Corporate Annual Reports

Financial Statements Don’t Lie.

A project completed in Accounting is for students to choose two public companies.  The requirements include that the company must have financial statements compiled using GAAP (Generally Accepted Accounting Principles) and must be in U.S. dollars.  The two companies must also be competitors such as Kimberly Clark and Proctor & Gamble.  Students calculate approximately 15 financial ratios for each company; look for each company’s strengths and weaknesses; trends in stock prices; etc.,  The purpose is to determine which company is financially stronger than the other.

Yes, this is a great project for accounting students, but take a look at a company’s annual report.  There is a lot of marketing information in annual reports.  Or maybe a general business class could use Annual Reports in a class project.  All public companies have their annual reports available on their website.

The first 20 pages of an annual report may be marketing.  Customers, employees and vendors smiling and having a great time.  Then we go to the financial statements.  Although customers and employees are smiling and having a great time, the financial statements might show a different story…. Net loss of $2 million.  Yikes!  Financial Statements don’t lie.

I’m surprised at how much students enjoy this project.  The students choose the companies they are going to analyze.