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INTRODUCTION TO THE CORPORATE ANNUAL REPORT:
A Business Application with IFRS Content
3rd edition
Copyright 2011 by Applied Accounting Analytics. All rights
reserved. Reproduction or translation of this book beyond that
permitted by the applicable copyright law without Applied
Accounting Analytics’ permission is prohibited. Requests for
permission to reprint or for further information should be
directed to [email protected] or [email protected].
ISBN: 978-0-9841839-2-0
To be completed by the student and submitted with the
completed annual report project according to your instructor’s
requirements.
Complete the following form before you submit your
assignment. This step is required to validate your compliance

with sections 107 or 108 of the 1976 United States Copyright
Act.
1. Remove the front cover of the workbook and identify:
Student Name:
Term: Winter 2014
Selected Company: Monsanto Company
Instructor:
2. Print your completed electronic template.
3. Attach the following:
· This page completed with all required information.
· Completed Word form template. Form template boxes expand
as you input responses.
Chapter 1 - Introduction
Select a Company and Gather Documents
Chapter 1: Select a Company and Gather Documents – Question
1
Identify with an “X” the primary source of data for this
project.Click here to enter text.
Annual report to shareholders X
Annual report to shareholders with a letter from Chief
Executive Officer and SEC Form 10-K as part of the annual
report to shareholders. The annual report may include additional
general company information. Click here to enter text.
SEC Form 10-K and the company website.
Fill in the page numbers from the annual report where the
following are located.
Required information for this workbook project.
Page No.
Required information for this workbook project.

Page No.
Financial Highlights
· Not absolutely necessary, but very common in annual report to
shareholders.
· Not in SEC Form 10-K. May be posted on company website. If
so put WEB in Page No. box.
· If not available, put N/A in Page No. box.Second Page in
Report but not labelled
Chief Executive Officer Letter
· May be labeled President’s, CEO’s or other top official’s
message or letter to the shareholders
· Not in SEC Form 10-K. Likely posted on company website if
SEC Form 10-K used to satisfy the annual report to shareholders
reporting requirement. If so put WEB in Page No. box.WEB
Management’s Discussion and Analysis (MD&A)16-31
Notes to Financial Statements
· Put range of pages, for example, 47 to 58.43-88
Income Statement
May be labeled Statement of Earnings39-40
Report of Independent Accountants or Independent Auditors’
Report 89
Balance Sheet
May be labeled Statement of Financial Position64
Five- or Ten-Year Summary of Operating Results
Item 6 in SEC Form 10-K15
Statement of Change in Stockholder’s Equity
42
Management’s Report (Responsibility) on Internal Control over
Financial Reporting
Item 9A. Control and Procedures in SEC 10-K 89
Statement of Cash Flows 41
Investor and Company Information or Shareholder
Information97
Identify Why You Selected This Company

Chapter 1: Identify Why You Selected This Company –
Question 1
A) What is/are your motivation(s) or interest(s) in selecting this
company?
[See above for examples.]
B) What question(s) are you seeking to answer?
[For example, is the company profitable? Can the company
change and develop new products and services to be
competitive? Would I invest in this company? Will the
company provide rewarding career opportunities? In chapter 5
you will have pulled together the financial and nonfinancial
information to answer these question(s).]
A) Professor Selected company
B) Would I invest in this company?
Company and Annual Report Essentials
Chapter 1: Company and Annual Report Essentials – Question 1
What is the company’s complete name?
MONSANTO COMPANY
What is the address of your company’s corporate headquarters?
800 North Lindberg Blvd, St Louis, Missouri, MO 63167
Identify the company’s website address.
http://www.monsanto.com
Identify the telephone number and e-mail address of the
company’s Investor Relations Department.

Telephone number: (314) 694-1000
E-mail address: None
Which stock exchange lists your company?
New York Stock Exchange
What is your company’s stock exchange trading symbol?
MON
What is your company’s Standard Industrial Classification
(SIC) and sector? Run a search on “Standard Industrial
Classification,” and the classification and code will be
identified. Your company may list more than one SIC code
number. The first listed is considered the primary SIC for the
company.
For example, search – The Home Depot SIC – brings up a
listing of sources. InvestorWords is one website location option
- http://www.investorwords.com/cgi-
bin/stocksymbol.cgi?ticker=HD. Move down the page and you
will find:
SIC Code: 5211
Sector: Basic Materials, Construction, Retail
Industry: Lumber and other building materials
SIC Code 8731, 2879, 5159, 5151
Locate the board of directors listing. How many board members
does your company have?
12

