Unit 5: Financial Reporting and Financial Statement Analysis

Unit 5: Financial Reporting and Financial Statement Analysis

5a: Locate public company financial statements and read and interpret financial statements.

Corporations that sell their stock publicly are required to make their financial reports available to the public. Visit the website of the U.S. Securities and Exchange Commission and click on “Company Filings” under the search box in the top right corner of the home page. Enter the name of any publicly traded company to access the information they filed with the SEC. An annual report is called a 10-K. This is the 10-K for General Motors Company.

Item 8 of an annual report includes a company’s financial statements and supplementary data. The data within item 8 provides the information from which you could determine the company’s financial strength utilizing ratios. Calculate the equity ratio and the current ratio for General Motors. Then, find the 10-K for another company of your choosing, find Item 8, and calculate both ratios for that company.

Read about the availability of financial statements in Hermanson, Edwards, and Maher's Accounting Principles: “Chapter 17, Section 4: Sources of information” on pages 467-469.

Unit 5 Vocabulary

This vocabulary list includes terms that might help you answer some of the review items above and some terms you should be familiar with to be successful in completing the final exam for the course.

Comparative financial statements

Horizontal analysis

Liquidity

Operating assets

Trend percentages

Vertical analysis

Yield