Getting under the hood of an annual report

Getting Under The Hood Annual Report Workbook Coca-Cola

Complete the annual report workbook. The company is Coca-Cola.

Chapter 2 and 3 should be finished before Monday 7.am, and chapter 3-6 is due to December 1st.

Annual Report Workbook

Getting under the hood of an Annual Report

and knowing what’s inside

by Donald Bittar

Introduction

You can use this workbook for analyzing many companies and saving your analysis for each one, like many professionals. Just like them, over time, you can compare a company’s actual performance to your analysis and predictions. Saving your analysis sheets can help sharpen you analytical skills.

The questions in the workbook are numbered the same way as they are in the book, ‘Getting Under the Hood of an Annual Report’. As there are no questions in the first chapter of the book, the workbook starts with Chapter 2. It will make it easier for you to relate the questions in the workbook to those in the book.

Your input to the workbook will appear in a dark green font while the questions appear in blue. The different font colors can make it easier for you to see your work.

You’ll need to do some number crunching to complete your annual report analysis. The Big Calculating Tool, located on your CD, can save you a great deal of time and make the number crunching nearly painless. Every ratio and calculation for the book is included in the Big Calculating Tool. You’ll have more time for analysis if you use the Big Calculating Tool.

Table of Contents

Questions for Chapter 2 4

Question 2.0 – What do you want to learn about company and why? 4

Question 2.1 - Fundamental Information Set For Your Company 4

Question 2.2 - The Marketplace Context 5

Question 2.3 - Challenges and Success for Your Company 6

Questions for Chapter 3 8

Question 3.1 – What is Management saying about your company? 8

Question 3.2 – What did the Chairman say? 9

Question 3.3 – Internal Controls and Auditors 10

Questions for Chapter 4 11

Question 4.0 – What is your company’s fiscal year 11

Question 4.1 – Current Assets 11

Question 4.2 – Property, Plant and Equipment 11

Question 4.3 – How good is the Goodwill 12

Question 4.4 – Current Liabilities 13

Question 4.5 – How much stock is there and who owns it? 13

Question 4.6 – Who owns the stock? 13

Question 4.7 – First look at the company’s strength 14

Question 4.8 – Significant changes in the balance sheet 15

Question 4.9 – Significant changes in the cash account 15

Question 4.10 – Debt to equity and the competition 15

Question 4.11 – ‘Income statement’. What’s in a name? 16

Question 4.12 – How does your company report the core business? 16

Question 4.13 – How does your company describe its business income? 17

Question 4.14 – Irregular items. Good or Bad? 17

Question 4.15 – The big questions. Are they makin’ money? Are they lookin’ good? 18

Question 4.16 – Which trend is important and why? 19

Question 4.17 – How strong is your company’s cash position? 19

Question 4.18 – How well can your company pay its bills? 20

Question 4.19 – How leveraged is your company? 21

Question 4.20 – How well does your company invest in its future? 22

Question 4.21 – Capital and Treasury Stock 22

Question 4.21 –Basic information about your company not found on the financial statement? 23

Question 4.22 –Other significant information about your company not found on the financial statement? 23

Questions for Chapter 5 25

Question 5.1 – Working Capital Balance 25

Question 5.2 – Acid Test or Quick Ratio 25

Question 5.3 – Current Ratio 26

Question 5.4 – Cash Ratio 27

Question 5.5 – Return on Sales Ratio 28

Question 5.6 – Return on Equity Ratio 28

Question 5.7 – Return on Assets Ratio 29

Question 5.8 – Asset Turn Ratio 30

Question 5.9 – Gross Profit Margin Ratio 30

Question 5.10 – Inventory Turnover Ratio 31

Question 5.11 – Days in Inventory Ratio 32

Question 5.12 – Accounts Receivable Turnover Ratio 33

Question 5.13 – Average Collection Period 33

Question 5.14 – Accounts Payable Turnover Ratio 34

Question 5.15 – Net Working Capital Turnover Ratio 35

Question 5.16 – Debt to Equity Ratio 36

Question 5.17 – Debt to Asset Ratio 37

Question 5.18 – Gearing Ratio or Long Term Debt to Shareholders’ Equity Ratio 37

Question 5.19 – Interest Coverage Ratio or Debt Service Ratio 38

Question 5.20 –Earnings per Share 39

Question 5.21 – Price/Earnings Ratio 40

Question 5.22 –Dividend per Share 40

Question 5.23 – Dividend Payout Ratio 41

Questions for Chapter 6 43

Question 6.0 – Calculate the Altman Z-Score 43

Question 6.1 - What did you learn about your company 43

Question 6.2 - Would you buy, sell, hold or stay away 43

Questions for Chapter 2

Question 2.0 – What do you want to learn about company and why?

2.0 - What You Want To Learn About the Company and Why?

Priority

What do you want to learn?

Why do you want to learn it?

A

B

C

D

Question 2.1 - Fundamental Information Set For Your Company

The answer to the following questions may be found in either the Annual Report to Stockholders or on the SEC Form 10-K. It may also be necessary for you to use other sources. To fully answer the questions, you must identify the source for your information and also include the answer. If the question is not applicable to your company, place “NA” as the answer. To identify the source use “AR” for Annual Report to Stockholders and “10K” for the SEC Form 10-K. If something else, use “Other” and include the identification at the end of your answer.

2.1 - Fundamental Information Set For Your Company

Question

Source

Answer

A

What is the official company name?

B

What is Company headquarters address?

C

What is the Executive Office telephone number?

D

What is the Investor Relations telephone number?

E

What is the official company website?

F

What is the fiscal year ending date?

G

State of incorporation

H

What government agency, other than the SEC, has a significant impact on your Company?

I

What is the trading symbol for your Company’s common stock?

J

Which stock exchange lists the common stock for your Company?

K

What is the name of the stock transfer agent for your Company?

L

What is the Par Value for the common shares of your Company?

M

What is the number of common shares outstanding?

N

In the past 3 years what is the highest trading price for the common stock for your company.

O

In the past 3 years what is the lowest trading price for the common stock for your company?

P

How many members are on the Board of Directors?

Q

How many Board Members are present or past employees of the Company?

R

How many are Board Members are from outside your Company?

S

Which companies or institutions do the outside Board Members represent?

T

How many subsidiaries are directly or indirectly controlled by your Company?

U

How many subsidiaries have jurisdictions outside the United States?

Question 2.2 - The Marketplace Context

If analyzing a company’s performance were only about the numbers, predicting the performance of a company would be easy. Performance, success and failure are outcomes that are affected by the marketplace. Your company does not exist inside a vacuum. It lives alongside other companies actively struggling to protect existing customer relationships and working to create new customers. Often companies will compete for the same customers. For some companies the competitors are easily identifiable. Your company’s SIC code can help you identify its competitors. They will have the same SIC code. Other companies compete indirectly with alternative products or technologies making it difficult to identify competitors. Consider FedEx with both direct and indirect competitors.

The answer to the following questions may be found in either the Annual Report to Stockholders or on the SEC Form 10-K. It may also be necessary for you to use other sources. To fully answer the questions, you must identify the source for your information and also include the answer. If the question is not applicable to your company, place “NA” as the answer. To identify the source use “AR” for Annual Report to Stockholders and “10K” for the SEC Form 10-K. If something else, use “Other” and include the identification at the end of your answer.

2.2 - The Marketplace Context

Question

Source

Answer

A

What is the Standard Industrial Classification and the SIC Code for your company? List all that may apply?

B

What is the company’s primary product, product group or business segment?

C

Is there a single customer that accounts for more than 10% of total net sales?

D

What is the major customer profile for your company?

E

Is there a competitor larger than your Company?

F

Which company is the most significant competitor for your Company?

G

What is the country of origin for this competitor?

H

During the past 2 years, has your Company launched a significant new product or service? If yes, what is the product or service?

I

During the past 2 years, has your company entered a new market? If yes, what is the market and where is located?

J

During the past 2 years, has your Company launched a new technology? If yes, what is it?

K

What are the technological issues for your Company? How are they described?

Question 2.3 - Challenges and Success for Your Company

Review the Annual Report for Stockholders and the Form 10-K for your company. Using the above list of Marketplace Issues, identify the marketplace issues affecting your company. Your company is large enough to be newsworthy. Most likely, the issue you identified in the Annual Report for Stockholders or the Form 10-K might be reported elsewhere. With research apart from the Annual Report for Stockholders and the Form 10-K you may be able to find additional information about the issue. There are several print media research sources available in the library:

Wall Street Journal

New York Times

Barron’s

Moody’s Complete Corporate Index

Standard and Poor’s Industry Guide

The Internet makes a vast universe of material available to you. It is fast and convenient. The chances are remote that you will not be able to discover sufficient information to satisfy your needs. Use your favorite search tool and start digging.

Your company is a good place to start. Their website may have relevant press releases about the issue. Some of the officers may have made speeches or written articles about it.

Describe the significant marketplace issues identified in the Annual Report for Stockholders and the Form 10-K for your company. For each issue:

Include the marketplace category.

The description of the issue as it appeared in the Annual Report for Stockholders and the Form 10-K for your company.

Your interpretation of its significance to the company, what the importance is to the company and if management is capable of creating a positive outcome.

2.3 - Challenges and Success for Your Company

Marketplace Issue

Description of the Issue

Significance

A

B

C

D

Questions for Chapter 3

Question 3.1 – What is Management saying about your company?

When reading the Management’s Discussion and Analysis of Operations and Financial Condition (MD&A) asking each of the following questions will help to identify a significant fact that will help you understand your annual report. Pick an item reported in the MD&A which you believe to be significant and ask yourself:

What is it?

When did it occur?

Where did the action take place?

Who was involved?

Why did this happen?

How did it happen

Answer as much of the five Ws and one H as you can from the annual report. Next, use the internet and other printed media sources to get additional information about the item. From the combined sources you should be able gather a reasonably complete assessment of the item.

Identify the source of your outside material.

Use the following template to complete your answers.

3.1.1 - What is Management saying about your company?

Copy the item from the MD&A and paste it below.

We expect significant new competitive opportunities to include long range strike, missile defense, command and control, network communications, enhanced situational awareness, satellite systems, restricted programs, cyber, technical services and information technology, as well as numerous homeland security programs. The company believes it has additional international opportunities (direct and foreign military sales), beyond those realized today, to sell its products and services outside the U.S. market, particularly in the domains of unmanned systems, cyber, C4ISR, logistics and manned military aircraft. The Administration has been addressing and supporting export control reforms that could enhance our ability to take advantage of these opportunities.

3.1.2

Five Ws and One H

Form 10-K MD&A

Outside Source Material

Paste information from the 10K in this column.

Paste information from outside sources in this column. Include the source link.

A

In your own words describe the item?

Long Range Missile Strike.

http://www.northropgrumman.com/AboutUs/AnnualReports/Documents/pdfs/2014_noc_ar.pdf

B

When did it occur?

Award is to be announced by Fall of 2015. NGC seems to have the better probability of having the contract awarded to them after negotiations.

http://www.northropgrumman.com/AboutUs/AnnualReports/Documents/pdfs/2014_noc_ar.pdf

C

Where did the action take place?

http://www.northropgrumman.com/AboutUs/AnnualReports/Documents/pdfs/2014_noc_ar.pdf

D

Who was involved?

Navy, US Government, Northrop Grumman

http://www.northropgrumman.com/AboutUs/AnnualReports/Documents/pdfs/2014_noc_ar.pdf

E

Why did this happen?

To better protect the United States of America, the US Govt devised an idea that NGC can execute

http://www.northropgrumman.com/AboutUs/AnnualReports/Documents/pdfs/2014_noc_ar.pdf

F

How did it happen?

There was an open bid on the table for all aerospace companies to bid on.

http://www.northropgrumman.com/AboutUs/AnnualReports/Documents/pdfs/2014_noc_ar.pdf

G

In your opinion, what do you believe is the importance of this item to your company? How will it impact the company?

The long range missile strike contract (if won) will benefit NGC by allowing different opportunities to the aerospace industry to apply a positive impact on the Depart of Defense.

Question 3.2 – What did the Chairman say?

Read the Chairman’s Message in the Annual Report to Stockholders for your company. You might also find the Chairman’s message in the company’s annual proxy statement. Identify the issues and events outlined in the Message. Highlighting the text of the issues and events can help assess their significance and prioritize them.

3.2.1 - What did the Chairman say?

A

In your opinion, what is the most significant issue in the Message?

That NGC can have a hand in complete domination as a world power.

B

Quote the Chairman’s description of the issue?

The Committee shall consist of three or more directors. Each Committee member shall be “independent” under the requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, applicable to audit committees, the requirements of the New York Stock Exchange (“NYSE”) and the Company’s Principles of Corporate Governance, in each case as in effect from time to time

C

What is the significance of the issue for the company?

A continuous funded contract from the untied states.

D

Did the Message include a solution for the issue? If yes, what was it?

no

E

Did the solution instill confidence in you?

no

F

If yes, why? If no, why?

No one company should hold the power of destruction based on any funding from any government.

The Chairman’s Message is read by a wide and diverse constituency. Select a group of constituents excluding stockholders, investors and financial analyst. Write your opinion of how you believe they will react to the Chairman’s message. Select one from the following constituents.

Creditors

Regulatory agencies

Competitors

Employees

Local and state governments

Suppliers

Salespeople

Foreign governments

Vendors

Franchisees

Environmental activists

Distributors

Unions

Consumer advocates

Customers

Human rights advocates

Press and media

Regulatory agencies

3.2.2 – What did the Chairman say?

A

Constituent’s name

Chairman of the Senate Armed Services Committee (SASC) raised concerns about the survivability and weapons payload capability of the current UCLASS requirements and pressed for a strike aircraft capable of operating in a medium to high-threat environment with broadband stealth, 4,000 pounds of internal weapons payload, and in-air refueling capability. In effect, Senator McCain is calling for an unmanned F-35C Joint Strike Fighter.

B

With respect to the company, is the constituency supportive, neutral or adversarial?

The support is extremely supportive.

C

What issue in the Chairman’s message will cause the greatest reaction?

The actual threat of full utilization of the long range missile strike if supported by the Chairman would cause the greatest reaction.

D

How do you believe the constituency will react to the issue?

There is no real one threat to the USA so therefore there would be no constituency that would be in a situation of reacting.

E

Why do you believe they will react that way?

Because it is modern warfare. We recruit eligible candidates to sit behind a joystick and do our dirty work.

F

Will their reaction create a positive or negative impact on the Company? What will be the impact and why?

I believe that it will create a positive and negative outlook on NGC, we have the capability to remotely demolish anything we want but we can also use this as a pawn in a big game of chess amongst the most powerful leaders of the world to gain whatever we want as a nation.

Question 3.3 – Internal Controls and Auditors

Information about the company’s compliance with SOX can be found in SEC Form 10-K. The section called Controls and Procedures includes information about how the company is complying with the SOX reporting requirements. Generally preceding the section on Controls and Procedures is the Report of Independent Registered Public Accounting Firm. It will also contain information about internal controls and auditors. Review these sections of your company’s SEC Form 10-K and answer the following questions.

3.3 – Internal Controls and Auditors

A

Who in your company is responsible for the internal disclosure controls and procedures?

The power of the internal controls and procedures is voted amongst a board of directors who outweigh the positives and negatives of the best and worst outcome of the situation.

B

Who are members of the Audit Committee?

Mostly those who are retired and have held positions o fa director or executive position.

C

What is the name of the independent auditor for your company?

AUDIT COMMITTEE CHARTER

D

What was the auditor’s opinion of the consolidated financial statement?

. Prior to filing with the SEC meet, review and discuss with management, the internal auditors and the independent auditor the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, including:

(a) annual audited financial statements and quarterly financial statements, including an analysis of the independent auditor’s judgment as to the quality of the Company’s critical accounting policies, applied in conjunction with the preparation of the financial statements;

(b) the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” including accounting policies that may be regarded as critical;

(c ) material issues regarding the Company’s critical accounting policies and financial statement presentations, including any significant change in the Company’s selection or application of accounting principles and financial statement presentations; and

(d) management’s assessment of, and report on, the effectiveness of the Company’s internal control over financial reporting at least annually and the independent auditor’s related report;

13. Determine whether the audited financial statements should be included in the Company’s Annual Report on Form 10-K;

14. Review and discuss with management and the independent auditor the Company’s earnings press releases and included financial information, as well as financial information and earnings guidance provided to analysts and rating agencies.

15. Review the disclosures by the Company’s Chief Executive Officer and Chief Financial Officer regarding the certifications required in each Annual or Quarterly Report filed with the SEC in accordance with the rules regarding such certifications as adopted by the SEC as well as any significant findings of the Disclosure Committee;

16. Review the analysis prepared by management setting forth the Company’s critical accounting policies, significant financial reporting estimates and judgments made in connection with the preparation of the financial statements, including an analysis of the effects of material alternative accounting treatments of financial information within generally accepted accounting principles on the financial statements. Review major issues regarding accounting policies and financial statement presentations, including any significant changes in the Company’s selection or application of accounting principles, and material issues as to the adequacy of the Company’s internal control over financial reporting and any special audit procedures adopted in light of material control deficiencies. Review the effect of regulatory and accounting initiatives, as well as off balance sheet structures, on the financial statements of the Company;

17. Discuss with the Chief Executive Officer and the Chief Financial Officer of the Company, as well as the internal auditors and independent auditor (i) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which could adversely affect the Company’s ability to record, process, summarize, and report financial data; and (ii) any significant changes in internal control over financial reporting or in other factors that could significantly affect internal control over financial reporting;

18. Discuss with the Chief Executive Officer, Chief Financial Officer and the General Counsel any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting;

Other Duties and Authorities

19. Determine the appropriate funding for payment by the Company of

(i) compensation to any registered public accounting firm (including the independent auditor) engaged by the Company for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company; (ii) compensation to any advisers employed by the Committee; and (iii) ordinary administrative expenses of the Committee that are necessary or appropriate in the carrying out its duties and responsibilities under this Charter;

20. Establish, periodically review and discuss with management procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters and for the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters;

21. Review with the General Counsel, at least annually, the status of significant pending claims, litigation and other significant legal, compliance or regulatory matters;

22. Periodically review and discuss with management its implementation of compliance policies, practices and programs of the Company, including, but not limited to those relating to consent decrees, import/export, International Traffic in Arms Regulations, the Foreign Corrupt Practices Act, environmental health and safety, and consultants and commissioned sales representatives;

23. Review with the Chief Compliance Officer, at least annually, the Company’s compliance program;

24. Review the employee benefit plan trust investment policies and performance (including financial statements), review and approve the retention of the independent auditor for benefit plan audits, review benefit plan financial statements filed with the SEC, and oversee the investment of assets set aside or otherwise associated with, but not held by, employee benefit plans, in each case on behalf of the Company as plan sponsor and the employer responsible for funding such plans. . The Committee may delegate to one or more of its members the responsibilities set forth in this paragraph.

25. Discuss guidelines and policies with respect to risk assessment and risk management, including financial risk exposures at the Company and sector level, and insurance risk management.

26. Periodically review and oversee the Company’s entry into and ongoing use of derivative instruments, including swaps and security-based swaps, and the Company’s use of the “non-financial end-user exception” from the mandatory clearing and exchange-trading requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act and rules and regulations thereunder;

27. Annually review the Company’s Swap Guidelines (set forth in the resolutions approved by the Board of Directors on December 21, 2011 relating to Financial Investments) and, to the extent the Audit Committee deems necessary or appropriate in the interest of the Company, modify or amend the Swap Guidelines and the authorizations and delegations of the Company to the Finance Authorized Officers as set forth in the “Swap End User Exception” resolutions approved by the Board of Directors on August 21, 2013;

Reports

28. Prepare an audit committee report as required by the rules and regulations of the SEC to be included in the Company’s annual proxy statement;

Other

29. Review this Charter, at least annually, and recommend any changes to the Charter that the Committee deems appropriate to the Board for approval;