How many of the directors are company employees, labeled
inside directors? And how many are non-company directors,
labeled outside directors? Why does a company want and need
outside directors?
(Inside and outside directors are typically identified as such by
their title and company.)
One director is a company employee. Eleven are non company
directors. A company needs outside directors so that there is no
conflict of interest, and they are able to bring vision and a fresh
view to the company.
Chapter 1: Company and Annual Report Essentials – Question
10
Leadership addresses the stockholders, typically, once a year at
the annual stockholders meeting. Identify where and when this
occurred, as reported in your annual report.
Click here to enter text.
Company Strategy and Business Environment
Chapter 1: Company Strategy and Business Environment –
Question 1
Review the chairman’s message of your company’s annual
report. Does it appear to be uplifting or somewhat apologetic?
Identify phrases that support your position.
The chairman’s message appear to be uplifting and not
apologetic. The phrases that support this position are quoted
directly from the chairman’s letter. He said that this year our
business took several steps forward. We closed out the year near
the high end of our guidance and with nearly $2 billion in free
cash flow. He also said that we also deliver innovation to
farmers and invested in new opportunities.
Question 2
Check below the one primary company strategy identified in the
chairman’s message. Support your answer with phrases found in

the chairman’s message that pointed you to the identified
corporate strategy.
Growth: Vertical
Horizontal Click here to enter text.
ConcentricClick here to enter text.
ConglomerateClick here to enter text.
Stability Click here to enter text.
Retrenchment Click here to enter text.
Phrases to support your above conclusion:
Question 3
Briefly summarize the company’s discussion found in Item 1 of
SEC Form 10-K.
Type of business:Leading global producer of agricultural
products for farmers.
Major business segments:Seeds and Genomics and Agricultural
Productivity
Primary customers:Farmers
Primary products and/or services: Germplasms and
Biotechnology traits
Other: Many seed brands
Question 4
Identify broad-based social, political, economic, and
technological concerns that may affect your company. Put N/A
if one of the categories does not apply.
Social:Click here to enter text.
Political: Click here to enter text.
Economic: Click here to enter text.

Technological: Click here to enter text.
Other: Click here to enter text.
Wrap-up
Chapter 1: Wrap-up – Question 1
After further review of additional information you should now
be confident in identifying the one primary company strategy,
beyond the insight provided by the chairman’s message?
Check below the one primary company strategy identified in the
chairman’s message and all other supporting documents.
Support your answer with phrases.
Growth: Vertical
Horizontal Click here to enter text.
ConcentricClick here to enter text.
ConglomerateClick here to enter text.
Stability Click here to enter text.
Retrenchment Click here to enter text.
Phrases to support your conclusion from information gathered
from the chairman’s message, Item 1 of the SEC Form 10-K and
other insight gained from completing Chapter 1.
Chapter 2 - Annual Report structure
Financial Highlights
Chapter 2: Financial Highlights – Question 1
Review the financial highlights of your company’s annual report
to the shareholders. Identify net sales or revenues, net income,
basic earnings per share (BEPS), and total assets for the current
and preceding years. These are the most common values
included in financial highlights. If your company reports
something different, simply cross out an item here and recap
what is reported. SEC Form 10-K does not provide financial

highlights. You may find this information on the company
website. If not available put N/A in the first row of boxes.
Categories
Current Year
One Year Prior
Two Years Prior
Net sales or
revenues$14,861,000,000$13,504,000,000$11,822,000,000
Net income$2,482,000,000$2,045,000,000$1,607,000,000
Basic EPS$4.60$3.79$2.96
Total AssetsClick here to enter text.Click here to enter
text.Click here to enter text.
Based on your preliminary review, is your company performing
better than, equal to, or less favorably than in the prior year?
Briefly explain.
Monsanto is performing better in 2013 than it did in 2012. The
net sales for 2013 increased by 10%, the income increase in
2013 compared to 2012 by 21% and the EPS also increased by
21% for 2013 over 2012.
General Company and Marketing Information
Chapter 2: General Company and Marketing Information –
Question 1
Look for pictures of product and people that are colorful and
send a positive company signal to the reader.
Category
Example: Volunteer Activities
Message
Ongoing and contributing to the success of the
communityPictures of flowersClick here to enter text.Pictures
of vegetablesClick here to enter text.Picture of watering
canisterClick here to enter text.Click here to enter text.Click
here to enter text.Click here to enter text.Click here to enter
text.
What is the broader message from this information?

