INTRODUCTION
Annual Report Analysis Project is designed to get you familiar with a real company’s
financial statements and disclosures. The purpose of the project is for student to be
able to identify the disclosure of financial information rules and compare between
IFRS and US GAAP requirements.
REQUIREMENT
- Form into a group of 2 students.
- Choose two companies in the same business and industry; one company
must be a Saudi listed Company and the other one must be from the
Fortune 500 companies (US Listed Company).
a. Go to
https://www.tadawul.com.sa/wps/portal/tadawul/markets/equities/indice
s/performance then click on the industry from the list (for example:
consumer products). Then the list of companies in the industry will be
revealed. Clink on your chosen company.
b. Go to http://fortune.com/fortune500/2018/. The list of top 500
companies for 2018 is listed on this page. - Go to the company’s website to get each company annual report for 2018.
- All of the financial and company information that you need will be in the
company’s Annual Report. Submit soft copy of the annual reports IN
SCHOOLOGY together with your written report. - Answer all of the questions to the best of your ability, using all of the
accounting skills that you have accumulated to answer the questions - You must submit your final report about your findings.
Prepared by: Ms Rahayu Abdull Razak Page 3
WRITTEN REPORT
Your written report should include the answer for each of the following parts
for each of your company.
Part A. Company overview:- Do not copy paste from annual report, You have
to write in your own words. Write your answer in table form, one column for
one company. - Brief introduction about your company and location.
- What products or services does the company produce? Be specific
- What do you think the outlook (future performance) is for these products or
services? - Provide financial summary for the last 3-5 years and briefly explain company
situation based on the summary.
Based on your findings, Are there any differences between Saudi Company
and US Company, in terms of information recorded or ease of finding
information? Write overall conclusion on Part A.
Part B. Audit committee and board of director:- - Who is the company’s external auditor?
- How many times the audit committee did meet?
- How many members are there on the committee?
- What is the percentage of attendance for the audit committee meeting?
- Who is the chief operating officer (CEO) of the company?
- Who is the chair person for the board of directors?
- How many members on the board of directors?
- How many times the board did meet?
Based on your findings, Are there any differences between Saudi Company
and US Company, in terms of information recorded or ease of finding
information? Write overall conclusion on Part B
Part C. Income statement:-
Prepared by: Ms Rahayu Abdull Razak Page 4 - Look at income statement presentation, which method does company follow:
IASB or GAAP? How can you tell, be specific? In your opinion which income
statement is better, IASB or GAAP? - What is the company’s (weighted) average number of shares-basic?
- What are the company’s basic earnings per share?
- What are the company’s total sales/revenues/net sales?
- What is the company’s total operating income/income from operations?
- What is the company’s interest expense (net)?
- What is the company’s pretax income (earnings)/income before taxes?
- What is the company’s income tax expense/provision for income taxes or
zakat? - What is the company’s net income/net earnings?
10.Calculate profitability ratios for the two companies and compare which
company is better? You must write an analysis to state which company is
better in terms of profitability for the year.
Part D. Balance sheet:- - Look at balance sheet presentation, which method does company follow:
IASB or GAAP? How can you tell, be specific? In your opinion which income
statement is better, IASB or GAAP?
LIABILITIES - What was the composition of the company’s borrowings and other financial
liabilities shown in its current liability section for 2018 and 2017? - What types of commitments and contingencies has the company reported in
its financial statements? What is the management’s reaction to these
contingencies? - How much working capital does the company have at the end of 2017 and
2018? - Compute the following and comment on company’s overall liquidity
a. Current cash debt coverage
b. Cash debt coverage
c. Current ratio
d. Quick ratio
e. Account receivable turnover
f. Inventory turnover
Prepared by: Ms Rahayu Abdull Razak Page 5 - What types of loss or gain contingencies does the company have at the end
of 2018? - What cash outflow obligations related to the repayment of long term debt does
the company have over the next 5 years? - Compute the debt to assets ratio and the times interest earned for the
company for two years. Comment on the quality of these ratios. - What is the difference between the fair value and the historical cost (carrying
amount) of each company’s borrowings at year-end 2018? Why might
differences exist in these two amounts? - Do these companies have debt issued in foreign countries? Speculate as to
why these companies may use foreign debt to finance their operations. What
risks are involved in these strategies and how might they adjust for the risk?
EQUITY
10.What is the par or stated value of the company’s preference share?
11.What is the par or stated value of the company’s ordinary share?
12.How many shares were issued by company at the end of 2017 and 2018?
13.What percentage of the company’s authorized ordinary shares was issued at
the end of 2018?
14.How many shares are held as treasury shares by the company at the end of
2017 and 2018
15.How many ordinary shares were outstanding at year end 2017 and 2018?
16.What amount of cash dividends per share were declared by the company in
2017 and 2018?
17.What was the monetary effect of the cash dividend on company’s equity?
18.What is the company’s return on ordinary share equity for 2017 and 2018?
19.What is the company’s payout ratio for 2017 and 2018?
20.What number of diluted weighted average shares outstanding was used by the company in computing earnings per share for 2017 and 2018?
21.What was the company’s diluted earnings per share in 2017 and 2018?
22.Did the company have share-based compensation plan? If yes state how
share option are granted to employees?
a. How many options were granted during 2017 and 2018?
b. How many options were exercisable in 2017 and 2018?
c. How many options were a case in 2018 and what was the average price of that exercise?
d. How many years from the grant date does the option expire?
e. To what accounts are the proceeds from these option exercises credited?
f. What was the number of outstanding options at year-end 2018 and at what average exercise price?
23. hat other share-based compensation plans does the any have?
Part E. Cash flow statement:-
- What are the individual totals of the operating activities, investing activities &
financing activities-found on the statement of cash flows?
Prepared by: Ms.Rahayu Abdull Razak Page 6 - How much cash did the company invest in property plant and equipment?
- How does net income compare to its net cash provided by operating
activities? - What items were the most responsible for the difference between net income
and net cash provided by operating activities? - Did the company pay a dividend? If so how much were they?
- What percentage of net income was the cash dividend?
Overall:- - Are there any significant differences between the al report of a Saudi listed company and the fortune 500 company? If so identify the differences? Be
specific (the differences can be in terms of additional information provided,
clarity of information provided, etc.)
Sample Solution
