Financial Statement analysis project. This project is due by wednesday. I really need help solving it. Thank you.

A-312 Intermediate Accounting 11 - Financial Statement Analysis Project OBJECTIVE Financial statement analysis is the process of gathering information from financial statements and related disclosures to evaluate a company's current performance and estimate future performance and financial position. The information extracted from the financial statements is often used by investors to value the company's net worth as the ground of their investment decisions. While financial statement analysis typically requires the comprehensive analysis of quarterly and annual financial statements (including management discussions and other disclosures), this project will focus on three topic areas covering in this course: Pension, Accounting for Income Taxes, and Cash Flow Statement. Motivated by a recent allegation of financial misrepresentation, General Electric Co. (GE) is selected as your target company for the analysis. To perform your analysis of the three topic areas, you are required to search the Securities and Exchange Commission's (SEC) EDGAR system to find and read Form 10-Ks filed by (GE). Then, read an analyst report ("GE Fraud Report", not a valuation report) by Harry Markopolos, CFA (www.gefraud.com) questioning some of GE's accounting practices. You are assigned to prepare a brief memo covering the issues raised below. ALLEGED FINANCIAL MISREPORTING In GE Fraud Report released on 8/15/2019, Harry pointed out that GE has been almost magically beating analysts' earnings forecasts continuously. Through his financial statement analysis, Harry asserted that GE has been engaged with financial misreporting mainly related to its insurance accounting and dubbed the GE's alleged misreporting as "Next Enron". In fact, GE has been well-known for its ability to meet analysts' earnings forecast. In recent 10 years, GE has been beating the median (MEDEST) and the mean (MEANEST) of the forecasted earnings by a thin margin. Analysts'Earnings Forecasts and GE's Reported Earnings by Quarter a : : 3 3 MMM 3 Daily Return/Price of GE stock and S&P 500 2.000 8/15/2019 Responding to Harry's allegation based on this financial statement analysis, investors questioned the value of GE and reacted negatively to GE's stocks. Right after the release of the GE Fraud Report, GE's stock showed much higher return volatility and traded at significantly lower prices compared to the return and price of the S&P 500 Index. Interestingly, Harry's website releasing the GE Fraud Report has been deactivated since September and GE's stock price has subsequently bounced back to its before-the-allegation price level. (In the image below, the size of circles represents the traffic to the website). 3 0 7 8 9 10 3 14 13 11 7 21 4 > > > > > > > Although Harry's allegations are turned out to be based on the misunderstanding of accounting standard changes (or ill-intended to manipulate the market), this incidence demonstrates the influence of financial statement analysis in the market. PROJECT REQUIREMENTS In this project, please consider yourself as an investment associate (buy-side analyst) of an asset management firm, Bicentennial, LLC., located in Chicago, IL A fund manager, John Edward. asks you to explain the following three accounting issues related to GE's financial statements. Please write a memo responding to John's questions. The memo should not be longer than 2 pages, 12 font size, and single-spaced (excluding the appendix). The memo should be submitted through Canvas on or before December 11", 2019. John's internal memo requesting your explanation follows: DATE: TO: FROM: RE: November 11th, 2019 XXX John Edward, Manager, Large-Cap. Equity Fund Financial Reporting Quality of General Electric (GE) During our evaluation of GE stocked traded at the New York Stock Exchange, our team comes up with the following questions regarding the integrity of GE's financial statement information. Given that the shock from Harry Markopolos's recent allegation on GE has negatively impacted our fund performance for the 3rd quarter, our team intends to revisit the quality of GE's financial reporting in the 10-ks filed to SEC annually. Specifically, I want you to provide your analysis and opinion on the following issues: 1. In the year of 2001, when the former CEO Jack Welch retired, GE reported pension revenue (or negative pension expense) of $615 million in the footnote 6. However, in GE's most recent 10-K footnote 13. pension expense of $4,129 million is disclosed. Considering that GE's total revenues for FY 2018 are $121,615 million, it is imperative for us to understand the way pension expense is calculated. Please explain why the pension expenses of 2001 and 2018 are drastically different. a. Is the pension expense reliable? According to Harry's report, it seems that actuarial assumptions affect insurance liabilities significantly. How about GE's assumption regarding discount rates for FY 2018? Is it comparable to other firms, for example, IBM? 2. Per the statement of earnings for 2016-2018 (included in 2018 financial statement), GE has reported the negative tax expenses (or tax revenues) of $1,133 million and $2,611 million in FY 2016 and FY 2017 respectively. However, $583 million income tax expense is reported for FY 2018. How can GE report "revenues from income taxes? Are they reliable? Can you explain the way tax expenses are measured? 3. While our valuation of GE is highly sensitive to its realized earnings or net cash flows, GE has been showing a declining trend of eash balances: $70.483 million as of FYE 2016, $48,129 million as of FYE 2017. $43.967 as of FYE 2018, and $35.020 as of FYE 2018. After checking historical records of GE's operating cash RESOURCE 1. SEC Edgar: https://www.sec.gov/edgar/searchedgar/legacy/companyscarch.html a. 10-K filings 2. IUSB Schurz Library Databased a. Business Insight Essentials - Basic company and industry information b. Hoover's Company Profiles c. Value Line - Investment information (including equity analyst's reports) 3. Other a. Google Finance: https://www.google.com/finance b. Yahoo Finance: http://finance.yahoo.com c. Wall Street Journal: http://www.wsj.com i. Text-based articles are available through the Library website (http://search.proquest.com/publication/105983) d. CNN Money: http://money.cnn.com/ e. Bloomberg terminal at the Leighton School of Business and Economics