PROJECT #2, ANNUAL REPORT
REQUIRED:
Web location of Annual Report (or Form 10-K). Write the web address (url) here:
https://www.cmcsa.com/financials/annual-reports
List the company’s primary products or services (minimum of two). Include the name of the annual report section and page number where you located the information in your Company’s Annual Report. Hint: these can typically be found in the Business and Business Overview sections. Example: Food – perishables, Section II Business Overview, Page 2
Overview of the Annual Report. Review the Annual Report (or Form 10-K) for your assigned company, it contains several parts. The table of Contents is helpful for locating items.
MANAGEMENT DISCUSSION AND ANALYSIS. This section discusses operating results, industries in which the company operates, financing and investing activities, significant events, trends and developments. Note its starting page number and full section name here:
Page #: 32 (2019) and 34 (2018).
Full Section Name in Annual Report: Management’s Discussion and Analysis of Financial Condition and Results of Operations
THE FINANCIAL STATEMENTS AND NOTES TO THE FINANCIAL STATEMENTS. There is a section that contains the financial statements. Locate the four financial statements within the Annual Report or Form 10-K and enter the page number below that is printed on the Annual Report, not the .pdf page number.
The Consolidated Statements of Operations (Income Statement) begins on page # 66 (2019) and 67 (2018).
The Consolidated Statements of Financial Position (Balance Sheet) is on page # 69 (2019) and 70 (2018).
The Consolidated Statements of Cash Flows (Statement of Cash Flows) is on page # 68 (2019) and 69 (2018).
The Consolidated Statements of Shareholders’ Investment (Statement of Stockholders’ Equity) is on page # 70 (2019) and 71 (2018).
The accompanying notes are an integral part of the financial statements. The financial statements cannot be understood without reference to the notes. In the Notes to the financial statements locate the following note topics, and enter the note number (or note letter), note name, and the page number the note starts on.
Calculate the company’s current ratio for both the most recent year and the prior year using the formula provided in the textbook. Show your computations, please include up to four decimal points.
Write the textbook formula here: Current ratio = Current assets / Current Liabilities
Most recent year: = $ 25,392/$ 30,292
= 0.8382
Prior year: = $21,848 / $27,603
= 0.7915
Explain what information this ratio provides (define), and what the results mean specifically to your assigned company. Use complete sentences, in your own words. The current ratio is a measure of Comcast’s ability to pay off their short-term debts. The current ratio has improved from the previous year which implies that it is financially stable.
Compare the two, has the ratio improved? (yes or no) Yes.
Calculate the company’s total asset turnover ratio for both the most recent year and the prior year using the formula provided in the textbook. Hint: Note to compute Average Total Assets for the prior year, you will need to locate the prior annual report to correctly compute the average for the prior year. Show your computations, please include up to four decimal points.
Write the textbook formula here: Total asset turnover ratio = Total revenue/average total assets
Most recent year: Average total assets = ($263,414 + $251,684) / 2 = $257,549
= $108,942 / $257,549
= 0.4230
Prior year: Average total assets = ($251,684 + $187,462) / 2 = $219,573
= $94,507 / $219,573
= 0.4304
Explain what information this ratio provides (define), and what the results mean specifically to your assigned company. Use complete sentences, in your own words. It is a measure of the efficacy of Comcast’s asset to generate revenue. Comcast’s total asset turnover ratios are relatively low since they are below average. It does not efficiently use its assets to generate revenue.
Compare the two, has the ratio improved? (yes or no) No.
Calculate the company’s debt ratio using the formula provided in the textbook and using total liabilities for debt. Calculate for both the most recent year and the prior year. Show your computations, please include up to four decimal points.
Write the textbook formula here: Debt ratio = Total Debts / Total Assets
Most recent year: = $179,540 / $263,414
= 0.6816
Prior year: = $179,182 / $251,684
= 0.7119
Explain what information this ratio provides (define), and what the results mean specifically to your assigned company. Use complete sentences in your own words. Debt ratio is a measure of Comcast’s capability to pay back its debt. Comcast has $0.6816 in debt for every dollar of assets implying that it has good financial health.
Compare the two, has the ratio improved? (yes or no) Yes.
Calculate the Equity ratio for the most recent two years presented using the formula provided in the textbook. Show your computations, please include up to four decimal points.