Management’s Discussion and Analysis
Chapter 2: Management’s Discussion and Analysis – Question 1
Results of Operations:
Identify the primary drivers/issues that explain current and
future results of operations discussed in the MD&A. For
example, the gross profit percentage increased because of
improved buyer/supplier relations resulting in greater overall
operating performance. Or an increase in operating expenses
because of increased fuel costs reduced profits. List the six
major drivers/issues of performance you find in the MD&A
section of the annual report.
1.Click here to enter text.
Liquidity:
Recap what you find about your company’s liquidity in the
MD&A section of the annual report. Look for information about
the ability of the company to satisfy short-term cash needs and
the ability to generate operating cash flows, for example.
Capital Resources:
Recap what you find about your company’s capital resources in
the MD&A section of the annual report. Look for information
about cash reserves and credit availability. For example, your
company’s MD&A section may have a disclosure about an
established lined of credit to fund future growth.

Reports by Management
Chapter 2: Reports by Management – Question 1
Review the Management’s Report (Responsibility) on Internal
Control over Financial Reporting in your company’s annual
report. Answer the following questions.
Who is responsible for maintaining the internal controls
designed to provide reasonable assurance that the books and
records reflect the transactions of the company?Click here to
enter text.
Record the statement that identifies management’s conclusion
about internal controls.Click here to enter text.
Who audited management’s assessment of the effectiveness of
your company’s internal control over financial reporting?Click
here to enter text.
Independent Auditors’ Report
Chapter 2: Independent Auditors’ Report – Question 1
Review the Independent Auditors’ Report of your company’s
annual report and answer the following questions.
Who was the company’s auditor and where is it located?Click
here to enter text.
What is the responsibility of the auditor?Click here to enter
text.
Who is responsible for the preparation of and information
within the company’s financial statement?Click here to enter
text.
The audit was conducted in accordance with what?
What was the opinion of the auditor?Click here to enter text.
Five- or Ten-Year Summary of Operating Results
Chapter 2: Five- or Ten-Year Summary of Operating Results –
Question 1
Identify the major components provided in the five- or ten-year

summary. Summarize the insight provided by each. Look for
stable, increasing, or decreasing trends. Consistent, slightly
improving performance signals management has control of the
business. Inconsistent performance signals management does
not have control of the business.
Component
Example: The Home Depot Statement of Earnings Data
Summary of Insight
Sales and earnings have grown significantly over time.
Operating expenses are growing at an increasing rate.Click here
to enter text.Click here to enter text.Click here to enter
text.Click here to enter text.Click here to enter text.Click here
to enter text.Click here to enter text.
Chapter 3 - Financial Statements
The Balance Sheet
Chapter 3: Balance Sheet – Question 1
Identify the date shown at the top of your selected company’s
balance sheet.
Current Year
Prior YearClick here to enter a date.Click here to enter a date.
Does the company’s fiscal year follow the calendar year? Enter
Yes or No Click here to enter text.
If no, why do you think it is different?
Review the current asset section of your selected company’s
balance sheet. Explain why the order of individual items begins
with cash. In your opinion, would it be more or less appropriate
to order these items according to dollar magnitude? Explain.

Review your company’s balance sheet (or SEC Form 10-K) and
compare accumulated depreciation to the historical cost of Plant
and Equipment (PE) using the following ratio.
Compute the following:
Accumulated depreciation /
Plant and Equipment
Percentage of Asset Life Remaining
High percentage means older assets
Low percentage means newer assets
Is the investment in fixed assets, on average, relatively recent?
If not, can we assume that these assets will be replaced shortly?
Since property, plant, and equipment (PPE) and long-term
investments in stock represent a company’s investment, why do
we distinguish between them in the balance sheet?
Review the noncurrent asset section of your company’s balance
sheet. Are any intangible assets listed? If so, identify the types
of intangible assets and the percent of total assets that the
intangible assets represent.
Intangible Asset 1:Click here to enter text.
Total Intangible Assets Total Assets = Click here to enter text.
If this company were to be acquired by another company, would
the intangible assets influence the purchase price? Explain your

answer.
Now review your company’s total assets for the most recent
year. What percentage of total assets is current? Noncurrent?
Current
NoncurrentClick here to enter text.Click here to enter text.
Should companies have a greater investment in current assets or
noncurrent assets, or does it depend on the nature of their
business? Explain your answer.
Review your company’s balance sheet. Does it report a deferred
tax asset? A deferred tax liability? If so, are the deferred tax
assets and/or liabilities reported as current or noncurrent?
Deferred tax asset? Enter Yes or No
Enter Current or Non-current
Deferred tax liability? Enter Yes or No Click here to enter text.
Enter Current or Non-current
Identify the information that relates to the stockholders’ equity
section of your company’s balance sheet.
Par value per share of common stock?Click here to enter text.
Number of common shares authorized?Click here to enter text.
Number of common shares issued?Click here to enter text.
Number of common shares outstanding?Click here to enter text.
Number of treasury shares held by the company?Click here to
enter text.

