The company’s name you choose to write like”Morgan Stanley”
1.Obtain the most recent annual reports (or 10-K report) for two competitor companies in an industry of your choice. The reports must contain at least three years of income statement data and two years of balance sheet data. Pick one of the two companies as your target company for consideration of making an investment.
2.Analyze at least three items on the income statement for your target company that would be important to an investor, and discuss whether your companys performance related to these items appeared to be improving, deteriorating or remaining stable. Justify your answer beyond just citing percentage increases or decreases.
3.Analyze at least three items on the balance sheet for your target company that would be important to an investor, and discuss whether your companys performance related to these items appeared to be improving, deteriorating, or remaining stable. Justify your answer beyond just citing percentage increases or decreases.
4.Analyze your target companys investing and financing activities for the most recent year as identified in the statement of cash flows, specifically identifying the two largest investing activities and the two largest financing activities. Analyze the investing and financing strategies that your company is employing and comment on whether you agree or disagree with these strategies.
5.Identify two items not included in the financial statements that you think would be important to someone considering whether to invest in your company. Discuss your reasons for believing that these two items about the company would be important in making an investment decision. You might want to consider items discussed in other business classes.
6.Compare your target companys financial statements with those of the competitor company in the industry. The competitors results do not have to be discussed in detail. If you were making a decision to invest in one of the two companies, which company would you choose? Why? Your answer in this section must include some summarization of financial issues, but doesnt need to be limited to a discussion of financial issues.
1. You must submit the financial statements for each company being discussed. Do not include the entire annual report or 10-K report, just the financial statements.
2.Your analysis must include page references to relevant portions of the annual reports. Your report must also contain appropriate quotation marks for quoted material and appropriate citations for material taken from sources outside the financial statements.
3.Your presentation should be between 4-5 pages and must be typed, double-spaced, and have at least a 10 point font.
Finding Annual Reports (10-K Reports)
Company Website (finding an annual report)
Type CompanyName.com into the web browser address bar
Find (usually under investor relations) the link to SEC Filings
Click on the link to open a PDF document
SEC Website (finding a 10-K report)
Type in Sec.gov into the web browser address bar
Under the Filings menu, click on Company Filings Search
Type in your companys name where indicated
When you get to the filings of your company, find the 10-K filing and open the document
Here is a sample as follow, and i also need works site.
The global financial service firm Morgan Stanley experienced a decrease in profitability in recent years, mainly due to the financial crisis of 2008. Investors should be concerned with companys future and how it plans to rebound. Their financial statements show that the road to economic recovery is slow and difficult.
(2)Based on the data from their Income Statement, one can see a decline in performance. The first item that stands out is a decrease in overall revenue. At the end of 2012, net revenues were $26 billion, a drop of about 19% and 16% from 2011 and 2010, respectively (p.140). The largest contributor was the decline in revenue from trading items (such as derivatives and interest rate swaps). However, these drops in trading should be expected as Morgan Stanley shifted its business model from a traditional investment bank to a bank holding company. The firm also reported growth within their asset management revenue. In 2012, the revenue was about $9 billion, as opposed to $8.4 billion in 2011 (+7.1%) and $7.8 billion (+14.9 %) in 2010 (p.140). Morgan Stanley is already one of the largest global investment management organizations of any full-service financial services firm (p. 5) and growth within this division is great news for the company.
Another key item on the income statement was that the firm did not experience any significant increases in expenses. The figures from 2012 were within 2% of the previous years. Expenses such as salaries, equipment, and fees all remained around the same. They are continuing to allocate about $600 million for marketing and development. This is a good sign for investors, indicating that the company still plans for future growth but did not incur any major new costs.
Overall, the decreasing net revenue led to a significantly lower net income from previous years. Net Income applicable to Morgan Stanley in 2012 was $68 million, while it was $4.11 and $4.7 billion in 2011 and 2010. Profit margin was an almost non-existent 0.3%. Investors should be very concerned with firms ability to produce a profit.
(3)Morgan Stanleys balance sheet for 2012 shows that they have $20.9 billion in cash and cash equivalents, an increase of 58.6% from the $13.2 billion in cash from the previous year (p. 138). This increase in cash tells the investors that Morgan Stanley has protection for future unforeseen expenses and that they will be able to reinvest in the company. The firm also reports that a third of its assets come from ownership of financial instruments (like securities and corporate equities). While it seems like a large portion of its assets, this should be expected for a company operating in the financial industry. Morgan Stanley uses these financial instruments as collateral for its clients trades (p. 194).
The Balance Sheet also tells the investors of solvency issues for Morgan Stanley. Both the total assets and total liabilities increased from the year 2011 to 2012. Using these figures to calculate the debt to assets ratio shows 91.1% for 2012 and 90.7% for 2011. This indicates that Morgan Stanley relies significantly on debt financing for its business and has a large amount of risk.
A third notable item from Morgan Stanleys balance sheet is that common stock and the paid-in capital accounts did not vary much from 2011 to 2012. The company was able to issue 2 billion shares of stock (valued at $0.01 per share) and report a gain of $23.4 billion (+2.6% from 2011) from paid-in capital (p. 139). Morgan Stanley was able to generate a consistent investment from its shareholders and use it to reinvest in its own business.
(4)Two of the largest investing activities for Morgan Stanley relate to the sale of available securities. In 2012 the company spent $24.48 billion to purchase securities and generated $15.1 billion from the maturity/redemption of previous securities (p. 142). While on the surface it may appear that the company is losing money from its investments, a breakdown of the proceeds demonstrate their importance. In 2012 the sale of securities lead to a gross realized gain of $88 million and a gross realized loss of $10 million, totaling to a profit of $78 million (p. 193). Because the securities require time to age and reach their maturity, their value will not be seen immediately. Over time, the investments made by the company will pay off. Another important item related to investing activities is the payment of $3.5 billion for loans. By loaning a portion of their cash flow they will be able to generate interest on their returns.
The largest cash flow from financing activities is a repayment of $43 billion in long-term borrowings. Th
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