Experiential Data Analytics Project

User Generated

Nznav22

Business Finance

Houston Baptist University

Description

This project covers the principles of financial statement analysis. The goal of this assignment is for you to experience finding out relevant accounting and other information about a corporation as if you were an investor. You will find out that it is relatively easy to look up information about any publicly traded company online.

Instructions:

Follow the directions for each question below to look up the answers to the questions on the worksheet. Write the appropriate response in the spaces provided on the worksheet. There are 14 multiple-choice questions and 2 free-response questions. Thus, there are 16 questions total with each question carrying 0.625 points to add up to a total of 10 points.

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ACCT 2301 Experiential Data Analytics Project Why Financial Statement Analysis? “Financial statements are the primary information that firms publish about themselves, and investors are the primary users of financial statements. Firms seek capital from investors and prepare financial statements to help investors decide whether to invest. Investors expect the firm to add value to their investment-to return more than was invested- and read financial statements to evaluate the firm's ability to do so. Financial statements are also used for other purposes. Governments use them in social and economic policy- making. Regulators such as the antitrust authorities, financial market regulators, and bank inspectors use them to control business activity. Employees use them in wage negotiations. Senior managers use them to evaluate subordinates. Courts, and the expert witnesses who testify in court, use financial statements to assess damages in litigation. Each type of user needs to understand financial statements. Each needs to know the statements' deficiencies, what they reveal, and what they don't reveal. Financial statement analysis is the method by which users extract information to answer their questions about the firm.” – Stephen H. Penman This project covers the principles of financial statement analysis. The goal of this assignment is for you to experience finding out relevant accounting and other information about a corporation as if you were an investor. You will find out that it is relatively easy to look up information about any publicly traded company online. Instructions: Follow the directions for each question below to look up the answers to the questions on the worksheet. Write the appropriate response in the spaces provided on the worksheet. Then starting November 10th use the worksheet to answer the questions on BLACKBOARD ONLINE ASSESSMENT. The worksheet is for you to look up your answers and write them down so that you can answer the assessment questions without guessing. The worksheet is NOT to be submitted. To receive credits, you must complete the BLACKBOARD ONLINE ASSESSMENT on or before 11 PM CST December 4th, 2022. There are 14 multiple choice questions and 2 free response questions. Thus, there are 16 questions total with each question carrying 0.625 points to add up to a total of 10 points. Please be sure to look up the answers and fill out the worksheet before doing the online assessment. If you just guess you will probably end up with a low score. Project Worksheet The following assignment is designed to introduce you to some of the FREE financial information that is available on the web. This can be especially useful for personal investing decisions. For the first part of the project, we focus on a single site, Yahoo! Finance. There are, however, various other good sites such as Google Finance. We encourage you to explore these web sites on your own. Use the glossary of terms for any items that are new to you. For the second part of the project, you should use the 10-Q report (quarterly report) of Home Depot Inc and Lowe’s Companies Inc. You can go to the Investor Relations section of their website, or you can go to sec.gov to search for their 10-Q filings. Click the link below and download the 10-Q reports Home Depot Inc Q1 10-Q (for the quarterly period ended May 1, 2022) https://www.sec.gov/ix?doc=/Archives/edgar/data/0000354950/000035495022000158/hd20220501.htm Home Depot Inc Q2 10-Q (for the quarterly period ended July 31, 2022) https://www.sec.gov/ix?doc=/Archives/edgar/data/0000354950/000035495022000193/hd20220731.htm Lowe’s Companies Inc Q1 10-Q (for the quarterly period ended April 29, 2022) https://www.sec.gov/ix?doc=/Archives/edgar/data/60667/000006066722000079/low20220429.htm Lowe’s Companies Inc Q2 10-Q (for the quarterly period ended July 29, 2022) https://www.sec.gov/ix?doc=/Archives/edgar/data/60667/000006066722000139/low20220729.htm For the purposes of this exercise, we will be examining Home Depot Inc and in the second part of the project comparing it to Lowe’s Companies Inc. The fiscal year end of Home Depot Inc and Lowe’s Companies Inc is January 28 and January 30, respectively. In order to use recent comparable information in the second part of the project you will gather financial statement facts from the 2nd quarterly report (of fiscal year 2022) of Home Depot Inc ending 7/31/2022 and compare those with the 2nd quarter (of fiscal year 2022) of Lowe’s Companies Inc ending 7/29/2022. 