ACCT503 Project Template (1)

xlsx

School

DeVry University, Keller Graduate School of Management *

*We aren’t endorsed by this school

Course

ACCT 503

Subject

Accounting

Date

Apr 3, 2024

Type

xlsx

Pages

Uploaded by ChancellorStraw13880

Complete your Title page on this tab. . Course ACCT - 503 Financial Accounting: Managerial Use and Analysis Date 10/1/2023 Student Name Solange Sanchez Instructor's Name William Dillon Project Title Signature Assingment - Course Project Please include the names of your team members, the course, the date, your instructor's name, and the title for the project.

Source: Sources: Complete one paragraph, profiling each company's business, including information such as brief histories, where each company is located, number of employees, the products each company sells, and so forth. Please reference any websites that you used for the profiles on the Bibliography tab. Microsoft, Inc develops and markets software, services, and hardware devices that deliver new opportunities , greater convinience, and enhances value to people and companies alike. Founded in 1975, their mission to enable businesses throughout the world by creating technology that transforms the way people work, play, and communicate has expanded to offices in more than 100 counries. Their headquarters are located in Redmond, WA with approximately 221,000 employees worldwide. Microsoft, Inc had net product sales of $168 billions in 2021 according to their website. https://www.microsoft.com/investor/reports/ar13/financial-review/business-description Apple Inc was founded in 1976 with the purpose of changing the way people viewed computers by creating small computers to be sold to the public. Today, the company develops, markets, and distributes personal computers, phones, Ipads, watches, computer softwares, and other electronics. Their headquarters are located in Cupertino, CA, giving employment worldwide to approximately 164,000 people. In 2021, Apple Inc net sales were $366 billions according to GlobalData. https://www.globaldata.com/data-insights/technology--media-and-telecom/apples-ann https://guides.loc.gov/this-month-in-business-history/april/apple-computer-founded

Use this Excel spreadsheet to compute ratios; show your computations for all ratios on this tab, and also include your commentary. The 2021 financial statements used to calculate these ratios are available in the Investor Relations sections of the Microsoft, Inc and Apple Inc websites. Microsoft, Inc Apple Inc 6/30/2021 9/25/2021 Earnings per Share of Common Stock (basic - common) As given in the income statement $ 8.12 $5.67 Higher is better Current Ratio Current assets $184,406 = 2.08 $134,836 = 1.07 Higher is better Current liabilities $88,657 $125,481 Gross Profit Rate Gross profit $115,856 = 68.9% $152,836 = 41.8% Higher is better Net sales $168,088 $365,817 Profit Margin Net income $61,271 = 36.5% $94,680 = 25.9% Higher is better Net sales $168,088 $365,817 Inventory Turnover Cost of goods sold $52,231 = 23.0 $212,981 40.0 Higher is better Average inventory $2,266 $5,321 Days in Inventory 365 days 365 = 16 365 = 9 lower is better Inventory turnover 23.0 days 40.0 days Accounts Receivable Turnover Net credit sales $168,088 = 4.8 $365,817 = 17.3 Higher is better Average net accounts receivable $35,027 $21,199 Average Collection Period 365 days 365 = 76 365 = 21 Lower is better Accounts receivable turnover 4.8 days 17.3 days Asset turnover Net sales $168,088 = 0.53 $365,817 = 1.08 Higher is better Average total assets $317,045 $337,445 Return on Assets (ROA) Net income $61,271 = 19.3% $94,680 = 28.1% Higher is better Average total assets $317,545 $337,445 Debt to assets ratio Total Liabilities $191,791 = 57.5% $287,912 = 82.0% Lower is better Total Assets $333,779 $351,002 Times-Interest Earned Ratio Net income + interest expense + income tax expense $72,334 = 58.7 111,852 = 42.3 interest expense $1,232 2,645 Dividend Yield Dividend per share of common stock $2.19 = 0.8% $0.85 = 0.6% (Please follow the Course Project instructions to calculate the current dividend yield.) Market price per share of common stock $270.90 $145.66 Return on Common Stockholders' Equity (ROE) Net income - preferred dividends 61,271 = 47.1% 94,680 = 147.4% Average common stockholders' equity 130,146.00 64,214.50 Free cash flow Net cash provided by operating activities minus capital expenditures minus cash dividends = $39,597 = $78,486 Higher is better in millions in millions Price-Earnings Ratio Market price per share of common stock as of 5/30/2014 for Nike and 12/31/2014 for Under Armour $270.90 = 33 $146.92 = 26 (Please see the Course Project instructions for the dates to use for this ratio.) Earnings per share $8.12 $5.67 Interpretation and comparison between the two companies' ratios (reading Chapter 13 will help you prepare the commentary) The comparison of the ratios is an important part of the project. A good approach is to briefly explain what the ratio tells us. Indicate whether a higher or lower ratio is better. Then compare the two companies on this basis. Remember that each ratio below requires a comparison. Higher is better as this ratio represents whether the company can meet its interest expene obligations.

