations section of their website, or you can go to sec.gov to search for their 10-Q filings.

Click the link below and downloaded the 10-Q reports

Ford Motor Company Q2 10-Q (for the quarterly period ended June 30, 2021)

HYPERLINK “https://www.sec.gov/ix?doc=/Archives/edgar/data/37996/000003799621000058/f-20210630.htm” https://www.sec.gov/ix?doc=/Archives/edgar/data/37996/000003799621000058/f-20210630.htm

Ford Motor Company Q3 10-Q (for the quarterly period ended September 30, 2021)

HYPERLINK “https://www.sec.gov/ix?doc=/Archives/edgar/data/37996/000003799621000086/f-20210930.htm” https://www.sec.gov/ix?doc=/Archives/edgar/data/37996/000003799621000086/f-20210930.htm

General Motors Company Q2 10-Q (for the quarterly period ended June 30, 2021)

HYPERLINK “https://www.sec.gov/ix?doc=/Archives/edgar/data/1467858/000146785821000142/gm-20210630.htm

” https://www.sec.gov/ix?doc=/Archives/edgar/data/1467858/000146785821000142/gm-20210630.htm

General Motors Company Q3 10-Q (for the quarterly period ended September 30, 2021)

HYPERLINK “https://www.sec.gov/ix?doc=/Archives/edgar/data/1467858/000146785821000152/gm-20210930.htm” https://www.sec.gov/ix?doc=/Archives/edgar/data/1467858/000146785821000152/gm-20210930.htm

For the purposes of this exercise, we will be examining Ford Motor Company and in the second part of the project comparing it to GM Company. The fiscal year end of Ford Motor Company and GM Company both are December 31. In order to use recent comparable information in the second part of the project you will gather financial statement facts from the 3rd quarterly report (of fiscal year 2021) of Ford Motor Company ending 9/30/2021 and compare those with the 3rd quarter (of fiscal year 2021) of GM Company ending 9/30/2021.

1st PART OF THE PROJECT

First, go to the following web site: https://finance.yahoo.com/Type “Ford Motor Company” in the search box. Then click on “search”. Select the ticker symbol “F” from the menu of choices. (NOTE: The ticker symbol for Ford Motor Company is F. The ticker symbol is a letter designation that is assigned to stocks and mutual funds traded on U.S. exchanges. You may use it to “get quotes” instead of typing in the whole company name)

This will take you to a page of basic information about Ford Motor Company’s stock. It will show you the current price and the volume of trading. From this menu, you will click on the following links to obtain the necessary information:

Summary

Profile

Financials

Historical Data

Each of the above links will be discussed in the following pages. You will be asked to go to each of the linked pages and record information in the spaces provided.

Summary

The earnings per share of a company measures the amount of income earned for each share of stock, which is net income divided by shares of common stock outstanding. Earnings per share are abbreviated as “EPS”.

The earnings per share (EPS) for Ford Motor Company for the most recent year shown on this page are

(Note: TTM = trailing twelve months (the past 12 months)

The current price of Ford Motor Company’s common stock is?

on Date (Record the Last Trade price and the date you looked at it)

Profile

From the Profile Page, you can obtain a brief Business Description. There is also general contact information as well as links to several other items, such as the company web site.

From this page, answer the following questions about Ford Motor Company:

What Industry is Ford Motor Company in?

How many full-time employees work for Ford Motor Company?

Who is the Chief Executive Officer?

Who is the Chief Financial Officer?

Historical Data

From this page, you can obtain daily, weekly, and monthly prices for the company for a range of dates. You can also obtain information on dividends. Select/input “Time Period” as 9/30/2021-10/1/2021, “Show” as Historical Prices, and “Frequency” as Daily to capture the historical price at the end of last year. (If select/input date couldn’t apply, simply scroll down to find “Sep 30, 2021”)

Look at the column listing the adjusted closing price (this price is adjusted for stock splits and stock dividends).

What was the adjusted Closing price of the company for 9/30/2021?

How much money would you have made or lost from the price change if you had purchased one share of Ford Motor Company stock on 9/30/2021 and sold it on the day you looked up the current price?

2nd PART OF THE PROJECT

Financials

From this page, you can view the recent quarterly or annual financial statements of the company. In order to compare Ford Motor Company to a close competitor GM Company, we will use data for the quarter ending 9/30/2021.

Open the 10-Q of Ford Motor Company and GM Company (link provided at the beginning of this project) and click on income statement or balance sheet of Ford Motor Company as requested below.

Ford Motor Company

Consolidated Income Statements: Page 2 on Q2 & Q3 reports.

Consolidated Balance Sheets: Page 3 on Q2 & Q3 reports.

GM

Condensed Consolidated Income Statements (Unaudited): Page 1 on Q2 & Q3 reports.

Condensed Consolidated Balance Sheets (Unaudited): Page 2 on Q2 & Q3 reports.

Notice that all numbers are in millions of dollars in the following part of the project. Write them down on your worksheet just as they are. For example, if it says $7,000, just write $7,000 or $7,000 million as your final answer, do not write $7,000,000,000.

Questions 1 through 16 pertain to Ford Motor Company

From the quarterly Income Statement, what was the total revenue for the quarter ending on 9/30/2021?

From the quarterly Income Statement, what was the total revenue for the previous quarter ending on 6/30/2021?

Now use your answers of 1 and 2 to calculate the % growth in revenue for the quarter (subtract revenues for the quarter ending 9/30/2021 from revenues for the quarter ending 6/30/2021 and divide the result by the revenues for the quarter ending 6/30/2021. Then express the result as a percentage).

