Overview

This project will be completed individually. You will evaluate the financial statements and related disclosures of Weyerhaeuser Company, a timberland company. You will use the 2021 10-K as your first resource in answering most of the questions; however, some questions require historical data which you will need to obtain from older 10-Ks. You will also need to access the financial statements of some of Weyerhaeuser's competitor firms. You can access financial filings using the following steps.

1. Go to https://www.sec.gov/edgar/searchedgar/companysearch.html. In the search box, enter the company's name or ticker symbol (i.e.., 'Weyerhaeuser Co.' or 'WY'). After selecting the right company, you can locate the latest 10-K filing under the heading "Latest Filings". For example, Weyerhaeuser's 2021 10-K was filed on February 18, 2022. Clicking on the link takes you to the 10-K.
2. You can also find financial statements on a company's investor relations site (for Weyerhaeuser, this is here: https://investor.weyerhaeuser.com/quarterly-and-annual-results).

Materials submitted for the assignment should include a single pdf document, including the following parts:

• A descriptive heading or title.
• A one-paragraph introduction describing Weyerhaeuser as a company. Include a brief summary of the company's history, its products, major recent events, and its industry.
• A reproduction of each question prompt detailed in the next section (in bold font) followed by your response to the question (non-bold font).
• An appendix with any tables you would like to provide to help you answer the questions fully. For example, questions that request horizontal or vertical analysis of financial statements cannot be fully addressed without providing quite a bit of data. You should fully discuss pertinent findings from your analysis in the text of your responses but include the full tables of data in the appendix (incorporating the tables by reference in your discussion). An example of this appendix is included at the end of this file.

Project Questions

1. Describe the format of Weyerhaeuser's income statement (single-step, multi-step, hybrid) and explain why you describe it that way. Why do some companies use the multi-step format? What information does such a format highlight for investors?
2. Evaluate the trend in revenue over the past five years for Weyerhaeuser. You'll need to refer to the company's financials from older 10-Ks to gather the historical data you need. Calculate the percentage change in revenue each year. Discuss what you believe is driving the change in sales considering what you can learn about the company, the industry, and overall economic conditions.
3. Evaluate the trend in net income over the past five years. Calculate the percentage change in net income and perform vertical analysis (calculating each expense item as a percentage of revenue) on key items of the income statement to help with your analysis. Discuss the key drivers of the change in net income.
4. Compute the gross profit percentage, profit margin, and return on assets for fiscal years 2017 through 2021. Analyze and discuss what these ratios tell you about the company. Consider your analysis from questions 2 and 3 in your discussion of the ratios. Describe the trend in these ratios for Weyerhaeuser. Also describe the inferences you can draw from comparisons with peer and competitor firms.
5. Compute the current ratio and debt to equity ratio for fiscal years 2017 through 2021. Analyze and discuss what these ratios tell you about the company. Describe the trend in these ratios for Weyerhaeuser. Also describe the inferences you can draw from comparisons with peer and competitor firms.
6. Compute Weyerhaeuser's Times-Interest-Earned ratio for 2021. Describe what this ratio tells you about the company.

• Assume that Weyerhaeuser capitalized 300 million of interest in 2021. (Put another way, assume the interest expense number Weyerhaeuser reports already reflects 300 million of capitalized interest. Note that this is an assumption since Weyerhaeuser does not disclose the amount of capitalized interest.) How would the calculation of Times_Interest_Earned be different if Weyerhaeuser did not capitalize any interest in 2021?

7. State whether Weyerhaeuser uses the direct or indirect method of reporting cash flows from operating activities in the statement of cash flows. Explain how you know this. Also, for the following line items describe why it is added or subtracted from net income in arriving at "Net cash from operations."

a. Depreciation, depletion and amortization: $477M is added back. Why?

b. Change in Receivables: $57M is subtracted. Why?

8 Read through the risk factors that Weyerhaeuser discloses in its 2021 annual report. In your opinion, what are the most significant risks faced by Weyerhaeuser and its investors? Why?

9 Summarize briefly the contents of the KPMG audit report that accompanies (precedes) the financial statements. Your summary should include, but not be limited to, [1] a discussion of how you know if the audit report is "unqualified", "unqualified with an explanatory paragraph", "modified", or "adverse", [2] a brief discussion of the Critical Audit Matter KPMG identifies (Why is this item highlighted and how should it impact an investor's reading of the financials?), and [3] the implications of the tenure of KPMG as Weyerhaeuser's auditor (What are the arguments for and against keeping the same auditor for 20 years?).

10 Weyerhaeuser is organized as a Real Estate Investment Trusts (REITs). Do some research into REITs and answer the following questions:

1. Why do you think they made this choice? What are the advantages and disadvantages (to the company and/or its investors)?
2. What must a company do to qualify as an REIT?
3. How does REIT status impact the amount of dividends paid by the company?
4. How does REIT status impact the amount of retained earnings on the balance sheet?

