Choose one company (preferably listed in the Fortune 500 or 1000 list) that uses U.S. GAAP. Compare and analyze the financial statements of that company to those of one non-US Company, in the same industry, which uses IFRS (Take a look at the Fortune Global 500 list for possible choices, although your possible choices are not limited to this list). Each student must choose two different companies.
To clarify: Each student must choose two different companies, in the same industry, one using GAAP and one using IFRS.
Sources to Consult:
There are many places where you can find information, ideas and ways to proceed. At the end of each module in the textbook for this course, there a summaries of key differences between US GAAP and IFRS. In addition, many of the “Big 4” accounting firms also maintain websites devoted to this issue.
Here are a few websites were you can find information to assist you with this project.:
*********Use these websites for sources*************************
onesource.com (Links to an external site.)
sec.gov (Links to an external site.)
fasb.org/intl/ (Links to an external site.)
ifrs.org (Links to an external site.)
EURO Stock Exchange
Market Watch (https://www.marketwatch.com) (Links to an external site.)
New York Stock Exchange (https://www.nyse.com/index (Links to an external site.))
Macro Trends (https://www.macrotrends.net)
FINAL PROJECT REQUIREMENTS:
Minimum of 3,500 words (Not including cover page, table of content, or reference page)
Must be single spaced
Use 12-point Times New Roman font for the body of the project (you can use either 10- or 12-point font for the exhibits and tables)
Must have at least 5 sources (APA format) listed on your reference page.
You will be analyzing and comparing the financial information (ratios, financials, annual reports, etc.) for your two companies to determine which company is in a better financial position and/or is more viable and why. You have a lot of flexibility regarding what to include, so feel free to be creative. You must decide which information is most relevant to analyze and develop your project based on it. However, there are requirements that I expect all papers to include.
The project requirements are as follows:
Cover page (do not include in your word or page count)
Table of content (do not include in your word or page count)
A minimum of five references in APA format (do not include in your word or page count)
Introduction of each company.
Business and Industry Environment: Include an analysis of the industry environment. Discuss Porters Five Forces that confront both companies, and the strategies both companies have implemented to address them. Include a SWOT analysis. Is the industry competitive, is the industry impacted by the global economy or recent government regulation, is there a high threat of substitution for the products, etc.
Ratio analysis: Complete an analysis of both companies from the perspective of a financial analyst.
Choose a minimum of 7 ratios you think are most relevant. You must include the following types of ratios:
2 liquidity ratios
2 solvency and/or leverage ratios
3 profitability and/or coverage ratios
To ensure an accurate comparison, if your IFRS company does not report in US Dollars, YOU WILL NEED TO CONVERT THE NUMBERS TO U.S. DOLLARS!!
Make sure you include a TABLE or CHART to provide the comparison of the ratios for both companies. In the table there should be a side-by-side comparison of the ratios of both companies.
Provide a written analysis/summary of each ratio and your findings
what similarities and differences do you see in the ratios
what do the ratios mean
based on the ratios, which company is in better financial condition and why
Include a summary or condensed Common-size Income Statements and Balance Sheets for both companies:
Use the statements for the most recent year available. Most companies should have 2018 available.
Provide a brief discussion of the similarities and differences.
Tell me which company is more profitable.
Identity the differences you found in the two accounting methods and standards: You will likely come across differences in accounting reports and methods. Identify them and tell me what a financial analyst would do with that information.
Explain any Issues or roadblocks: The two companies probably do not display their information the same way, so you may face challenges comparing the data. Let me know what obstacles you ran into and how you addressed them.
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