08 Aug Describe the inventory accounting methods
This assignment is an opportunity for you to apply the concepts you learned to a publicly-traded
company. You will select a publicly-traded company, evaluate the company’s application of the financial
accounting concepts you learned in the class, analyze the differences between GAAP and cash flow, and
make investment recommendations for the stock. You will prepare a paper summarizing your findings.
Below are the requirements for your paper.
1. Select a large publicly-traded company defined as:
a member of the Dow Industrials https://www.slickcharts.com/dowjones,
one of the top 75 companies in the S&P 500 https://www.slickcharts.com/sp500 or
one of the top 25 companies in the Nasdaq 100 https://www.slickcharts.com/nasdaq100
Since this is an individual assignment, each student will analyze a unique company. To
create an equitable selection process, I will randomly order all students. You need to
complete the form in Google Drive. List at least 5 choices.
https://docs.google.com/forms/d/e/1FAIpQLScXwHQqRb…
mF_AySIv0bO9g/viewform?usp=sf_link
I will fill your requests in random order. Requests are due at 9:00am on Friday, February 4.
If you miss this deadline you can select a company after all requests are filled, but no later
than 12pm (noon) Monday, February 7.
Obtain the last annual report from the company’s website or the SEC Edgar website. You
will focus on the financial statements only, not the entire 10-K.
2. Grading rubric: The percent of your grade for each topic is in parenthesis below.
3. Outline for your paper—less than 3 pages text.
Company overview (10%): Name, description of business, operating locations,
revenues, net income, EPS, stock price, number of employees and other relevant
information.
Balance Sheet (40%): Discuss significant accounting policies with an emphasis on
compliance with GAAP accounting (ignore insignificant items).
i. Revenue/Accounts Receivable: What are the revenue recognition and Bad debt
policies? Explain the reasons for unearned/deferred revenue balances.
Calculate the Collections and AR:Sales ratios.
ii. Inventory: Describe the inventory accounting methods. Calculate inventory
turnover ratios. Explain inventory write-downs/write-offs, if any.
iii. Tangible non-current assets: Describe the capitalization and depreciation
policies. What is the PPE: Sales ratio. Is this a capital intensive business?