Answer the following questions relative to the stockholders’
equity section of the balance sheet.
By what amount did retained earnings increase or decrease from
the prior year?
Was the increase or decrease in retained earnings equal to the
company’s current year net income or net loss?
* Enter Yes or No
* If No, then dividends were paid (or declared) by your selected
company or certain events took place during the year where the
accounting for the events directly affected the retained earnings
account.
List (write-in) each financial statement element as shown in
your company’s balance sheet.
Assets
Liabilities
Stockholders’ EquityClick here to enter text.Click here to enter
to enter text.
Click here to enter text.Click here to enter text.Click here to
enter text.Click here to enter text.Click here to enter text.Click
here to enter text.
Identify the combined carrying values (dollar amounts) of the
following selected account groups taken from your company’s
balance sheet:

Account Groups
Current Year
Prior Year
Increase or Decrease
(in dollars)
Current Assets Click here to enter text.Click here to enter
Net Fixed AssetsClick here to enter text.Click here to enter
Intangible and Other Noncurrent AssetsClick here to enter
text.Click here to enter text.Click here to enter text.
Current Liabilities Click here to enter text.Click here to enter
Long-term LiabilitiesClick here to enter text.Click here to enter
Common StockClick here to enter text.Click here to enter
Additional Paid in Capital*Click here to enter text.Click here to
enter text.Click here to enter text.
Retained EarningsClick here to enter text.Click here to enter
Other Equity ComponentsClick here to enter text.Click here to
Identify the three major balance sheet accounts, for example
accounts receivable, accounts payable, inventory, etc. that
changed the most from the prior year. What events might
explain these changes? Working to explain why these changes
occurred contributes to a greater understanding about a
company.
Account
Explanation
Example:

Account Receivable
Example:
An increase in accounts receivable should coincide with an
increase in sales, i.e., a 10% increase in sales would explain a
10% increase in accounts receivable. If accounts receivable are
increasing and sales decreasing, the signal is unfavorable.Click
to enter text.
Prepare a common-sized balance sheet (expressed in
percentages) using the following account groups shown in your
selected company’s balance sheet.
Account Group
Current Year
Prior Year
(current year percent minus prior year percent)
Current AssetsClick here to enter text.Click here to enter
Net Fixed AssetsClick here to enter text.Click here to enter
Intangible and Other Noncurrent Assets Click here to enter
Total Assets
100%
100%
Current LiabilitiesClick here to enter text.Click here to enter
Long-term LiabilitiesClick here to enter text.Click here to enter

Common StockClick here to enter text.Click here to enter
Additional Paid in CapitalClick here to enter text.Click here to
Retained EarningsClick here to enter text.Click here to enter
Other Equity ComponentsClick here to enter text.Click here to
Total Liabilities and Stockholders’ Equity
100%
100%
Example provided because of common student error in
completing this report. All accounts groups divided by total
assets, in dollars.
Account Group
Current Year
Prior Year
Current Assets
40%
35%
5%
Net Fixed Assets
40%
45%
-5%
Intangible and Other Noncurrent Assets
20%
20%
Total Assets
100%
100%

Current Liabilities
60%
50%
10%
Long-term Liabilities
10%
15%
-5%
Common Stock
20%
20%
Additional Paid in Capital
5%
5%
Retained Earnings
5%
10%
-5%
Other Equity Components
Total Liabilities and Stockholders’ Equity
100%
100%
Identify the three balance sheet groups from question 13 above
that changed most significantly. Within each of these groups,
identify the primary balance sheet element that drove this
change. What events might explain these changes?
Group Name:

Current Assets
Explanation:
(Example – sales increased by 22%, thus accounts receivable
increased by approximately 22%)Click here to enter text.Click
Did your company become more or less liquid when comparing
this year to last year?
Current Year:
Current Assets minus Current Liabilities =
Prior Year:
Current Assets minus Current Liabilities =
Explain why?
Did your company increase or decrease its financial leverage
when comparing total debt to total stockholders’ equity from
this year to last?
Current Year:
Total debt Total stockholders’ equity =
Prior Year:
Total debt Total stockholders’ equity =
Explain why:
The Income Statement or Statement of Earnings