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

You all get the chance to play the role of financial analyst below. The summary should be a comparison of each company's performance for each major category of ratios listed below. Focus on major differences as you compare each company's performance. A nice way to conclude is to state which company you feel is the better investment and why. Liquidity: NIKE has the advantage for the current ratio. NIKE has $3.05 in current assets for every dollar in current liabilities while Under Armour has only 98 cents in current assets for every dollar in current liabilities. NIKE has the advantage for the inventory turnover ratio, but Under Armour has the advantage for the accounts receivable turnover ratio. NIKE turns over its inventory 4.1 times to Under Armour's 3.1 times. Under Armour has the advantage for the accounts receivable turnover ratio as Under Armour collects on its receivables 12.6 times to Nike's 8.5 times. Solvency: Under Armour has less debt than NIKE as evidenced by Under Armour's 35.5% debt-to-assets ratio as compared to NIKE's 41.8% debt-to-assets ratio. NIKE can cover its interest expense 108.4 times with income before interest and taxes, while Under Armour can only cover its interest expense 65.1 times with their income before interest and taxes. NIKE has free cash flow of $1.3 billion while Under Armour has $78.5 million in free cash flow. Profitability: Under Armour has the advantage for the gross profit rate at 49% while NIKE has a 44.8% gross profit rate percentage. NIKE has the advantage for the profit margin ratio at 9.7% versus 6.7% for Under Armour. Under Armour has the advantage for asset turnover as they turn their assets 1.68 times to Nike's 1.54 times. NIKE has the advantage for both return on assets (ROA) and return on common stockholder's equity (ROE). NIKE has an ROA of 14.9% to Under Armour's 11.3%. NIKE also has the advantage for return on common stockholders' equity with an ROE of 24.6% to Under Armour's 17.3%. Conclusion: Under Armour has less debt than NIKE as measured by the debt to assets ratio, but NIKE has a stronger current ratio and times-interest earned ratio. Regarding profitability, NIKE has the advantage for return on assets (ROA) and return on common stockholders' equity (ROE). For both a conservative investor and growth investor, NIKE looks like the better choice.

Your textbook and any information that you use to profile the companies should be cited as a reference below. Nike's 2014 Annual Report. (2014). Retrieved from https://s1.q4cdn.com/806093406/files/doc_financials/2014/index.html NKE profile. (2019). Retrieved from https://finance.yahoo.com/quote/NKE/profile?p=NKE NKE stock price. (December 24, 2015). Retrieved from https://finance.yahoo.com/quote/NKE/profile?p=NKE UA profile. (2019). Retrieved from https://finance.yahoo.com/quote/UA/profile?p=UA&.tsrc=fin-srch UA stock price. (December 24, 2015). Retrieved from https://finance.yahoo.com/quote/UA?ltr=1 Big Charts for Nike. (2014, May 30). Retrieved from http://bigcharts.marketwatch.com/historical/default.asp? symb=NKE&closeDate=5%2F30%2F14&x=0&y=0 Big Charts for Under Armour. (2014, December 31). Retrieved from http://bigcharts.marketwatch.com/historical/default.asp? symb=ua&closeDate=12%2F31%2F2014&x=37&y=26 Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2019). Financial Accounting: Tools for Business Decision Making (9th ed.). Hob Wiley & Sons, Inc. Under Armour 2014 Annual Report. (2015). Retrieved from https://underarmourinc.gcs-web.com/static-files/13a42846-a519-46 b3199de9fbe8

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version