Analyzing an Annual Report
Overview
Students analyze a company based on one of its recent annual reports.
Why Use This?
This project simulates real-world tasks in the business field and allows students to apply what they’ve learned in a “mini-capstone” paper. In addition to analyzing a company using common business methods, students must also consider factors such as the company’s diversity, equity, and inclusion initiatives and its triple bottom line, a framework that considers the three Ps of people, planet, and profit.
An overview and purpose for the assignment
Purpose
This capstone process will provide you with an opportunity to further enhance your skills at the following:
- Horizontal analysis
- Vertical analysis
- Percentage change calculations
- Analysis of specific criteria
Process
Select a company from a specified list and their associated static annual report from a specific year, and analyze the company’s most recent performance along a number of required criteria that will include horizontal analysis, vertical analysis, ratio analysis, and percentage change. Additional factors including diversity, equity, inclusion, and sustainability topics will be considered along with a conclusion based on the company’s triple bottom line of people, planet, and profit.
How Does It Work?
Students select one company to analyze from a list of six. In addition to conducting horizontal, vertical, ratio, and percentage change analyses, they are asked to consider the company’s sustainability, triple bottom line, and diversity initiatives.
Directions for the assignment
Directions
For this project, you will need to select a company from the list below and write a two- to three-page paper analyzing the company based on a recent static annual report. You must use one of the annual reports specified, covering the specific year in which a link is included so your instructor can appropriately evaluate everyone along the same criteria using a similar basis. Do not deviate from this selection. An example report and writing resources are included in the Learning Resources on the prior page.
Your report should include the following:
- Company description (a brief description of the products and services the company offers)
- Revenues by segment (this uses common size elements based on total revenues)
- Growth in revenue, operating income, and/or net income, including percentage change
- A common size income statement
- Analysis of revenues by geography
- Key highlights from the year, with a brief explanation of growth (or lack of growth) in key areas
- Ratio analysis including selected ratios (at least one of each of the following ratios is required: liquidity, solvency, and profitability)
- Description of diversity, equity, and inclusion initiatives*
- Description of environmental/sustainability initiatives*
- An overall summary of how well your company is doing as a company (this should include an analysis of the extent to which the company meets the “Three P’s” of people, planet, and profit)
*Note Some companies have separate reports for these initiatives. If you are using additional reports as a supplement, be sure to reference them appropriately in your written report and make sure that the reports used represent the same time period as your annual report.
Companies
You may select one of the following companies. Be sure to use the link to the specific annual report provided.
- The Coca-Cola Company 2021 Annual Report
- Johnson & Johnson 2021 Annual Report
- Marriott International, Inc. 2021 Annual Report
- Microsoft 2021 Annual Report
- Netflix, Inc. 2021 Annual Report
- Nike, Inc. 2022 Annual Report
Keep In Mind
Begin with the end in mind. Think about what you want your students to be able to do after they complete the course. This project asks students to demonstrate certain technical competencies common in business (such as journalizing transactions, developing financial statements, and calculating ratios). Projects like this often help students retain specialized knowledge for a longer period.