The goal of this project is twofold: 1) to orient each MBA student to the financial reports that undergird the economic market system in the United States, and 2) to familiarize each with the techniques and benefits of vertical and horizontal analysis. Each course participant will assess public company financial information from a user perspective. This project should be considered a professional document, written in APA style, where grammar, punctuation and word usage are important.

This project will enable the student to apply accounting principles in a real-world setting. The student will begin by selecting a publicly owned manufacturing or merchandising company of particular interest to him or her.

Project Data: The data for this project will come solely from Form 10-K. The form is filed with the Securities Exchange Commission (SEC) and is required for any entity that is an issuer of securities that trade on a U.S. Exchange. U.S. entities prepare financial statements according to U.S. GAAP

Project Data retrieval: Students MUST go to the EDGAR ( website, retrieve, and use the company Form 10-K for the two most recent years. The 2018 10-K Form will include financial results for fiscal 2017. Although the Annual Report may include the 10-K, it is not an acceptable source for this assignment. The Annual Report is the company’s presentation to its stakeholders regarding its perspective on events during the year. Campbell Soup Company’s Annual Report for 2017 is located in the textbook appendix on page 662, with excerpts from its 10-K. It has pictures, summative data, charts, etc. Information about SEC reporting and document retrieval is on page 379 of the textbook and at the end of this document. We will use Campbell Soup Company as an example of project preparation.

Project Flow and Content: In preparing the project content, students will follow a list of questions and use full sentences to respond. Each question in the project must be answered as fully as possible (project questions are below). Use subheadings between project sections as indicated. For any question (in part or in whole) that is not answered, the student must explicitly state why it is not stated and the reason. For example, question may be: What was the date of incorporation? Standard Answer: “The date of incorporation is not indicated anywhere within Form 10-K.” If you make such a statement, make sure it is accurate. All company information contained in this project MUST come from Form 10-K. Other information may be taken from other sources. Additionally, course participants must disclose the page number on which the data is found on Form 10-K. This is an individual, rather than a team, project.

The project will have two components: One completed in Excel and the other completed in Word. We will begin with the Excel portion, from which much of the Word portion will be taken.

Preparing the Project

Microsoft Excel portion

Prepare a spreadsheet with Income Statement and Balance Sheet data on separate tabs in the Worksheet.

1. You may retype or download the information from the website Form 10-K exactly as presented on Form 10-K.

2. Format the values to include comma (no decimals) as shown below.

3. Prepare common size vertical analysis on the financial statements (balance sheet and income statement) as explained below. (Only a summarized income statement is demonstrated). Please complete in detail.

a. Insert two columns next to the financial statement amounts. For each income statement line item, divide that item by Net Sales, which means that Net Sales will always be 100% and will be the basis for every other percentage on the income statement. Use the formula tool in excel.

· 2016 Net Sales = 7,961/7,961 =100%; 5,181/7,961 =65%

b. Balance Sheet: for each balance sheet item, in a separate column, divide that line item by Total Assets, which will be 100% and the basis for other percentages on the balance sheet.

Campbell Soup Company
Consolidated Statement of Operations (In Millions)
Dollar AmountsVertical Analysis Percent
Net Sales7,9617,890100%100%
Cost of Sales5,1814,83165%61%
Gross Margin2,7803,05935%39%
Net Earnings Attributable to Campbell Soup Company563887(7%)11%

4. Prepare common size financial statements (income statement and balance sheet) applying horizontal analysis (only a partial balance sheet is demonstrated).

Here is how to accomplish this on the income statement and balance sheet:

· By line, subtract the 2016 value from the 2017 value

· Divide the difference by the 2016 value and convert to a percent

· Set to one decimal place (as shown below)

Campbell Soup Company
Balance Sheet (In Millions)
AmountsHorizontal Analysis
20162017Change Incr (Decr)Percent Change
Cash and Cash Equivalents296319237.8%
Accounts Receivable, net626605(21)(3.4%)

