Question Details

An annual report is a comprehensive statement describing a company's activities throughout the preceding year. Annual reports are intended to give shareholders and other interested stakeholders information about the company's activities and financial performance. All public corporations must provide shareholders with a financial report every year so that shareholders understand and are able to assess overall performance.
The front part of the report often contains an impressive combination of graphics, photos and an accompanying narrative, all of which chronicle the company's activities over the past year. The back part of the report contains detailed financial and operational information.
In this assignment, you will read and assess the financial performance of IBM, Inc. over the past couple of years. Begin by downloading the 2013 IBM annual report from the IBM Website.
Read Pages 1 - 28 and then find the financial data (i.e., income statements, balance sheets and statements of cash flows) on pages 78 - 81.
Using the IBM income statement data on Page 78 in the annual report, create a common size income statement by filling in the following format:
 
2013
2012
2011
Revenue (services)
 
 
 
Cost (services)
 
 
 
Gross profit (services)
 
 
 
Revenue (sales)
 
 
 
Cost (sales)
 
 
 
Gross profit (sales)
 
 
 
Revenue (financing)
 
 
 
Cost (financing)
 
 
 
Gross profit (financing)
 
 
 
 
 
 
 
Total revenue
 
 
 
Total cost
 
 
 
Gross profit (total)
 
 
 
Less expenses
 
 
 
Selling, general and administrative
 
 
 
Research, development, engineering
 
 
 
Intellectual property and custom development income
 
 
 
Other (income) and expense
 
 
 
Interest expense
 
 
 
Total expenses and other (income)
 
 
 
Income before taxes
 
 
 
Provision for income taxes
 
 
 
Net income
 
 
 
Then, using the income statement data and the balance sheet data on page 80 in the IBM annual report, create a table of ratios
To create the required common size income statements for IBM, see the following resources:
NetMBA (2010) Common Size Financial Statements Investigating AnswersUse total revenue for sales to construct these values.
Write a four-part analysis of IBM. In Section 1 your paper, summarize what you learned and/or found particularly interesting about IBM in your reading of the first 28 pages of the annual report. In Section 2, insert the tables you created (either cut and paste from Excel or create tables in Word) . In Section 3, evaluate IBM by discussing the numbers in your common size income statement and balance sheet ratios. Look for trends that identify areas of strength, stability or possible concern. Finally, in Section 4, find two scholarly reports that discuss IBM- financial performance during this period and discuss how those professional reports correlate with what you found in your analysis.
Length: 4-5 pages not including title page and references

References can be use for the assignment:

Konchitchki, Y., & Patatoukas, P. (2014). Taking the pulse of the real economy using financial statement analysis: Implications for macro forecasting and stock valuation.
http://proxy1.ncu.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=95293399&site=eds-live

Laux, J. (2010). Topics in finance part II: Financial analysis.
http://search.proquest.com.proxy1.ncu.edu/docview/195911761?accountid=28180

Accounting and Financial Statements (2013).
https://www.khanacademy.org/economics-finance-domain/core-finance/accounting-and-financial-stateme

Financial Reporting for Business (2008).
http://proxy1.ncu.edu/login?url=http://digital.films.com/PortalPlaylists.aspx?aid=6281&xtid=40229