Chapter 3: Income Statement – Question 1
Review the heading of your company’s income statement. Does
the company’s income statement provide two or three years of
comparative information? (Insert number to the right.)
Click here to enter text. yrs.
Why do you think the SEC requires that balance sheets provide
two years of comparative financial information and income
statements provide three years of comparative financial
information?
Review the middle section of your company’s income statement.
Did operating income (loss) increase or decrease from the prior
year and by how much? You may have to compute operating
income (loss).
Increased by $ Click here to enter text.
Decreased by $Click here to enter text.
Does the middle section of your company’s income statement
show a nonoperating income (loss) increase or decrease from
the prior year and by how much? You may have to compute
nonoperating income (loss).
Decreased by $ Click here to enter text.
In reference to why you are studying this company, is it

important to know the different sources of income—operating or
nonoperating?
If any of the irregular events are shown on your company’s
income statement, describe the nature and the amount. Select
the most current year affected by the event if multiple years are
affected.
Irregular Event
Amount
Nature of the Change
Restructuring charge?Click here to enter text.Click here to enter
text.
Discontinued operation?Click here to enter text.Click here to
enter text.
Extraordinary event?Click here to enter text.Click here to enter
text.
Review the lower section of your selected company’s income
statement. Did net income (loss) increase or decrease from the
prior year and by how much?
Decreased by $ Click here to enter text.
Prepare a common-sized income statement for the categories
below.
Account/Category
Current Year
Prior Year
(current year percent minus prior year percent)
Net Sales (revenues)

100%
100%
Cost of Goods/Services (if applicable)Click here to enter
Gross Profit Click here to enter text.Click here to enter
Operating Expenses Click here to enter text.Click here to enter
Operating Income (Loss)Click here to enter text.Click here to
Nonoperating Income (Loss)Click here to enter text.Click here
Income Tax ExpenseClick here to enter text.Click here to enter
Net IncomeClick here to enter text.Click here to enter text.Click
here to enter text.
Example provided because of common student error in
completing this report. All account categories divided by net
sales (revenue), in dollar.
Account/Category
Current Year
Prior Year
Net Sales (revenues)
100%
100%
Cost of Goods/Services (if applicable)
(35%)
(36%)
(1%)
cost of goods sold decrease
Gross Profit
65%

64%
1%
gross profit increase
Operating Expenses
(25%)
(23%)
2%
expenses increased
Operating Income (Loss)
40%
41%
(1%)
operating income decreased
Nonoperating Income (Loss)
5%
5%
Income Tax Expense
(20 %)
(17%)
3%
taxes increased
Net Income
25%
29%
(4%)
Identify the three income statement accounts/categories that
changed the most in Question 7. What events might explain
these changes?
Account or Category:
Explanation:
(Hint – the MD&A section will provide good information to

answer this question.)Click here to enter text.Click here to enter
Identify your company’s Basic and Diluted EPS amounts. Place
a N/A in Diluted EPS if not reported.
Basic EPS
Diluted EPS
Current yearClick here to enter text.Click here to enter text.
Preceding year 1Click here to enter text.Click here to enter text.
Preceding year 2 Click here to enter text.Click here to enter
text.
Why is diluted EPS always equal to or less than basic EPS?
Statement of Cash Flows (SCF)
Chapter 3: SCF – Question 1
Is the SCF dated in the title for a period of time similar to the
income statement or for a point in time similar to the balance
sheet? Why?
Identify the following sections of the SCF and record the
amounts. Check the math by summing to the cash balance at end
of year. Verify that the ending cash balance reported on the SCF
is the same as reported on the balance sheet.
Section
Current Year
Prior Year
Second Prior Year
Net operating cash flowsClick here to enter text.Click here to

