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[Solved] Accounting Theory-Financial Statement Analysis

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[Solved] Accounting Theory-Financial Statement Analysis

Accounting Theory-Financial Statement Analysis

Using concepts learned in the Accounting Theory course, analyze the financial statements for a major CANADIAN COMPANY(Market capitalization greater than $5 Billion) Your work should include an examination of the face of the financial statements, the notes to the financial statements, the management discussion and review, and also a comparison of the last five years key information. Your report should pick a date and identify whether, on that date, you thought the stock price was overvalued or undervalued, and what a good trading range for the stock should be. As the efficient markets hypothesis is also one of the concepts in the course, feel free to use whatever other information you feel is necessary. You must demonstrate an understanding of course concepts. You must comment on the degree of disclosure and any voluntary disclosures. You should analyze key accounting policies for any effect they may have on management behavior or stock prices. Please attach the financial statements, and it is not included in the total pages. You can use 1 to 2 sources(recommend online source)
Name:Instructor`s Name:Course:Date of Submission:Imperial OilIntroduction:Imperial Oil is the oldest oil and gas company in Canada with a history that dates back to 130 years. The company deals in petroleum products, oil and gas and has a vast upstream and downstream business. It is involved from exploring oil and gas opportunities across Canada to manufacturing and distribution of these products for various purposes. The company also deals in by-products of the main products e.g. chemicals that are essential to many other industries like automobile, manufacturers of personal care and household products etc. The company is Canada`s second largest company by market capitalization of around CAD 36.79 billion. The company has successfully undertaken various acquisitions in the past and is the largest oil and gas producing company in Canada with corporate offices in Toronto, Montreal and Calgary (About Imperial Oil).Financial Statements Analysis:Being the key producer of oil and gas in Canada, the company has a significant importance in the economy. However, like all the oil companies of the world the company`s performance and its decisions are greatly influenced by the economy of the county and its operating environment. Below is the analysis of company`s financial performance and position in previous five years from December 31, 2007 to December 31, 2011. Despite of a recession in economy and extreme fluctuation in prices of the oil in years, the company has managed to increase its revenues and remain profitable. Since 2007, the company has increased the revenues by 16%. Though the company is profitable, its gross profits have fallen by 20% since 2007. The main reason for the fall can be associated with the inconsistency of cost to sales ratios which weren`t very impressive in the five years period. Further, the company has increased its expenditures in research and development which gradually increased from CAD 83 million in 2007 to 120 million in 2011. Great reductions were seen in the interest expenses of the company which fell to 3 million in 2011. The reason for such reductions in the interest expenses is due to capitalization of the interest. The company`s net incomes have shown varying trends in past five years which was 3.19 billion in 2007, reached lowest at 1.58 billion in 2009 and was recorded as 3.37 billion in year 2011. The company has managed to improve its net income as compared to past years, though a falling trend was noticed in gross profits. This means the company has controlled its operating and other expenses to improve its profitability (Summary Annual Report 16; “Imperial Oil Limited-IMO: Toronto”).The company has increased its asset base by 56% in five years where the current standing of the total assets of the company is 25.43 billion. The ROCE is recorded as 25.4% in 2011 which is promising individually and as compared to industry ratio. The current ratio of the company is 0.85:1 for the year 2011 which is better as c...

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  • Title: [Solved] Accounting Theory-Financial Statement Analysis
  • Price: £ 89
  • Post Date: 2021-09-28T11:03:23+00:00
  • Category: Essays
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