Question:
Financial reports are the primary means by which corporations report their performance and financial
condition.
Financial statements are one component of the annual report mailed to their shareholders and to interested
others.
Required:
Obtain an annual report from a corporation with which you are familiar. Using techniques you learned in
this chapter and any analysis you consider useful, respond to the following questions:
1. Do the firm’s auditors provide a clean opinion on the financial statements?
2. Has the company made changes in any accounting methods it uses?
3. Have there been any subsequent events, errors and irregularities, illegal acts, or related-party
transactions that have a material effect on the company’s financial position?
4. What are two trends in the company’s operations or capital resources that management considers
significant to the company’s future?
5. Is the company engaged in more than one significant line of business? If so, compare the relative
profitability of the different segments.
6. How stable are the company’s operations?
7. Has the company’s situation deteriorated or improved with respect to liquidity, solvency, asset
management, and profitability?
Note: You can obtain a copy of an annual report from a local company, from a friend who is a
shareholder, from the investor relations department of the corporation, from a friendly stockbroker, or
from EDGAR (Electronic
Data Gathering, Analysis, and Retrieval) on the Internet ( www.sec.gov ).
Answer:
Financial reports are the primary means by which corporations report their performance and financial
condition.
Financial statements are one component of the annual report mailed to their shareholders and to interested
others.
Required:
Obtain an annual report from a corporation with which you are familiar. Using techniques you learned in
this chapter and any analysis you consider useful, respond to the following questions:
1. Do the firm’s auditors provide a clean opinion on the financial statements?
2. Has the company made changes in any accounting methods it uses?
3. Have there been any subsequent events, errors and irregularities, illegal acts, or related-party
transactions that have a material effect on the company’s financial position?
4. What are two trends in the company’s operations or capital resources that management considers
significant to the company’s future?
5. Is the company engaged in more than one significant line of business? If so, compare the relative
profitability of the different segments.
6. How stable are the company’s operations?
7. Has the company’s situation deteriorated or improved with respect to liquidity, solvency, asset
management, and profitability?
Note: You can obtain a copy of an annual report from a local company, from a friend who is a
shareholder, from the investor relations department of the corporation, from a friendly stockbroker, or
from EDGAR (Electronic
Data Gathering, Analysis, and Retrieval) on the Internet ( www.sec.gov ).
Answer:
