How and possible reasons why the measure has changed over time for the same firm

Research Project

Accounting 526 – Accounting for Managers

Fall 2018

FTI Consulting Inc. SIC 8742 – CIK 0000887936

Purpose:

You will utilize the knowledge you gained in the financial accounting portion of the

course to analyze FTI Consulting Inc. Three sources of information are required.

Information from a variety of other sources are needed to complete the analysis.

Required Information Sources:

  1. Use the SEC’s EDGAR database at http://www.sec.gov/edgar.shtml to get four years

of financial data for the company. Do NOT use any other source. The link above will

take you to the database where there is a tutorial on how to use it. Search for the

company and then select the interactive form 10-K for 2017 (file date 2-22-18) and the

2015 10-k (file date 3-29-2016).

  1. A list of competitors, industry information, and company news is available on Mergent

Online electronic database at TAMUT. Search for FTI Consulting Inc. and click on the

competitors tab for United States Companies. Use sales revenue to find where FTI

Consulting ranks in the industry. Do not use any other industry ranking.

  1. Get industry data from the Key Business Ratios database in TAMUT’s library

electronic resources. Select SIC code 3533. Use the ‘median’ ratio for the industry ratio

in your report. The Enterprise Standard Industrial Classification (SIC) is a method of

defining industries. Firms are classified into two, three, and four digit industries. The

two-digit classification is the broadest definition of an industry. The four-digit code is

more specific.

The ‘current ratio’ from this report is shown below. Use the ‘median’ ratio for the

industry ratio in your report. If the current ratios you pull up do not match those below,

check the SIC code on the report and the group by classification.

Industry Quartiles

2014 2015 2016 2017

Solvency Upper Median Lower Upper Median Lower Upper Median Lower Upper Median Lower

Current

Ratio 2.1

2.0

1.9

2.0

Calculate the ratios for your paper as given in the assignment. These calculations are the

ones used by D&B Key Business Ratios and you want the calculations to be the same.

Normally you would use average inventory, accounts receivable etc., but that would not

be consistent with the industry ratios you are comparing the company with. For

information on the ratios, click on the ‘help guide’ on the upper right of the Key Business

Ratios webpage. Next, select download the ‘ratio guide’.

http://www.sec.gov/edgar.shtml

Format for Reports:

Your project should be 10 – 12 pages using a word-processor, double-spacing, Times

New Roman 12-point font, and 1-inch margins. Submit the paper using Microsoft Word

via the assignment tab in Blackboard. Make sure your file is attached.

Title Page – Include the title of the paper, your name, Texas A&M University-Texarkana,

and the date. Center this information in the upper-middle of the page. In the lower-middle

of the page include submitted to Dr. Joan Brumm and the course name and number.

Introduction – Include a one paragraph introduction to the paper.

Part 1 – Company Profile and Analyses of the Industry – The first section (no more

than 4 pages) must contain ALL of the following subsections:

– Description of the company – Brief company history – Description of the industry (major players, industry outlook, etc.) – Business segment information (one page) Segment reporting is the reporting of the

operating segments of a company in the disclosures accompanying its financial

statements. Segment reporting is required for publicly-held entities. Segment

reporting is intended to give information to investors and creditors regarding the

financial results and position of the most important operating units of a company. In

your paper you need to identify which segments your company is reporting on and

give some information on them. This can include financial data for the segments.

The company’s annual 10-k and website has a lot of information. In addition, information

on the company and the industry can be obtained from Mergent Online. This database is

available through TAMUT library electronic resources. Enter the company name in the

search box and click ‘go’. Click on the blue tabs near the top of the page to get

information on executives, company financials, competitors, and industry reports.

Directly under the blue tabs there are tabs that cover subsidiaries, business segments etc.

Part 2 – Analysis of Historical Financial Data

Perform time-series and cross-sectional analyses of your firm for each of the measures

listed below. Time-series analysis compares the same measure for the same company or

industry over a period of time (4 years minimum for this project). Cross-sectional

analysis refers to a comparison of a company with the industry using the same measure.

Present the ratios for your paper in the following format:

Ratio – e.g. Current ratio 2014 2015 2016 2017

Company – put your company name here

Calculate from

Edgar

Financials

Industry From Key Business Ratios

N/A

Percentage Presentation

If you use the % sign is the title of the ratio like the example below, then express 98% as

98 in the table. This is the way the ratios are show in the Key Business Ratios database.

You will also have to show your company’s ratios this way for it to be comparable.

Total Liabilities/Net Worth %

Company

Industry 98.00 109.50 110.10

If you do not use the percent sign in the table, then express the percentages as .98 or

98%. Be sure to change the industry key business ratios to match.

Total Liabilities/Net Worth

Company

Industry 98% 109.50% 110.10%

Directly below each ratio discuss:

1) what the ratio measures,

2) how and possible reasons why the measure has changed over time for the same firm,

3) how the firm’s measure compares with the industry and

4) what these results indicate about the company.

Do not list all of the ratios and then begin the discussion.

– Curent ratio (total curent assets / total curent liabilities) – Total Liabilities/Net Worth % (total liabilities / total equity) – Collection Period (Accounts Receivable-net x 365) / Sales Revenue – Accounts Payable/Sales % – Return on Sales % (net profit for year / sales-revenues) – Return on Assets% (net profit for year / total assets)

FTI Consulting’s Statement of Comprehensive Income is somewhat unique. For

Income Statement items scroll right on the 10-k to the 12 month ended columns. The

columns are the 10-k for 3-months ended are not usually shown.

Conclusion – The conclusion should be a brief one paragraph summary of your findings.

References – Four sources other than Key Business Ratios, the SEC, and Mergent online

are required. Do not cite a textbook.

Sources of information used in the report should be identified with an in-text citation

(indicate author and date) and a complete Reference List. Use the APA format. See the

APA videos posted under the assignment tab in Blackboard. Instructions and examples

are also available at https://owl.english.purdue.edu/ or the TAMUT library by going to

libguides (blue tab at the right of the library page), scroll down to developmental writing,

select APA.

https://owl.english.purdue.edu/

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