Net investing cash flowsClick here to enter text.Click here to
Net financing cash flowsClick here to enter text.Click here to
Net increase (decrease) in cash flowsClick here to enter
Cash balance at beginning of yearClick here to enter text.Click
here to enter text.Click here to enter text.
Cash balance at end of yearClick here to enter text.Click here to
Does the total match balance sheet cash?
Enter Yes or No Click here to enter text.
Enter Yes or No Click here to enter text.
Record net sales, net income and net operating cash flows
below. All three should be trending in approximately the same
direction. If so, this is a sign of a well-run business. If one or
more are going in a different direction, or random, then you
must keep an eye open for an explanation why.
Item
Current Year
Prior Year
Second Prior Year
Net Sales Click here to enter text.Click here to enter text.Click
here to enter text.
Net IncomeClick here to enter text.Click here to enter text.Click
here to enter text.
Net Operating Cash FlowsClick here to enter text.Click here to
Explain why net sales, net income and net operating cash flows
are trending together or differently. (Hint: Look at depreciation
expense and substantial changes in inventory, accounts
receivable and accounts payable balances. Explaining why is a

key learning point.)
Identify the primary cash outflows and inflows from investing
activities.
Description of Activity
Amount
Cash outflow: Click here to enter text.Click here to enter text.
Cash inflow: Click here to enter text.Click here to enter text.
Consider three key issues at this point. Is the company adding
assets? This is a sign of growth. Is the company replacing
assets? This is a sign of growth and stability. Is the company
only selling assets? This is a sign of retrenchment.
Identify the primary cash inflow and outflow from financing
activities.
Description of Activity
Amount
Cash inflow:Click here to enter text.
Cash outflow: (Note: cash dividends paid are reported
here.)Click here to enter text.
Consider two key issues at this point. How is the company being
financed, through debt or equity? Can you determine which is
growing faster and why? A sound corporate strategy is to
finance a company with debt during stable times, because this
demands regular payment of principal and interest, and to
finance a company with equity during unstable times, because
leadership can elect to pay or not pay dividends.

The Statement of Stockholders’ Equity (SSE)
Chapter 3: SSE – Question 1
Identify the elements that comprise the statement of
stockholders’ equity section of your company. Hint: These
items are generally illustrated across the top of the page using a
columnar format. (Example. Common stock – shares and dollar
amount.)
Chapter 3: SSE – Question 2
Identify the cash dividends per share.Click here to enter text.
Determine the dividend payout percentage. A company’s
dividend payout percentage is computed by dividing dividend
per common share by net income or earnings per common share.
(Hint: If your company reported a net loss for the year, the
answer lacks meaning.) Click here to enter text.
Compute dividend yield. A company’s dividend yield is
computed by dividing dividend per common share by market
price per common share. (Hint: Use the current per share price
for your selected company.)Click here to enter text.
Is your company’s dividend yield a reasonable return given
current market conditions?
Notes to the Financial Statements
Chapter 3: Notes to the Financial Statements – Question 1
How does your company define “cash and cash equivalents”?
How does your company value its “inventories”? Explain the

meaning of the inventory valuation method. Are domestic and
international inventories valued thesame?Service companies
will typically not have inventory.
Does your company report any investments in marketable
securities? Identify the respective amount(s) invested.
Category
Current Year Amount
Trading SecuritiesClick here to enter text.
Available-for-Sale SecuritiesClick here to enter text.
Held-to-Maturity Debt SecuritiesClick here to enter text.
Note 1 and a separate note on income taxes should provide the
information to answer this question.
What was your company’s income tax expense for the current
year?Click here to enter text.
How much cash was paid for income taxes in the current year?
(Hint: Review the SCF. The difference generally relates to the
accrual basis of accounting.) Click here to enter text.
Identify the three major elements, such as depreciation or other
post employment benefits, that gave rise to deferred tax assets
or deferred tax liabilities:
Deferred Tax Assets
Deferred Tax LiabilitiesClick here to enter text.Click here to
here to enter text.Click here to enter text.
What is this year’s effective tax rate for your company? What
is the current year statutory rate?
Effective Tax Rate: % Click here to enter text.
Statutory Tax Rate: % Click here to enter text.

Reviewing note #1, any related supporting notes, and/or the 10-
K, identify the fixed asset group(s), depreciation methods used,
and the estimated useful lives of these fixed assets.
Fixed Asset Group
Depreciation Method
Estimated Lives (range)Click here to enter text.Click here to
to enter text.
Review the balance sheet, note #1, and any related notes and
identify the amount of goodwill reported in the current year.
Amount reported in current year.
$ Click here to enter text.
Identify the amount of any significant write-down of goodwill
that occurred during the current year.
$ Click here to enter text.
How does management describe how it accounts for goodwill as
disclosed in the note(s) to the financial statements?
Given present executive compensation packages, why would the
user of financial information prefer a company follow SFAS
#123(R) instead of APBO #25? Explain.

