Interpreting a 10-K
The purposes of this project are to:
1. Access and review a company 10-K or annual required filing with the Securities and Exchange Commission.
2. Research a company and competitor specified information within the 10-K.
3. Compute certain liquidity, leverage, profitability, and turnover ratios for a company and competitor.
4. Analyze results and estimate company business strategies/business models from data gathered and ratios computed.
Requirements:
1. Review the audio/video regarding how to access a company 10-K and brief comments regarding the 10-K annual filing:
http://www.screencast.com/t/g4sfY2ArQ0
2. Access the Walmart and Target latest 10-K reports through the following SEC search engine link (see above audio/video for instructions):
http://www.sec.gov/edgar/searchedgar/webusers.htm
3. Compute the following ratios following the formulas reported in the text (if averages are to be used simply add the beginning and ending balances and divide by two):
A. Current Ratio
B. Acid Test Ratio
C. Debt to Equity Ratio
D. Return on Sales (commonly called the profit ratio)
E. Return on Equity
F. Inventory Turnover Ratio
G. Gross profit ratio – compute this ratio by dividing gross profit by sales. This shows the average markup on inventory sold.
H. Asset Turnover Ratio – compute this ratio by dividing sales by the company’s average total assets (not given in text). This ratio show the extent of revenue being generated from the use of assets – for example, does one company’s stores generate more revenue than that of the other company.
4. From a source such as Yahoo Finance, report each company’s monthly stock price for the latest six months – use the end of the month stock price as the monthly price. 5. From the income statements within the 10-K filings report the basic earnings per share amounts for the latest year for each company.
6. Compute and report the