1st PART OF THE PROJECT First, go to the following web site: https://finance.yahoo.com/ Type “Home Depot Inc” in the search box. Then click on “search”. Select the ticker symbol “HD” from the menu of choices. (NOTE: The ticker symbol for Home Depot Inc is HD. The ticker symbol is a letter designation that is assigned to stocks and mutual funds traded on U.S. exchanges. You may use it to “get quotes” instead of typing in the whole company name) This will take you to a page of basic information about Home Depot Inc’s stock. It will show you the current price and the volume of trading. From this menu, you will click on the following links to obtain the necessary information: • Summary • Profile • Financials • Historical Data Each of the above links will be discussed in the following pages. You will be asked to go to each of the linked pages and record information in the spaces provided. Summary The earnings per share of a company measures the amount of income earned for each share of stock, which is net income divided by shares of common stock outstanding. Earnings per share are abbreviated as “EPS”. The earnings per share (EPS) for Home Depot Inc for the most recent year shown on this page are (Note: TTM = trailing twelve months (the past 12 months) The current price of Home Depot’s Inc common stock is? on Date (Record the Last Trade price and the date you looked at it) Profile From the Profile Page, you can obtain a brief Business Description. There is also general contact information as well as links to several other items, such as the company web site. From this page, answer the following questions about Home Depot Inc: 1. What Industry is Home Depot Inc in? 2. How many full-time employees work for Home Depot Inc? 3. Who is the Chief Executive Officer? 4. Who is the Chief Financial Officer? Historical Data From this page, you can obtain daily, weekly, and monthly prices for the company for a range of dates. You can also obtain information on dividends. Select/input “Time Period” as 7/28/2022-7/31/2022, “Show” as Historical Prices, and “Frequency” as Daily to capture the historical price at the end of last year. (If select/input date couldn’t apply, simply scroll down to find “Jul 29, 2022”) Look at the column listing the adjusted closing price (this price is adjusted for stock splits and stock dividends). What was the adjusted Closing price of the company for 7/29/2022? How much money would you have made or lost from the price change if you had purchased one share of Home Depot Inc stock on 7/29/2022 and sold it on the day you looked up the current price? 2nd PART OF THE PROJECT Financials From this page, you can view the recent quarterly or annual financial statements of the company. In order to compare Home Depot Inc to a close competitor, Lowe’s Companies Inc, we will use data for the quarter ending 7/31/2022 & 7/29/2022, respectively. Open the 10-Q of Home Depot Inc and Lowe’s Companies Inc (link provided at the beginning of this project) and click on income statement or balance sheet of Home Depot Inc as requested below. Home Depot Inc Income Statement - Consolidated Statements of Earnings: Page 2 on Q1 & Q2 reports. Consolidated Balance Sheets: Page 1 on Q1 & Q2 reports. Lowe’s Companies Inc Income Statement - Consolidated Statements of Earnings: Page 1 on Q1 & Q2 reports. Consolidated Balance Sheets: Page 2 on Q1 & Q2 reports. Notice that all numbers are in millions of dollars in the following part of the project. Write them down on your worksheet just as they are. For example, if it says $7,000, just write $7,000 or $7,000 million as your final answer, do not write $7,000,000,000. Questions 1 through 16 pertain to Home Depot Inc: 1. From the quarterly Income Statement, what was the total revenue (net sales) for the quarter ending on 7/31/2022? 2. From the quarterly Income Statement, what was the total revenue (net sales) for the previous quarter ending on 5/1/2022 ? *Use the 3 months ended value 3. Now use your answers of 1 and 2 to calculate the % growth in revenue for the quarter (subtract revenues for the quarter ending 5/1/2022 from revenues for the quarter ending 7/31/2022 and divide the result by the revenues for the quarter ending 5/1/2022. Then express the result as a percentage). Revenue Growth = 4. From the quarterly Income Statement, what was Consolidated Net Income (net earnings) for the quarter ending on 7/31/2022? *Use the 3 months ended value 5. From the quarterly Income Statement, what was the Gross Profit for the quarter ending on 7/31/2022? *Gross Profit = Net Sales – Cost of Sales 6. From the quarterly Income Statement, what was the Cost of Sales (cost of goods sold) for the quarter ending on 7/31/2022? 7. From the quarterly Balance Sheet, what was the value of inventory as of 7/31/2022? 8. From the quarterly Balance Sheet, what was the value of inventory as of 5/1/2022? 9. From the quarterly Balance Sheet, what was the total assets value as of 7/31/2022? 10. From the quarterly Balance Sheet, what was the total liabilities as of 7/31/2022? 11. From the quarterly Balance Sheet, what was the total current assets value as of 7/31/2022? 12. From the quarterly Balance Sheet, what was the total current liabilities value as of 7/31/2022? Use Quarterly data ending at 7/31/2022 to answer question 13 to 16. 