ACC 501 Module 2 Case

We will continue to review the financial statements of Caribou Coffee and Fazer Group to learn additional information. The emphasis of this Case is to review the income statement, balance sheet and computation of ratios.

Review the financial statements for the companies and answer the following questions for the last reporting year:

Balance Sheet

What components of stockholders' equity do each of the companies disclose?

Do the companies have preferred stock shares outstanding? If so, what special features do these shares contain?

Do either of the companies report treasury shares? If so, do the companies disclose the reason for reacquiring the shares?

Income Statement

What are the basic and diluted earnings per share for each company?

Have the companies reported any discontinued operations?

Do the companies disclose any stock compensation plans? If so, are they reporting such plans under the fair value or intrinsic value methods? What was the value of compensation expense measured for any outstanding stock option plans?

Financial Ratios

Compute the following ratios. Also, interpret and assess each group of ratios for the company. What type of story are the ratios telling the analyst?

Profitability ratios:

oGross profit margin

oNet profit margin

oReturn on stockholders' equity

Liquidity ratios:

oCurrent ratio

oQuick ratio

oInventory turnover

Leverage ratios:

oDebt-to-assets

oDebt-to-equity

oTimes-covered ratio

What type of information do you find in footnotes to the financial statements?

Do you find the balance sheet, income statement or other measures such as ratios the most informative? Comment on the advantages and disadvantages of using ratios for analysis.