Review your company’s lease note (and related balance sheet
information), then identify the following amounts:
Minimum lease payments under operating leasesClick here to
enter text.
Minimum lease payments under capital leasesClick here to enter
text.
Ratio of operating lease payments to capital lease
paymentsClick here to enter text.
As a user of reported financial information, would you be
concerned about a significant amount of operating leases that
are not reported in the balance sheet? Explain.
Review your company’s long-term debt note and identify the
following (consider the three most significant liabilities only):
Instrument
Maturity Date
Rate
Amount DueClick here to enter text.Click here to enter
to enter text.Click here to enter text.Click here to enter text.
How much interest expense was recognized in the current
year?Click here to enter text.
How much cash was paid for interest in the current year? (Hint:
Look in the SCF.*)Click here to enter text.
*The difference between interest expense and cash paid for
interest is due to the accrual basis of accounting (and in some
cases, the capitalization of interest).
Review your company’s pension and OPEB note (if applicable)
and answer the following questions.

Pensions
OPEB
How much is the Projected Benefit Obligation (PBO) and
Accumulated Postretirement Benefit Obligation (APBO) for
your company at the end of the current year?Click here to enter
What was the amount of pension or OPEB benefits paid to plan
participants during the current year? Click here to enter
What amount of cash did the company contribute to the
respective funds during the current year? This is known as
“employer contributions.”Click here to enter text.Click here to
enter text.
What is the value of the plan assets at the end of the current
year?Click here to enter text.Click here to enter text.
Based on your review of the plan assets and the projected
benefit obligation (or accumulated postretirement benefit
obligation), has your company sufficiently funded its employee
benefit plans (this is known as funded status)?
An expected average return on invested plan assets is used to
reduce the volatility in the reporting of pension or OPEB
expense. Higher expected average returns reduce pension or
OPEB expense, and lower expected returns increase pension
expense. What rate of return on plan assets does your company
use to compute pension or OPEB expense? Does this appear
reasonable, given present market conditions?
Rate employed? Click here to enter text.
Response: Click here to enter text.

Based on your review of the contingencies note, briefly identify
specific events that have led to the accrual of contingent
liabilities in your selected company’s the balance sheet.
Based on your review of the segment-reporting note to the
financials, identify the reported operating segments, their
related revenues, and operating income. Identify the largest
three if more than three are disclosed.
Reportable Operating Segments
Net Sales Revenue
Net Operating IncomeClick here to enter text.Click here to enter
Based on your review of the segment-reporting note to the
financials, identify the geographical segments and their related
revenues. Identify the largest three if more than three are
disclosed.
Country
Net Sales RevenueClick here to enter text.Click here to enter
Chapter 3: Notes to the Financial Statements—Question 14
Based on your review of the notes to the financials or the
statement of stockholders’ equity, identify the components (no
more than four) that comprise Other Comprehensive Income for
your company.
Component
AmountClick here to enter text.Click here to enter text.

here to enter text.
Chapter 4 - Financial Analysis
Summary Financial Analysis Report
Note: S&P 500 data is no longer available from the website:
investing.money.msn.com. You will see this column in the
workbook but not in the Word template form. You are not
responsible for S&P 500 data input.
Profit Margin %
Answers how well the business performed.
Company Two Years Prior
Company One Year Prior
Company
Industry
Gross Margin
Gross Profit /
Total Revenue
Pre-Tax Margin
Operating Income / Total RevenueClick here to enter text.Click
text.
Net Profit Margin
Net Income /
Total Revenue
Click here to enter text.*

Click here to enter text.*Click here to enter text.Click here to
enter text.
Sales
Financial StatementClick here to enter text.Click here to enter
Not required
Operating Income
Not required
Operating Cash Flows
Not required
Evaluate Profitability (Think about the corporate strategy in
providing a response. Following are general guidelines, yet each
company situation is unique. For a company with a growth
strategic focus you will likely find increasing performance,
above or below industry average. For a company with a stability
strategic focus you will likely find stable performance, above or
below industry average. For a company in a retrenchment
strategic focus you will likely find poor performance, below
industry average with efforts to improve and approach industry
average. Note: Sales, operating income and operating cash flows
should trend in approximately the same direction. This signals a
stable operating business environment. If the three measures are
not trending together, this signals lack of control by
management.)