13. The largest current asset category is: 14. The largest current liability category is: 15. The largest non-current asset category is: 16. The largest non-current liability category is: FINANCIAL RATIOS Use the information gathered from Home Depot Inc’s Financials on the previous pages to calculate the following ratios for Home Depot Inc. Do not try to look these up on the website. Instead, you must make the calculation yourself. Inventory Turnover (Cost of Goods Sold / Average Inventory) Average Inventory = (Beginning Inventory + Ending Inventory) / 2 Gross profit % (as of 7/31/2022) (Gross Profit / Revenues) *100% Debt Ratio (Total Liabilities / Total Asset) Current Ratio (Current Asset / Current Liabilities) Compare Home Depot Inc to its close competitor Lowe’s Companies Inc. Now open the income statement and balance sheet for Lowe’s Companies Inc: Income Statement - Consolidated Statements of Earnings: Page 1 on Q1 & Q2 reports. Consolidated Balance Sheets: Page 2 on Q1 & Q2 reports. Look up the following income statement information: Total Quarter Total Revenues (7/29/2022) Total Quarter Revenues (4/29/2022) Quarter Gross Profit (7/29/2022) *Gross Profit = Net Sales – Cost of Sales Look up the following Quarterly balance sheet information for Lowe’s Companies Inc 7/29/2022: Total Assets Total Liabilities Current Assets Current Liabilities Now use these 7 values (above) to calculate the following ratios for Lowe’s Companies Inc in order to compare them to Home Depot Inc. (Use the same calculation methods as for Home Depot Inc) Revenue Growth Gross Profit% (as of 7/29/2022) Debt Ratio Current Ratio Based on a comparison of these two ratios between Home Depot and Lowe’s which company seems to have better liquidity, which has better margin, which has better solvency, and which has better revenue growth? Enter the Company names below. Revenue Growth? Gross Profit? Solvency? (Debt Ratio, low is good) Liquidity? (Current Ratio, high is good) HORIZONTAL ANALYSIS Horizontal analysis is also known as trend analysis. By looking at recent trends, and also taking into disclosures and press releases from the company and outside the company, the financial markets often try to predict the future stock prices. In the next few steps, do a simple 3-year trend analysis. Go to Home Depot Inc and Lowe’s Companies Inc 10-K for 2021 and open Consolidated Income Statements. (Click the link below and download the 2021 10-K) Home Depot Inc 10-K: (For the fiscal year ended January 30, 2022) https://www.sec.gov/ix?doc=/Archives/edgar/data/354950/000035495022000070/hd20220130.htm From the Table of Contents, select Item 8: Financial Statements and Supplementary Data. Then, click Consolidated Statements of Earnings (page 38). Lowe’s Companies Inc 10-K: (For the fiscal year ended January 28, 2022) https://www.sec.gov/ix?doc=/Archives/edgar/data/60667/000006066722000038/low20220128.htm From the Table of Contents, select Item 8: Financial Statements and Supplementary Data. Then, click Consolidated Statements of Earnings (page 38). *Fiscal 2021 is the same as Fiscal year ended January 30, 2022. Home Depot’s statement uses “Fiscal 2021”, and Lowe’s statement uses “Fiscal year ended January 2022”; these mean the same thing. Write down the Total Revenues Year Ended (Fiscal year) Home Depot Inc Fiscal 2021 Fiscal 2020 Fiscal 2019 Write down the Operating Income. Year Ended (Fiscal year) Home Depot Inc Fiscal 2021 Fiscal 2020 Fiscal 2019 Write down the Consolidated Net Income Year Ended (Fiscal year) Home Depot Inc Lowe’s Companies Inc Lowe’s Companies Inc Lowe’s Companies Inc Fiscal 2021 Fiscal 2020 Fiscal 2019 Open an Excel Spreadsheet. Type the Revenues for Home Depot Inc and Lowe’s Companies Inc in two separate columns. Title them as Home Depot Inc Revenues and Lowe’s Companies Inc revenues respectively. Make a simple line chart for each. Title the line charts as Home Depot Inc and Lowe’s Companies Inc revenues respectively. Next, type the Operating Income for Home Depot Inc and Lowe’s Companies Inc in two separate columns. Title them as Home Depot Inc Operating Income and Lowe’s Companies Inc Operating Income respectively. Make a simple line chart for each. Title the line charts as Home Depot Inc and Lowe’s Companies Inc Operating Income respectively. Next, type the Net Income for Home Depot Inc and Lowe’s Companies Inc in two separate columns. Title them as Home Depot Inc Net Income and Lowe’s Companies Inc Net Income respectively. Make a simple line chart for each. Title them as Home Depot Inc and Lowe’s Companies Inc Net Income respectively. Once all six-line charts are ready, write down a brief analysis on Home Depot Inc’s revenue, operating income and net income trends. Next, write down a brief analysis on Lowe’s Companies Inc’s revenue, operating income and net income trends. Contrast the two. There is no one correct answer. We will be checking for plagiarism. Is there any indication that the current disruptions to global supply chain had an impact on the bottom-line of Home Depot or Lowe’s? Substantiate your answer. Research this by using recent news discussion on the internet. Fill in your brief response in the worksheet, keep it ready and then type it in the blackboard assessment when you take it. Your answers will be checked for plagiarism.
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Just what I was looking for! Super helpful.

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