accounting-ACG2021 Fall 2015 Comprehensive Financial Statement Analysis Project

ACG2021
Fall 2015

Comprehensive
Financial Statement Analysis Project

Group Members

Last Name

First Name

100%

The
objective of this exercise is to develop your ability to perform analysis of
the financial information included in financial statements.

Instructions:

You
will need the annual report for Kohl’s Corporation for fiscal years 2014 and
2013. They will be provided to you in pdf format.

Note that Kohl’s fiscal year is referenced one year back, so,
for example, the 2014 fiscal year relates to the fiscal year which ended on
January 31, 2015 and the 2013 fiscal year relates to the year which ended
February 1, 2014.

Requirement
1: Basic Questions

Answer
the questions for the fiscal 2014 year in the shaded input box.

The location (source) where you can find the answer is provided
for you above the shaded input box. Use only that source to answer the
question. The Index on the second page of the annual report PDF file gives
you a table of contents which allows you to quickly find the sources of the
information.

Requirement
2 – 6: Ratio and Financial Analysis

For the ratios in requirements 2 and 3, provide the formula of
the ratio, the amounts used to calculate the ratio and what the ratio
measures. Enter your answers in the shaded input boxes. The first one (a.)
was completed as an illustration.

The ratio formulas are listed in pages 775 – 777 in chapter 13
of your textbook. I have added the number of the ratio listed in pages 775 –
777 to each ratio so that you know exactly how to calculate them.

When calculating the ratios, only use the amounts included in
the audited financial statements (Item 8. Financial Statements and
Supplementary Data); do not just enter
those that may be shown in other sections of the annual report. All other
sections of the annual report except for the financial statements are not
audited and as such the preparer can calculate any other ratios or financial
indicators are they wish, not necessarily as the textbook prescribes. If you
pick up amounts in other sections you risk getting the question wrong.

Since the fiscal 2014 financial statements are comparative, they
include info for both fiscal years 2014 and 2013. Use those financial
statements to answer the questions about 2013 as well.

However, some ratios for the 2013 year will require you go to back an
additional year because some of the 2013 ratios use averages which are
calculated using the 2013 + 2012 balances. For example, the inventory
turnover for 2013 uses average inventory calculated by using the 2013 ending
inventory balance + the 2013 beginning inventory balance (which is the ending
balance in 2012). You need to obtain the fiscal 2012 ending inventory balance
included in the 2012 financial statements which have been provided to you.

For
ratios that include averages, use a simple average calculation (beginning +
ending balance / 2).

Other:

Several
questions have multiple parts. Make sure you answer every part in order to
receive full credit.

Please
do not add columns or rows to this file. I will be using this file to grade
and my grading template is in this same format.

The points assigned to each question are included in the boxes
highlighted in pink on the right-hand side of the question. There are 141
points which is equivalent to 100%.

Requirement 1

Answer BASIC INFORMATION about company operations
and financial results for the 2014 fiscal year ending January 31, 2015.
NOTE: Use amounts found in the “Source” only to answer these
questions.

Points

a.
As of January 31, 2015, how many stores did Kohl’s operate and in how many
states?

Source:

Item 8. Notes to Consolidated Financial Statements: Note #1

b.
When does the fiscal year end each year? How many weeks did fiscal year 2014
have? How about 2013 and 2012?

Source:

Item 8. Notes to Consolidated
Financial Statements: Note #1

c.
Does Kohl’s report a multi-step or single-step income statement? How do you
know?

Source:

Item 8. Consolidated Statements of Income

d.
What is Kohl’s largest asset? Largest liability? What is the amount of each?

Source:

Item 8. Consolidated Balance Sheets

e.
How many shares of common stock are Issued? Outstanding?

Source:

Item 8. Consolidated Balance Sheets

f. How many shares of treasury stock did
Kohl’s purchase during the year?

Source:

Item 8. Consolidated Statements of
Changes in Shareholders’ Equity

g. How much was dividends declared and paid
per share?

Source:

Item 8. Consolidated Statements of Income

h. When does Kohl’s record revenue sold at the stores? What
about online sales shipped to customers?

Source:

Item 8. Notes to Consolidated
Financial Statements: Note #1

i. What method does Kohl’s use to value its
inventory?

Source:

Item 8. Notes to Consolidated Financial Statements: Note #1

j. What method does Kohl’s use to depreciate
its property and equipment?

Source:

Item 8. Notes to Consolidated Financial Statements: Note #1

k. What percentage of Kohl’s total property
and equipment are depreciated at year-end?

Source:

Item 8. Notes to Consolidated Financial Statements: Note #1

l.
What items are recorded as cash equivalents?

Source:

Item 8. Notes to Consolidated Financial Statements: Note #1

m.
Kohl’s has receivables from credit card transactions at fiscal year-end and
yet there is no Accounts Receivable classification on the balance sheet. In
what balance sheet line are those receivables included and under what
conditions?

Source:

Item 8. Notes to Consolidated
Financial Statements: Note #1

n. What types of Other Comprehensive Income
items does Kohl’s have?

Source:

Item 8. Consolidated
Statements of Comprehensive Income

o.
Was Kohl’s debt issued at a discount or premium in the aggregate? How do you
know?

Source:

Item 8. Notes to
Consolidated Financial Statements: Note #2

p. What type of items are included in the Various Liabilities to
Customers? Why are they classified as liabilities?

Source:

Notes to Consolidated Financial
Statements: Note #1

q. Using a site such as www.hoovers.com or www.finance.yahoo.com, research the
discount variety store industry. List three competitors of Kohl’s
Corporation.

Source:

Type source here

r.
List three Kohl’s brands.

Source:

Item1. Business

s.
Does Kohl’s have any business relations with foreign entities such as
suppliers or customers?

Source:

Item1. Business

t.
Describe three risk factors that Kohl’s faces.

Source:

Item 1A. Risk Factors.

u. What was the cause of the increase in average selling price
per unit? What was the effect of higher selling prices on the number of units
sold?

Source:

Item 7. Management’s Discussion and
Analysis: Results of Operations.

v.
Did capital expenditures increase or decrease from prior year? What is the
explanation for the change?

Source:

Item 7. Management’s Discussion and
Analysis: Liquidity and Capital Resources

KOHLS 2014
Fiscal Year as of January 31, 2015

KOHLS 2013
Fiscal Year as of February 1, 2014

Ratio
(Refer to pgs 775 – 777 for ratio formula)

Calculation of
Ratio
Show work

Ratio

Calculation of
Ratio
Show work

Ratio

Points

Requirement 2

Evaluate
PROFITABILITY. Using information you have learned in the text and elsewhere,
evaluate Kohl’s profitability for 2014 compared with 2013. In your analysis,
you should compute the following ratios and then comment on what those ratios
indicate.
NOTE: Use amounts in the audited financial statements
only to calculate these ratios (Item 8. of annual report).

a. Rate of return on
sales #13

4.6%

4.7%

Ratio:

$ 867

$ 889

Net income / Net sales

$ 19,023

$ 19,031

<— This item was completed