Understanding Financial Statements

Group #/Name
Company Name
As of Date of 10K filing
Questions
What is the nature of this companys
business?

Answers

Based on the information you know per the

financial statements, how does this
company make money?

How often does your publicly traded

corporations typically prepare financial
statements for external reporting purposes?
List the dates of the most recent ones.
Annual Report 10-K ______________________
3Q 10-Q
______________________
2Q 10-Q
______________________
1Q 10-Q
______________________
6 most recent 8-Ks (Date, Topic)
_______________

______________________

_______________

______________________

_______________

______________________

_______________

______________________

_______________

______________________

_______________

______________________

Who is responsible for the financial

statements? (Hint: Look at signature page)

Discuss the potential users of this

companys financial statements and what
kind of information the user is interested in.

Who are this companys external auditors?

Year End Date

____________________________

External auditors
___________________________
_________________________________________
Describe the two opinion letters that this
company received and in your own words,
describe what these opinions mean. Why
are both opinions dated several months
after the companys year-end? State the
date of the opinion.

City______________________________________

Audit Opinion

Date__________________________
Refer to the companys balance sheet for
the year-end.
1. Demonstrate that the accounting
equation holds for this company.
(Assets=Liabilities + Equity)
2. What are this companys major
assets? Calculate the proportion of
short-term and long-term assets for
the fiscal year. Does this seem
appropriate for the type of company
this is?

_____________ = __________ + _____________

Assets
Liability
Equity
Major Assets
_____________________

$______________

_____________________

$______________

_____________________

$______________

% Short term ___________

% Long term ___________

3. What specific intangible assets does

this company have?

4. How is this company financed? What

proportion of total financing comes
from non-owners?

Refer to the companys statement of

earnings for the year-end:
1. Review the revenue recognition
policies of the company. Where in the
footnotes do you find this? Does the
company record revenue when they
receive cash from their customers
(cash-basis) or do they follow a
different method? Are there any
challenges in measuring revenue?

2. What are the companys major

expense categories?
_____________________ $________________
_____________________ $_________________
_____________________ $_________________

3. Were there any significant changes in

the cost structure during the most
recent year?
(Hint: Analyze the financial
information on comparative financial
statements)

Refer to the companys statement of cash

flows:
1. How much cash did the company use
for expenditures for property, plant
and equipment during the fiscal year?

2. What amount of dividends did the

company pay during the year? How
does amount compare to the amount
of dividends declared as shown in the
statement of equity?