Write the textbook formula here: Equity ratio = Total Equity / Total Assets
Most recent year: = $83,874 / $263,414
= 0.3184
Prior year: = $72,502 / $251,684
= 0.2881
Explain what information this ratio provides (define), and what the results mean specifically to your assigned company. Use complete sentences in your own words. It is a measurement of the total assets that are financed by the owners’ investments. The equity ratio has increased which illustrates to the potential investors that Comcast is worth investing in since several investors are willing to service the company financially.
Compare the two, has the ratio improved? (yes or no) Yes.
Calculate the profit margin ratio for the most recent two years presented using the formula provided in the textbook. Show your computations, please include up to four decimal points.
Write the textbook formula here: Profit margin ratio = Net income / Net Sales or Revenue
Most recent year: = ($13,057 / $108,942) * 100%
= 11.9853%
Prior year: = ($11,731 / $94,507) * 100%
= 12.4128%
Explain what information this ratio provides (define), and what the results mean specifically to your assigned company. Use complete sentences in your own words. Profit margin ratio is given as the percentage of sales that comprise of the net income. It shows how well Comcast manages its expenses in comparison to its revenue. Comcast’s profit margin ratio has decreased which implies that its expenses have increased.
Compare the two, has the ratio improved? (yes or no) No.
Calculate the return on total assets ratio for the most recent two years presented using the formula provided in the textbook.Hint: Note to compute Average Total Assets for the prior year, you will need to locate the prior annual report to correctly compute the average for the prior year. Show your computations, please include up to four decimal points.
Write the textbook formula here: ROA = Net Income / Average Total Assets
Most recent year: Average total assets = ($263,414 + $251,684) / 2 = $257,549
ROA = ($13,057 / $257,549) * 100% = 5.0697%
Prior year: Average total assets = ($251,684 + $187,462) /2 = $219,573
ROA = ($11,731 / $219,573) * 100% = 5.3426%
Explain what information this ratio provides (define), and what the results mean specifically to your assigned company. Use complete sentences in your own words. Return on total assets indicate how well Comcast’s investment generate income. The ROA has decreased indicating that there is a likelihood that it had over-invested in assets that have failed to increase its revenue.
Compare the two, has the ratio improved? (yes or no) No.
Which of the two years reviewed was more successful? Explain the group answer based on the research completed in this report? Explain each item of research used to base the conclusion.
Type the group conclusion on this document in the space beginning on the following page, minimum one full page double spaced. Upload this entire document to Canvas for scoring. To earn all of the points for this section the answer must specifically include support for your group conclusion using the research you have completed. It will be scored based on clarity and accuracy.
Group Conclusion
Financial Ratios | 2019 | 2018 |
Current Ratio | 0.8382 | 0.7915 |
Total Asset Turnover | 0.4230 | 0.4304 |
Debt Ratio | 0.6816 | 0.7119 |
Equity Ratio | 0.3184 | 0.2881 |
Profit Margin | 11.9853% | 12.4128% |
Return on Total Assets | 5.0697% | 5.3426% |
Table 1: Summary of Comcast’s Financial Ratios
The main aim of most companies and businesses is to be profitable in the long run. We used the return on total assets ratio (ROA) to determine which year was the most successful given that ROA is a profitability ratio. 2018 had a higher ROA than 2019 even though the former had less revenue and net income than the latter. Comcast efficiently used its assets in 2018 to generate earnings. This measure gives the profitability of a company relative to its average total assets. Comcast, eventually, is all about efficiency; how well its management can utilize its limited resources to maximize earnings. 2018’s high ROA illustrates that Comcast earned more money on minimal investment. Investors would be more willing to invest in the company in 2018 than in 2019 because they would get maximum returns from their investments.
2018 still is Comcast’s most successful year based on the analysis if we put the other financial ratios into the picture. 2018 had a higher total asset turnover ratio than 2019. This implies that the investors’ assets were efficiently used to generate sales. The high total asset turnover ratio in 2018 indicates how well it performed financially in 2018 as opposed to 2019. 2019 had more current liabilities and current assets than 2018 which is why 2019 had a higher current ratio than 2018. Comcast was able to maximize its current assets to pay off its short-term debts. Nonetheless, both current ratios are less than one which means that Comcast does not have the financial resources to remain solvent if all its short-term debts were to be paid off all at once.
The profit margin ratio also measures a company’s profitability relative to its sales. It shows how effectively the business can convert sales into net income. A low profit margin is indicative of the fact that the company has a lot of expenses that eventually need to be cut and a new budget prepared. 2019’s profit margin was lower than the previous year’s profit margin. The expenses for the year increased which in turn led to a decrease in the profit margin ratio. Only a small percentage of sales were left after Comcast paid all its expenses.
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