Example Appendix Exhibit A: Coca Cola Income Statement Used for questions ( ) THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In millions except per share data) Year Ended December 31, 2019 2018 2017 Net Operating Revenues 37,266 $ 34,300 $ 36,212 Cost of goods sold 14,619 13,06 13,721 Gross Profit 22,64 21,23 22,491 Selling, general and administrative expenses 12,103 11,00 12,834 Other operating charges 458 1.079 1,902 Operating Income 10,086 9,152 7,755 Interest income 563 689 679 Interest expense 946 950 853 Equity income (loss) - net 1,049 1,008 1,072 Other income (loss) - net 34 (1,674) (1,763) Income Before Income Taxes 10,78 8,225 6,890 Income taxes 1,801 1,749 5,607 Consolidated Net Income 8.985 6,476 1,283 Less: Net income (loss) attributable to noncontrolling interests 65 42 35 Net Income Attributable to Shareowners of The Coca-Cola Company $ 8,920 6,434 $ 1,248 Basic Net Income Per Share $ 2.09 1.51 $ 0.29 Diluted Net Income Per Share $ 2.07 1.50 $ 0.29 Average Shares Outstanding - Basic 4,276 4,259 4,272 Effect of dilutive securities 38 40 52 Average Shares Outstanding - Diluted 4.314 4.299 4,324 Calculated based on net income attributable to shareowners of The Coca-cola Company. Exhibit B: Coca Cola Statement of Comprehensive Income Used for questions ( ) THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) Year Ended December 31, 2019 2018 2017 Consolidated Net Income 8,985 $ 6,476 $ 1,283 Other comprehensive income: Net foreign currency translation adjustments 74 (2,035) 861 Net gains (losses) on derivatives (54) (7) (433) Net change in unrealized gains (losses) on available-for-sale securities 18 (34) 188 Net change in pension and other benefit liabilities (159) 29 322 Total Comprehensive Income 8,864 4,429 2,221 Less: Comprehensive income attributable to noncontrolling interests 110 95 73 Total Comprehensive Income Attributable to Shareowners of The Coca-Cola Company 8,754 $ 4,334 $ 2,148Exhibit C: Coca Cola Balance Sheet Used for questions ( ) THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In millions except par value) December 31, 2019 2018 ASSETS Current Assets Cash and cash equivalents 6,480 $ 9,077 Short-term investments 1,467 2,025 Total Cash, Cash Equivalents and Short-Term Investments 7,947 11,102 Marketable securities 3,228 5,013 Trade accounts receivable, less allowances of $524 and $501, respectively 3,971 3,685 Inventories 3,379 3,071 Prepaid expenses and other assets 1,886 2,059 Total Current Assets 20,411 24,930 Equity method investments 19,025 19,412 Other investments 854 867 Other assets 6,075 4,148 Deferred income tax assets 2,412 2,674 Property, plant and equipment - net 10,838 9,598 Trademarks with indefinite lives 9.266 6.682 Bottlers' franchise rights with indefinite lives 109 51 Goodwill 16,764 14,109 Other intangible assets 627 745 Total Assets $ 86,381 $ 83,216 LIABILITIES AND EQUITY Current Liabilities Accounts payable and accrued expenses $ 11,312 $ 9,533 Loans and notes payable 10,994 13,835 Current maturities of long-term debt 4,253 5,003 Accrued income taxes 414 411 Total Current Liabilities 26,97 28,782 Long-term debt 27,516 25,376 Other liabilities 8,510 7,646 Deferred income tax liabilities 2.284 ,354 The Coca-cola Company Shareowners' Equity Common stock, $0.25 par value; authorized - 11,200 shares; issued - 7,040 shares 1,760 1,760 Capital surplus 17,154 16,520 Reinvested earnings 65,855 63,234 Accumulated other comprehensive income (loss) (13,544) (12,814) Treasury stock, at cost - 2,760 and 2,772 shares, respectively (52,244 (51,719) Equity Attributable to Shareowners of The Coca-Cola Company 18,981 16,981 Equity attributable to noncontrolling interests 2,117 2,077 Total Equity 1,098 19,058 Total Liabilities and Equity 86,381 $ 83,216MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2019 AND 2018 (In Thousands, Except Par Value) December 31, December 31, 2019 2018 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 797,957 S 637,513 Short-term investments 533,063 320,650 Accounts receivable, net 540,330 484,562 Inventories 360,731 277,705 Prepaid expenses and other current assets 54,868 44,909 Prepaid income taxes 29,360 38.831 Total current assets 2,316,309 1,804,170 INVESTMENTS 12,905 PROPERTY AND EQUIPMENT, net 298,640 243,051 DEFERRED INCOME TAXES 84,777 85,687 GOODWILL 1,331,643 1,331,643 OTHER INTANGIBLE ASSETS, net 1,052,105 1,045,878 OTHER ASSETS 53,973 16,462 Total Assets 5,150,352 4,526,891 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 274,045 S 248,760 Accrued liabilities 114,075 1 12,507 Accrued promotional allowances 166,761 145,741 Deferred revenue 44,237 44.045 Accrued compensation 47,262 39,903 Income taxes payable 14,717 10,189 Total current liabilities 661,097 601,145 DEFERRED REVENUE 287,469 312,224 OTHER LIABILITIES 30,505 2,621 COMMITMENTS AND CONTINGENCIES (Note 12) STOCKHOLDERS' EQUITY: Common stock - $0.005 par value; 1,250,000 shares authorized; 636,460 shares issued and 536,698 shares outstanding as of December 31, 2019; 630,970 shares issued and 543,676 shares outstanding as of December 31, 2018 3,182 3,155 Additional paid-in capital 4,397,511 4,238,170 Retained earnings 5,022,480 3,914,645 Accumulated other comprehensive loss (32,387) (32,864) Common stock in treasury, at cost; 99,762 and 87,294 shares as of December 31, 2019 and December 31, 2018, respectively (5,219,505) (4,512,205) Total stockholders' equity 4,171,281 6,610,901 Total Liabilities and Stockholders' Equity 5,150,352 4,526,891