Question

Analyzing Financial Statements of United States Based Corporations
Scenario

Each student is to select a United States based public (shares are listed on a major stock exchange) company for this project. You will need to locate the company's income statement and balance sheet for the past two years. The project is to be completed Individually - this is not a group project.

Requirements

1. For each year please determine/calculate the following:
* Net income
* Net income before taxes
* Income tax rate
* Earnings per share
* Gross profit margin
* Net profit margin
* Operating income
* Non-operating income
* Total assets
* Current assets
* Total liabilities
* Current liabilities
* Current ratio
* Debt to total assets ratio
* Book value (owners equity)
2. Prepare a comparative financial statement analysis (horizontal analysis) for each of the 15 categories/financial measures.
3. Prepare a spreadsheet that shows all of the data, calculations, and analyses.
4. For each of the categories/financial measures that show a difference between the two years, determine what factors could have caused the differences.

use a companys income statement and balance sheets.

Answer 1

1.

Particular	Remarks	For year ended June 30, 2019	For year ended June 30, 2018
* Net income	From the Income Statement (amount in million)	$                                     39,240	$                                     16,571
* Net income before taxes	From the Income Statement (amount in million)	$                                     43,688	$                                     36,474
* Income tax rate	Provision for Income taxes / Net income before taxes 2019 - 4,448 / 43,688 2018 - 19,903 / 36,474	10.18%	54.57%
* Earnings per share	From the Income statement (per share amount, Basic EPS)	$                                          5.11	$                                          2.15
* Gross profit margin	Gross margin / Total Revenue 2019 - 82,933 / 125,843 2018 - 72,007 / 110,360	65.90%	65.25%
* Net profit margin	Net Income / Total Revenue 2019 - 39,240 / 125,843 2018 - 16,571 / 110,360	31.18%	15.02%
* Operating income	From the Income Statement (amount in millions)	$                                     42,959	$                                     35,058
* Non-operating income	From the Income Statement (amount in millions)	$                                           729	$                                        1,416
* Total assets	From the Balance Sheet (amount in millions)	$                                   286,556	$                                   258,848
* Current assets	From the Balance Sheet (amount in millions)	$                                   175,552	$                                   169,662
* Total liabilities	From the Balance Sheet (amount in millions)	$                                   184,226	$                                   176,130
* Current liabilities	From the Balance Sheet (amount in millions)	$                                     69,420	$                                     58,488
* Current ratio	Current assets / current liabilities	2.53	2.90
* Debt to total assets ratio	Total Liabilities / Total assets	64.29%	68.04%
* Book value (owners equity)	From the Balance Sheet (amount in millions)	$                                   102,330	$                                     82,718

2.

Particular	Remarks	For year ended June 30, 2019	For year ended June 30, 2018
* Net income	From the Income Statement (amount in million)	$                                     39,240	$                                     16,571	$ 22,669
* Net income before taxes	From the Income Statement (amount in million)	$                                     43,688	$                                     36,474	$    7,214
* Income tax rate	Provision for Income taxes / Net income before taxes 2019 - 4,448 / 43,688 2018 - 19,903 / 36,474	10.18%	54.57%	-44%
* Earnings per share	From the Income statement (per share amount, Basic EPS)	$                                          5.11	$                                          2.15	$           3
* Gross profit margin	Gross margin / Total Revenue 2019 - 82,933 / 125,843 2018 - 72,007 / 110,360	65.90%	65.25%	1%
* Net profit margin	Net Income / Total Revenue 2019 - 39,240 / 125,843 2018 - 16,571 / 110,360	31.18%	15.02%	16%
* Operating income	From the Income Statement (amount in millions)	$                                     42,959	$                                     35,058	$    7,901
* Non-operating income	From the Income Statement (amount in millions)	$                                           729	$                                        1,416	$     (687)
* Total assets	From the Balance Sheet (amount in millions)	$                                   286,556	$                                   258,848	$ 27,708
* Current assets	From the Balance Sheet (amount in millions)	$                                   175,552	$                                   169,662	$    5,890
* Total liabilities	From the Balance Sheet (amount in millions)	$                                   184,226	$                                   176,130	$    8,096
* Current liabilities	From the Balance Sheet (amount in millions)	$                                     69,420	$                                     58,488	$ 10,932
* Current ratio	Current assets / current liabilities	2.53	2.90	$    (0.37)
* Debt to total assets ratio	Total Liabilities / Total assets	64.29%	68.04%	-4%
* Book value (owners equity)	From the Balance Sheet (amount in millions)	$                                   102,330	$                                     82,718	$ 19,612

3 and 4.

Particular	Remarks	For year ended June 30, 2019	For year ended June 30, 2018		Reason
* Net income	From the Income Statement (amount in million)	$                                     39,240	$                                     16,571	$ 22,669	This is due to higher taxes in 2018
* Net income before taxes	From the Income Statement (amount in million)	$                                     43,688	$                                     36,474	$    7,214	This is due to increase in revenue
* Income tax rate	Provision for Income taxes / Net income before taxes 2019 - 4,448 / 43,688 2018 - 19,903 / 36,474	10.18%	54.57%	-44%	This is on account of TCJA impact taken in 2018
* Earnings per share	From the Income statement (per share amount, Basic EPS)	$                                          5.11	$                                          2.15	$           3	Due to increase in Net Income in the current year
* Gross profit margin	Gross margin / Total Revenue 2019 - 82,933 / 125,843 2018 - 72,007 / 110,360	65.90%	65.25%	0.65%	Negligble difference.
* Net profit margin	Net Income / Total Revenue 2019 - 39,240 / 125,843 2018 - 16,571 / 110,360	31.18%	15.02%	16.17%	This is due to higher taxes in 2018
* Operating income	From the Income Statement (amount in millions)	$                                     42,959	$                                     35,058	$    7,901	This is due to increase in revenue
* Non-operating income	From the Income Statement (amount in millions)	$                                           729	$                                        1,416	$     (687)
* Total assets	From the Balance Sheet (amount in millions)	$                                   286,556	$                                   258,848	$ 27,708	The increase is due to the following 1. Higher receivables due to higher sales - 3,043 2. Purchase of assets - 7,017 3. New acquistions (Goodwill) - 6,343 4. Remaining is due to other assets
* Current assets	From the Balance Sheet (amount in millions)	$                                   175,552	$                                   169,662	$    5,890	The increase is due to higher receivables due to higher sales
* Total liabilities	From the Balance Sheet (amount in millions)	$                                   184,226	$                                   176,130	$    8,096	Major increase is on account of taxes payable and unearned revenue
* Current liabilities	From the Balance Sheet (amount in millions)	$                                     69,420	$                                     58,488	$ 10,932	Major increase is on account of taxes payable and unearned revenue
* Current ratio	Current assets / current liabilities	2.53	2.90	$    (0.37)	Decrease is because increase in current liabilities is higher than the increase in current assets
* Debt to total assets ratio	Total Liabilities / Total assets	64.29%	68.04%	-4%	Decrease is because increase in assets is higher than the increase in liabilities
* Book value (owners equity)	From the Balance Sheet (amount in millions)	$                                   102,330	$                                     82,718	$ 19,612	The increase is due to net income earned during the year net off dividends