Research Project Report
Perform preliminary analytical procedures for the PricewaterhouseCopper LLP.
a. Obtain the financial statement data for the current year and prior two years.
Analyze the year-to-year change in account balance for the following
financial statement line items. Document the trend analysis in a format
similar to the following:
% Change % Change
Account Balance 2019–2020 2018–2019
Net sales
Cost of sales
Operating expenses
Operating income
Net receivables
Inventories
Accounts payable
Long-term debt
b. For the current and prior years, calculate the common financial ratios that
are applicable to the company, including short-term debt-paying ability,
liquidity activity, ability to meet long-term debt obligation, and
profitability ratios.
c. Compare the company’s main financial indicators (market cap, revenue,
employees, revenue growth, gross margin, net income, and EPS) with the
industry benchmark (you may find relevant information from Yahoo
Finance).
Please see the detailed instructions and use the 10-K report.
3 pages and double spaces.
Written Report:
You are required to submit a written report per group (prepared in Microsoft Word, not
exceeding 12 pages in length; double-spaced with font size of 12). Your writing should
be original and free from plagiarism (referring to the University Catalog’s section on
Academic Honesty). If you find useful information in an article or web site and you use it
in some form in your paper, indicate where you got the information from by using
quotations and proper references. Use of reference material and citations are expected in a research paper. The final copy of the report should have page numbers with a Table of Contents and Bibliography. Charts and tables summarizing your findings may also be included as appendices in your report.
A formal copy of the report is due on the last day of this class, with no exceptions. The
written report accounts for 10% of your overall course grade, and will be graded on the
basis of originality, content, and grammar
Here are detailed instructions for conducting your research project:
1. The U.S. Securities and Exchange Commission (SEC) requires publicly traded
companies to electronically file a variety of forms or reports (for example, 8-
K, 10-K, 10-Q, and DEF-14a) and makes most of these electronic documents
available on the Internet via EDGAR. EDGAR stands for Electronic Data
Gathering, Analysis, and Retrieval system. The primary purpose for EDGAR
is to increase the efficiency and fairness of the securities market for the
benefits of investors, corporations, and the economy by accelerating the
receipt, acceptance, dissemination, and analysis of time-sensitive corporate
information filed with the agency.
Visit the SEC Website (
www.sec.gov
) and get yourself familiar with the
search engine EDGAR for company filings. Then choose a publicly held
company with stocks actively traded on NYSE or NASDAQ and obtain a
copy of its most recent 10-K report. Answer the
following questions:
a. What is the company’s industry?
b. What are its primary products or services?
c. Who are its customers?
d. Where is the company located?
e. What are the main financial characteristics of the company:
• Total Assets
• Equity
• Revenue
• Net Income (Loss)
• Other relevant metrics
f. Who are the major competitors/peers of this company?
g. Look at the annual report:
• What image does it intend to convey?
What messages are being communicated to the shareholders?
Are these messages consistent with the disclosures in the financial statements?
0. Obtain outside information about the company and its industry. Answer the
following questions:
a. What are the key characteristics of the industry?
b. Where is the company in its life cycle?
c. Describe at least three most important factors for success in this business?
d. How does this company stand with respect to these factors?
e. What legal or regulatory matters are of concern for the company?
f. What social matters are of concern for the company?
PricewaterhouseCopper LLP performed the financial audit for Tesla for 2019. In fact, the firm has audited Tesla’s financial statements since 2004. PricewaterhouseCopper LLP issued that Tesla’s 2019 financial statement is fairly presented. It means that consolidated balance sheet, and all other consolidated statements of operations, of comprehensive loss, and of cash flows are free of
3. Perform preliminary analytical procedures for the company:
a. Obtain the financial statement data for the current year and prior two years.
Analyze the year-to-year change in account balance for the following financial statement line items. Document the trend analysis in a format similar to the following:
% Change % Change
Account Balance 2019–2020 2018–2019
Net sales
Cost of sales
Operating expenses
Operating income
Net receivables
Inventories
Accounts payable
Long-term debt
b. For the current and prior years, calculate the common financial ratios that are applicable to the company, including short-term debt-paying ability, liquidity activity, ability to meet long-term debt obligation, and profitability ratios.
c. Compare the company’s main financial indicators (market cap, revenue, employees, revenue growth, gross margin, net income, and EPS) with the industry benchmark (you may find relevant information from Yahoo Finance).
0. Based on the background research and analytical procedures performed in
Stages a-c, summarize your observations about the company’s business,
including your assessment of the client’s business risk. Prepare a broad audit plan:
a. Which transaction cycles are the high-risk areas?
b. Identify at least three risk areas in the audit of this company and describe:
(1) the risk; (2) why you have assessed this as a specific risk; and (3) how
you would perform the audit to address this risk.
c. If management faced tremendous pressure regarding the entity’s financial
performance, what opportunities might exist for them to engage in
fraudulent financial reporting?
0. Which audit firm performed the audit? What kind of opinion has the audit firm issued on the financial statements (and on the internal control over financial reporting)? Are they consistent with what you expect based on your previous analysis?