Select a company you are interested in and obtain its annual reports by going to the company’s website. Download the annual report for the most recent year. (On many companies’ websites, you will need to visit the Investor Relations section to obtain the company’s financial statements.) You may also collect the information from the company’s Form 10- K, which can be found at http:// sec. gov/ idea/ searchidea/ companysearch_ idea.html.
Basic Discussion Questions
1. Locate the company’s annual report as outlined previously. Find the company’s segment information; it should be in the “Notes to Consolidated Financial Statements” or another, similarly named section. Look for the word “Segment” in a heading; that is usually the section you need.
2. List the segments as reported in the annual report. Make a table listing each operating segment, its revenues, income, and assets.
3. Use the data you collected in Requirement 2
4. Use the data you collected in Requirement 2 to calculate each segment’s capital turnover. Interpret your results.
5. Use the data you collected in Requirement 2 to calculate each segment’s ROI. Interpret your results.
6. Can you calculate RI using the data presented? Why or why not?
7. The rules for how segments should be presented in the annual report are governed by external financial accounting rules. The information you gathered for the previous requirements would be used by investors and other external stakeholders in their analysis of the company and its stock. Internally, the company most likely has many segments. Based on what you know about the company and its products or services, list at least five potential segments that the company might use for internal reporting. Explain why this way of segmenting the company for internal reporting could be useful to managers.