Microsoft Word portion


1. Introduce the name of the company and state whether it is a U.S. or foreign-owned entity. Describe the market(s) in which the entity operates. When was the company incorporated? From the first page of Form 10-K, on which stock exchange in the U.S. or abroad is the stock traded? Is it a large/small exchange (research type of exchange)? What is the par value of the stock and the market value of equity (research stock price as of a specific date, typically stated in the 10-K)? Introduce the purpose of the paper and what is being analyzed in the paper. Confirm that all financial information presented will come directly from Form 10-K and that it is available to the public.2. What is the nature of the company’s business? That is, based on what you know about the company and on the financial statements, how does this company make money? (Look at the income statement to help gather how revenues are earned). Again, we will use Campbell Soup to show how the project questions might be answered.Campbell Soup Company (Campbell Soup) is a public company that manufactures and markets high-quality, branded food and beverage products (Form 10-K, p. 3). The Company was initially incorporated in 1922 in New Jersey (Form 10-K, p. 3). Campbell Soup stocks are traded on the New York Stock Exchange (Form 10-K, p. 1). The NYSE is the number one global listings exchange ( The par value of the company stock as disclosed on page 1 of Form 10-K is $0.0375; the market value as of January 27, 2017 is $11.9 billion (Form 10-K, p. 1). The purpose of this paper is to review and analyze Campbell Soup from an ordinary financial user’s perspective. This analysis will include information on the nature of the company, the financial statements that are publicly available, and the content of the financials. The financial information presented is available to the public on the Securities Exchange Commission website ( on Form 10-K.3. Who is responsible for preparing the financial statements? Discuss the potential users of the financial statements of the company selected and the type of information in which those users are likely. What are the four financial statements that are commonly prepared for external reporting purposes as mentioned in the textbook? What titles does the company being reviewed give to these same statements on Form 10-K? How often do publicly traded companies prepare financial statements for external reporting purposes? What are Notes on Form 10-K and why does the company include them? How many “Notes” are contained on the company’s Form 10-K? What does the first Note present (details not needed – just title and implied content)?

The Independent Accountant (Auditor) Reports for XYZ Company

4. Find the Report of the Registered Independent Accountants (or Auditors) on Form 10-K. Who are the external auditors for the company and how many opinions do the auditors provide [normally two]? Describe the opinion(s) (in the provided reports) and the date of the reports. Why are the opinions/reports dated after the fiscal year end in contrast to the financials that are dated as of the year end?

Financial Operations and Financial Position Review

5. Refer to the data from the financial statements and vertical, and horizontal analyses.

a. What is reported on the Balance Sheet of an entity?

i. How much were Total Assets? Demonstrate that the accounting equation holds true: A= L + S/E by reporting the totals.

ii. What was the percent increase of decrease in total assets? Use horizontal analysis.

iii. What are the company’s major assets based on percentages (based on vertical analysis)?

iv. Of the total assets, what percent is short term (or current) and long term (or non-current) assets for the two years.

v. Define Intangible Assets. Are there any intangibles reported? What are they and what percentage of its total assets does the company hold in intangibles? (Use vertical analysis)

vi. How is the company financed? What was the percent change in liabilities between the two years? What portion of total equity comes from liabilities?

vii. What percent of equity is from Stockholders’ Equity?

b. What is reported on the Income Statement of an entity?

i. How much were Net Sales in each year?

ii. Was the company profitable in each year? What was the dollar amount of net income or net loss?

iii. What was the percent of net income (loss) based on vertical analysis for both years?

iv. Was there cost of sales (or goods sold)? What percent in both years (vertical analysis)?

v. How much was operating expense? What percent in both years (vertical analysis)? Did total operating expenses increase or decrease (use horizontal analysis).

vi. Was there interest expense? What percent in both years (vertical analysis)?

vii. What was the change in net sales and net income based on horizontal analysis?

Cash Assessment

6. Refer to the Statement of Cash Flows on the Form 10-K

What is the statement of cash flows and what does it tell us about the company?

a. List the net cash flows from:

i. Operating Activities

ii. Investing Activities

iii. Financing Activities

b. How much is cash on the balance sheet for each year? Confirm that the total of the three net cash flows accounts for the change in cash from one year to the next (from the respective balance sheets). This may require other adjustments; but the reconciliation should be explicit at the end of the cash flow statement.

c. What was the percent change (use horizontal analysis) in cash from one year to the next?

Company Performance Assessment

7. Based on this financial assessment, analyze the company from your perspective. Summarize your thoughts on the company’s performance and future, based on the data you have collected. What advice would you give management? What advice would you give to a potential investor?