Revenue Growth =

From the quarterly Income Statement, what was Consolidated Net Income for the quarter ending on 9/30/2021?

From the quarterly Income Statement, what was the Gross Profit for the quarter ending on 9/30/2021?

*Gross Profit = Total Revenue – COGS

From the quarterly Income Statement, what was the Cost of Sales (cost of goods sold) for the quarter ending on 9/30/2021?

From the quarterly Balance Sheet, what was the value of inventory as of

9/30/2021?

From the quarterly Balance Sheet, what was the value of inventory as of 6/30/2021?

From the quarterly Balance Sheet, what was the total assets value as of 9/30/2021?

From the quarterly Balance Sheet, what was the total liabilities as of 9/30/2021?

From the quarterly Balance Sheet, what was the total current assets value as of 9/30/2021?

From the quarterly Balance Sheet, what was the total current liabilities value as of 9/30/2021?

Use Quarterly data ending at 9/30/2021 to answer question 13 to 16.

The largest current asset category is:

The largest current liability category is:

The largest non-current asset category is:

The largest non-current liability category is:

FINANCIAL RATIOS

Use the information gathered from Ford Motor Company’s Financials on the previous pages to calculate the following ratios for Ford Motor Company. Do not try to look these up on the website. Instead, you must make the calculation yourself.

Inventory Turnover

(Cost of Goods Sold / Average Inventory)

Average Inventory = (Beginning Inventory + Ending Inventory) / 2

Gross profit %

(Gross Profit / Revenues) *100%

*Revenue should include only net sales.

Debt Ratio

(Total Liabilities / Total Asset)

Current Ratio

(Current Asset / Current Liabilities)

Compare Ford Motor Company to its close competitor GM.

Now open the income statement and balance sheet for GM:

Condensed Consolidated Income Statements (Unaudited): Page 1 on Q2 & Q3 reports.

Condensed Consolidated Balance Sheets (Unaudited): Page 2 on Q2 & Q3 reports.

Look up the following income statement information:

Total Quarter Total Revenues (9/30/2021)

Total Quarter Revenues (6/30/2021)

Quarter Gross Profit (9/30/2021)

*Gross Profit = Total Revenue – COGS

Look up the following Quarterly balance sheet information for GM 9/30/2021:

Total Assets

Total Liabilities

Current Assets

Current Liabilities

Now use these 7 values (above) to calculate the following ratios for GM in order to compare them to Ford Motor Company. (Use the same calculation methods as for Ford Motor Company)

Revenue Growth

Gross Profit%

*Revenue should include Sales only.

Debt Ratio

Current Ratio

Based on a comparison of these two ratios between Ford and GM which company seems to have better liquidity, which has better margin which has better solvency, and which has better revenue growth? Enter the Company names below.

Revenue Growth?

Gross Profit?

Solvency? (Debt Ratio, low is good)

Liquidity? (Current Ratio, high is good)

HORIZONTAL ANALYSIS

Horizontal analysis is also known as trend analysis. By looking at recent trends, and also taking into disclosures and press releases from the company and outside the company, the financial markets often try to predict the future stock prices.

In the next few steps, do a simple 3-year trend analysis.

Go to Ford Motor Company and GM Company’s 10-K for 2020 and open Consolidated Income Statements. (Click the link below and download the 2020 10-K)

Ford Motor Company 10-K: (For the fiscal year ended December 31, 2021)

https://www.sec.gov/ix?doc=/Archives/edgar/data/0000037996/000003799622000013/f-20211231.htmPage: 110

GM Company 10-K: (For the fiscal year ended December 31, 2021)

https://www.sec.gov/ix?doc=/Archives/edgar/data/1467858/000146785822000034/gm-20211231.htmPage: 53

Write down the Total Revenues

Year Ended (Fiscal year) Ford Motor Company GM Company

Dec 31, 2019 (2018) Dec 31, 2020 (2019) Dec 31, 2021 (2020) Write down the Operating Income.

Year Ended (Fiscal year) Ford Motor Company GM Company

Dec 31, 2019 (2018) Dec 31, 2020 (2019) Dec 31, 2021 (2020) Write down the Consolidated Net Income

Year Ended (Fiscal year) Ford Motor Company GM Company

Dec 31, 2019 (2018) Dec 31, 2020 (2019) Dec 31, 2021 (2020) Open an Excel Spreadsheet. Type the Revenues for Ford Motor Company and GM Company in two separate columns. Title them as Ford Motor Company Revenues and GM Company revenues respectively. Make a simple line chart for each. Title the line charts as Ford Motor Company Revenues and GM Company revenues respectively.

Next, type the Operating Income for Ford Motor Company and GM Company in two separate columns. Title them as Ford Motor Company Operating Income and GM Company Operating Income respectively. Make a simple line chart for each. Title the line charts as Ford Motor Company Operating Income and GM Company Operating Income respectively.

Next, type the Net Income for Ford Motor Company and GM Company in two separate columns. Title them as Ford Motor Company Net Income and GM Company Net Income respectively. Make a simple line chart for each. Title them as Ford Motor Company Net Income and GM Company Net Income respectively.

Once all six-line charts are ready, write down a brief analysis on Ford Motor Company’s revenue, operating income and net income trends. Next, write down a brief analysis on GM Company’s revenue, operating income and net income trends. Contrast the two. There is no one correct answer. We will be checking for plagiarism.

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Is there any indication that the current disruptions to global supply chain had an impact on the bottom-line of Ford or GM? Substantiate your answer. Research this by using recent news discussion on the internet. Fill in your brief response in the worksheet, keep it ready and then type it in the blackboard assessment when you take it. Your answers will be checked for plagiarism.

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