Financial Condition
Signals ability to take on additional debt and liquidity.
Company
Industry
Debt/ Equity Ratio
(Total Liabilities – Current Liabilities)
/ Total equity
enter text.
Current Ratio
Current assets /
Current liabilitiesClick here to enter text.Click here to enter
Quick Ratio
(Cash and Short Term Investments +
Short Term Investments + Total Receivables, Net) /
Current Liabilities
Interest Coverage
Data not readily available
enter text.
Evaluate Financial Condition (often labeled liquidity and

solvency analysis) (Think about the corporate strategy in
providing a response. Following are general guidelines, yet each
company situation is unique. For a company with a growth
strategic focus you will likely find stable or slightly decreasing
liquidity, above or below industry average. Debt to equity often
is increasing in a growing company. For a company with a
stability strategic focus you will likely find stable liquidity,
above or below industry average. Debt to equity often is stable
as well. For a company with a retrenchment strategic focus you
will likely find poor liquidity, below industry average with
efforts to improve and approach industry liquidity. Debt to
equity often is decreasing in a company during retrenchment.)
Investment Return %
Signals performance for managers and owners.
Company
Industry
Return On Equity
Net Income /
Total Equity
enter text.
Return On Assets
Net Income /
Total Assets

enter text.
Return On Equity
(5-Year Avg.)
Not required
Not requiredClick here to enter text.Click here to enter text.
Return On Assets
(5-Year Avg.)
Not required
Evaluate Investment Return (Think about the corporate strategy
in providing a response. Following are general guidelines, yet
each company situation is unique. For a company with a growth
strategic focus you will likely find increasing returns. For a
company with a stability strategic focus you will likely find
stable investment returns. For a company in a retrenchment
strategic focus you will likely find poor and stable investment
solvency, below industry average.)
Management Efficiency
Signals how well the company was run by management.
Company
Industry

Income/
Employee
Not required
Revenue/
Employee
Not required
Receivable Turnover
Total Revenue /
Average Accounts Receivable - Trade, Net Click here to enter
to enter text.
Average is defined: (beginning of the year + end of the year) / 2
Inventory Turnover
Cost of Revenue, Total / Average Total Inventory Click here to
here to enter text.
Asset Turnover
Total Revenue / Average Total AssetsClick here to enter
to enter text.
Evaluate Management Efficiency (Think about the corporate
strategy in providing a response. Following are general
guidelines, yet each company situation is unique. For a
company with a growth strategic focus you will likely find
improving efficiency, above or below industry average. For a
company with a stability strategic focus you will likely find

stable efficiency, above or below industry average. For a
company in a retrenchment strategic focus you will likely find
poor efficiency, below industry average with efforts to improve
and approach industry average.)
Chapter 5 - Decision-Making Process
Chapter 5: Decision-making Process – Question 1
Based upon your review, do the numbers support the company’s
explicit strategic focus: a growth, stability or retrenchment
focus? Why or why not?
Chapter 5: Decision-making Process – Question 2
Return to the first question in this project.
Chapter 1: Identify Why You Selected This Company—Question
1
A) What is/are your motivation(s) or interest(s) in selecting this
company?
B) What question(s) are you seeking to answer?
You were asked to explain why you were investigating this
company’s annual report. You have likely uncovered numerous
pieces of information, some with conflicting insight. This may
involve both financial and nonfinancial information. In
addition, you may have found certain information to be
incomplete for decision-making purposes. This is real world
analysis. Most business decisions are made with as much
reliable information as possible, yet common to the decision-
maker is a desire for more information.
Prepare a thorough, yet concise answer to your original
questions A and B above. For example, would you work for this
company, why or why not? Support your response with the
information gathered throughout your annual report study.

Chapter 5: Validate Your Conclusion – Question 1
The Altman Z-score is a predictive model created by Edward
Altman in the 1960’s. The score combines and weights five
financial ratios to estimate the likelihood of a company going
bankrupt. The lower the Altman Z-score the higher the odds of
bankruptcy. Research findings suggest the Z-score predicts 72 -
80% of corporate bankruptcies two years prior to the actual
filing.
· Z-score > than 3 = considered healthy
· Z-score between 1.8 and 3 = considered a warning sign
· Z-score < than 1.8 = could be headed for bankruptcy
Computing the Z-score for your company is very simple. Go to
one of the Websites listed below and compute the Z-scores for
the respective years identified below. Print out your results and
turn them in with this workbook.
· www.jaxworks.com/calc2a.htm
· www.ironwoodadvisory.com/zscore.htm
Two Years Prior
One Year Prior
Current Year
Z-scoreClick here to enter text.Click here to enter text.Click
here to enter text.
Z-score interpretation compared to the financial analysis. Does
the Z-score agree or disagree with your analysis?
Congratulations.
Now submit to your instructor your completed workbook per the
instructions provided at the beginning of this document.

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