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13 Apr 2018

What are some of the ethical issues of selecting accountingprinciples for a company? Do you believe accountants have beenproperly conservative in the past few years with financialstatement presentation? Why? As a potential investor, what risks doyou want to identify with financial statement analysis?

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Lelia Lubowitz
Lelia LubowitzLv2
15 Apr 2018

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Assignment 2: You Are an InvestmentAnalyst
Due Week 10 and worth 250 points

As the CFO of your corporation, you are in charge of preparing andanalyzing financial statements that will be presented to potentialinvestors and creditors. However, before you can present thefinancial statements to investors and creditors, you need toprepare the financial statements with supporting analysis. Selectone (1) pair of the following companies to conduct your financialstatement analysis.

Pepsi versus Coca Cola, or

Amazon versus eBay

Target versus Walmart

Nike versus Reebok

Write a six to eight (6-8) page paper in which you:

1) Analyze each company’s history, product / services, majorcustomers, major suppliers, and leadership, and provide a synopsisof each company.

2) Identify three (3) profitability ratios that creditors may beinterested in. Calculate the ratio for each company, and prepare areport to summarize your findings on the financial health of eachcompany. Also, recommend to management the manner in which they canimprove each of the three (3) ratios identified.

3) Summarize at least two (2) news events (this may includemergers, acquisitions, or political issues) that occurred from 2012to the present day, and analyze the impact that these events had oneach company’s financial statements. Indicate the primary way inwhich the merger, acquisition or political issues influencepotential investors’ and creditors’ perception of bothcompanies.

4) Analyze each company’s income statement over the past two (2)years, and determine which company outperformed the other. Suggesta way in which the lagging company can improve its income. Supportyour suggestion with a specific analysis.

5) Analyze each company’s balance sheet. Prepare a verticalanalysis for each company, interpret the results, and write afinancial report. Also, suggest the manner in which the companythat is not performing well can improve its balance sheet in orderfor it to be attractive to potential investors.

6) Use at least four (4) quality academic resources in thisassignment. Note: Wikipedia and other Websites donot qualify as academic resources. PLEASE INCLUDE THE WEBSITES USEDFOR INFORMATION.

Hi Max. I appreciate you sharing those research findings with the class! Let’s take a closer look at the element of risk assessment. Risk assessment is important for management, the auditors, as well as other external financial statement users. To adequately assess risks, we have to understand the balances on the financial statements as well as the underlying circumstances. If things are omitted, then it’s difficult to reach a reasonable conclusion. Class, what is a joint venture? What sort of additional risks do external users face when a company engages in joint venture transactions?

Using Disney Form 10K

https://www.thewaltdisneycompany.com/wp-content/uploads/2017-Annual-Report.pdf

Determine what the company's comprehensive income is for theyear (and prior 2 years).

Identify what items are flowing through comprehensiveincome.

Is comprehensive income higher or lower than net income?Why?

Identify the company's Earnings per Share for the year (andprior 2 years).

Identify whether the company has both basic and diluted EPS.

What trends do you see in comprehensive income and earnings pershare?

Has the company issued dividends, stock dividends or had a stocksplit in the past three years?

Based on your additional analysis of the company, how has yourevaluation of the company's financial health changed since youranalysis during Week 2?

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