accounting project and need the explanation and answer to help me learn.
analyzing and comparing two companies’ financial reports and financial performance. submit a final written report for nike a Adidas
Requirements: no more than ten pages
Nike & Adidas
The project for this course is analyzing and comparing two companies’ financial reports and financial performance. submit a final written report, and present the report by the end of the semester.
Pick up your favorite company. Find 2020, 2021, 2022 annual reports for your favorite company.
Your favorite company should be a manufacturing company, with securities publicly traded on a U.S. stock exchange. The company reports inventories, PPE, and intangible assets in financial statements.
Pick up a competitor company. The competitor company should be a public company, with securities publicly traded on a U.S. stock exchange. Find 2020, 2021, 2022 annual reports for the competitor company.
Please do NOT choose the Procter & Gamble Company as your favorite company or the competitor company.
submit a final written report (no more than ten pages) with answers to all questions All group members must contribute equally.
Please write a written report that addresses the following questions:
Question 1. Briefly introduce your favorite company and the competitor.
Explain why these two companies are competitors. (Hint: What are the primary lines of business of these two companies as shown in their notes to the financial statements? What are the market positions of these two companies?)
As a public company, with securities traded on a stock exchange, is your favorite company subject to SEC regulations? Explain.
Since your favorite company’s stock is publicly held and traded on a stock exchange, must a CPA audit the company’s books? Must these audited statements be prepared in accordance with GAAP? Do you trust the numbers presented in these financial statements? Support your answer.
Do these two companies mention risks related to COVID-19 pandemic and the impacts of COVID-19 pandemic on its market condition and operation in their annual reports? Explain your answer.
Question 2. Compare the profitability of your favorite company and the competitor. Comparing to the competitor company, has your favorite company had better profitability over this period of time? Explain.
Refer to income statements and related notes.
Why types of income format(s) are used by your favorite company and its competitor in fiscal year 2022? Identify any differences in income statement format between these two companies. Explain how a multiple-step income statement format can provide useful information to a financial statement user. What format do these two companies use to report comprehensive income?
Identify the revenue recognition methods used by your favorite company as discussed in its note on significant accounting policies in fiscal year 2022. Are revenue recognition policies of your favorite company and its competitor similar? Explain.
What are your favorite company’s primary revenue sources in fiscal year 2022? Compare it with the competitor.
What are the gross profits, operating profits, and net incomes for your favorite company over the 3-year period 2020-2022 (fiscal year)? Explain why gross profit, operating profits, and net incomes decreased or increased. Compare these financial ratios with the competitor. How does Covid-19 impact the profitability of these two companies?
Please predict gross profits, operating profits, and net incomes for your favorite company and the competitor for the next future fiscal year (i.e., year 2022) based on your analysis.
Question 3. Evaluate the financial conditions of these two companies based on the balance sheets. Comparing to the competitor company, has your favorite company had better financial conditions? Explain.
What format(s) do your favorite company and its competitor use to present their balance sheets in fiscal year 2022?
What are your favorite company’s total assets at the end of fiscal year 2022? At the end of fiscal year 2020? Comparing to its competitor, does your favorite company have the greater percentage increase in total assets from fiscal year 2020 to 2022? What is the most significant difference in the asset structure of your favorite company and the competitor company?
Examining each item in your favorite company’s 2022 balance sheet, identify those items that require present value, discounting, or interest computations in establishing the amount reported. What are interest rates are disclosed by your favorite company as being used to compute interest and present values? Do interest rates applies to your favorite company’s financial statement elements (i.e., assets, liabilities) differ from interest rates used by its competitor? Why?
What items may be included in “cash”? What items may be included in “cash equivalents”? At the end of fiscal year 2022, what balances do your favorite company and the competitor company have in cash and cash equivalents? What are the major uses of cash during the year? How do “cash equivalents” differ from other types of short-term investments?
What are the accounts receivable (net) for your favorite company and the competitor company at the end of fiscal year 2022? Do your favorite company and the competitor company report any allowance for doubtful accounts? Does it suggest that bad debt expense is material or not material for this company? Is it reasonable? Explain. How does Covid-19 impact receivables and estimated doubtful accounts of these two companies? How do these two companies report the impacts?
How much working capital does your favorite company have by the end of fiscal year 2022? How much working capital does the competitor company have by the end of fiscal year 2022? Speculate as to their rationale for the amount of working capital they maintain.
How does your favorite company value its inventories in fiscal year 2022? Which inventory costing method does your favorite company use as a basis for reporting its inventories? What would you expect the physical flow of goods for your favorite company to be most like (i.e., FIFO, LIFO)? Is the inventory costing method chosen by the company consistent with physical flow of goods? How does your favorite company report its inventories in the balance sheet? In the notes to its financial statements, what descriptions are used to classify its inventories? Comparing to the competitor company, does your favorite company choose different inventory costing method and report inventories differently? How does Covid-19 impact the supply chains of these two companies? How do these two companies estimate and report the possible losses related to inventory due to Covid-19?
Which types of costs does your favorite company include in inventory? What is the amount of inventory reported by your favorite company and the competitor company at the end of fiscal year 2022? What percent of total assets is invested in inventory by each company? Are these amounts comparable between these two companies (i.e., how might inventory valuation methods impact the balance of inventories?)
What are these two companies’ annual and 3-year growth rates in total assets and long-term debt?
Compare and evaluate inventory turnover, days to sell inventory, gross profit percentage, profit margin on sales, current cash debt coverage, current ratio, and return on assets for your favorite company and the competitor company. Indicate why there might be a difference between the two companies.
Question 4. Compare and evaluate the quality of accounting information of these two companies.
The qualitative characteristics that make accounting information useful for decision-making purposes are as follows: Relevance, Neutrality, Verifiability, Faithful representation, Completeness, Understandability, Predictive value, Timeliness, Comparability, Confirmatory value, Materiality, Free from error.
Describe briefly these characteristics of useful accounting information.
Do these two companies follow these qualitative characteristics of accounting information? Which qualitative characteristics may not be followed? Explain your answers.
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