B203-051 Corporate Financial Statements Project Part 1:
DUE DATE: TUESDAY, APRIL 2
You will be working with this company for both part 1 and part 2 of this project. Pick a company you are interested in, that is listed on a US stock exchange, and for which financial statements are available for the last 3 years.
Step 1: State name and ticker symbol of the company you have chosen.
Step 2: Write a short statement (1 paragraph) describing the company and why you chose it.
Step 3: Obtain a copy of the financial statements for the year ended December 31, 2012. This should include income statements for the years ended December 31, 2012, 2011, and 2010. You can get this either from the company website or from sec.gov
Step 4: Translate the income statement for the year ended December 31, 2012 from absorption costing to variable costing. You will need to state, on a line item by line item basis, why you are identifying that cost as a variable, fixed, or mixed cost. If you select mixed cost, you will need to support your allocation based on information you gained about the company online, in the financial statements or accompanying materials.
Set revenues to equal 100% and calculate what percentage each cost is for the years ended December 31, 2012, 2011 and 2010. Revisit your initial decisions about variable costs – if a line item did not vary by more than 10%, it probably is a variable cost. Alternatively, if a line item stayed relatively constant by dollar value, and did not fluctuate more than 10%, it is most likely a fixed cost.
Provide a copy of the income statement for your company and place the letter F for fixed, V for variable, and M for mixed by each cost. Also include the percentages you calculated. Describe your rationale for your choices on a separately.
Step 5: Prepare a variable costing income statement.
Step 6: Calculate break-even for the company.
Step 7: Calculate margin of safety in dollars