SDSU The Bank of America a Financial Services Company Analysis

Description

The company I have chosen is Bank Of America

Instructions

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/nasdaq10

? 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?  
iv. Intangible non-current assets:  describe the capitalization and amortization

policies.  What is the ratio of intangibles to total assets.  Is management

philosophy to organically grow the business or to acquire other

companies/intellectual property?

v. Other:  Highlight unusual items disclosed in the footnotes such as changes in

accounting, write-offs, gains or losses, contingencies.

? Income statement (20%):  Evaluate the income statement as well as non-financial

information to address the following items.

i. Income statement unusual items:  Explain the nature of major restructuring,

impairments, discontinued operations.  What is the impact from these items in

future periods?

ii. Ratios:  Calculate gross profit/margin and net income:sales ratios

? Analysis of statement of cash flows

i. Compare net income amount to the cash flow from operations amount—why

are they different?

ii. How does the company invest its cash?  

? Investment recommendations

i. Assume you are an investment analyst and are tasked to make a buy/sell

recommendation for your company given today’s stock price.  What is your

recommendation and why?

Explanation & Answer:
3 pages

Tags:
financial statement

accounting

bank of america

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