30. Conduct an annual evaluation of the Committee’s own performance and report the results of such evaluation to the Board; and

31. Undertake such additional duties and responsibilities as the Board may from time to time prescribe.

Limitation of Audit Committee’s Role

While the Committee has the responsibilities and powers set forth in this charter, it is not the responsibility of the Committee to plan or conduct audits or other types of accounting reviews or procedures or to determine that the Company’s financial statements are complete and accurate and are in accordance with accounting principles generally accepted in the United States. These are the responsibilities of management and the independent auditor, and each member of the Committee shall be entitled to rely on (i) the judgment of those persons and organizations within and outside the Company that it receives information from and (ii) the accuracy of the financial and other information provided to the Committee by such persons or organizations.

E

What was the auditor’s opinion of the internal disclosure controls and procedures?

Questions for Chapter 4

Question 4.0 – What is your company’s fiscal year

4.0 – What is your company’s fiscal year?

A

When does your company’s fiscal year end?

B

In your opinion, why did your company select this date to end its fiscal year?

C

Do competitors use the same fiscal year as your company?

Question 4.1 – Current Assets

Some companies have current assets other than Cash, Short Term Investments, Accounts Receivables and Inventories. Locate the Current Asset section of the Balance Sheet for your company and review the current asset categories.

What categories of current assets, other than Cash, Short Term Investments, Accounts Receivables and Inventories are reported by your company? What is their significance to the company? Mark your answer “NA” if your company does not report current asset categories other than Cash, Short Term Investments, Accounts Receivables and Inventories.

4.1 – Current Assets

Current Asset Category

Significance

A

B

C

D

Question 4.2 – Property, Plant and Equipment

Some companies have categories for Property, Plant and Equipment other than land, buildings, factories, furniture and equipment. What categories of Property Plant and Equipment other than land, buildings, factories, furniture and equipment are reported by your company? What is it their significance to the company? Mark your answer “NA” if your company does not report categories of Property Plant and Equipment other than land, buildings, factories, furniture and equipment.

4.2 – Property, Plant and Equipment?

Property Plant and Equipment Category

Significance

A

B

C

D

Question 4.3 – How good is the Goodwill

Goodwill is a balance sheet item reported by many companies. The details of the Goodwill are generally described in the Notes to the Financial Statement. Goodwill should reflect the strategic future value of an acquisition. Mark your answer “NA” if your company does not report Goodwill.

4.3 – How good is the Goodwill?

A

Does your company report Goodwill?

B

What is the value of the Goodwill?

C

What is the ratio of Goodwill to Total Assets (Goodwill Total Assets)?

D

In your opinion why is the ratio of Goodwill to Total Assets significant or insignificant?

E

What was the source of the Goodwill?

F

In your opinion why was the acquisition justified or not justified?

Question 4.4 – Current Liabilities

Some companies have current liabilities other than Accounts Payable, Accrued Salaries and Wages and Accrued Income Tax. Locate the Current Liabilities section of the Balance Sheet for your company and review the current liability categories.

What categories of current liabilities other than Accounts Payable, Accrued Salaries and Wages and Accrued Income Tax are reported by your company? What is it their significance to the company? Mark your answer “NA” if your company does not report current liability categories other than Accounts Payable, Accrued Salaries and Wages and Accrued Income Tax.

4.4 – Current Liabilities

Current Liability Category

Significance

A

B

C

D

Question 4.5 – How much stock is there and who owns it?

The equity structure is a significant aspect of a public company. It can have a dramatic impact on stock price movement and appreciation. Review the SEC Form 10-K and Annual Report to Stockholders and answer the following questions.

4.5 – How much stock is there and who owns it?

A

What is the par value of the common stock?

B

What is the number of shares outstanding?

C

What is the current listed market price for the common stock?

D

What is the number of common shares authorized?

E

What is the number of treasury shares?

Question 4.6 – Who owns the stock?

Knowing who owns large blocks of stock can be useful information when assessing the investment value of a company. The percent ownership of a company will determine the amount of control a shareholder has over the company. In a democratic election, each citizen has only one vote. In a corporate election, each shareholder gets one vote for each share of stock the shareholder owns. A shareholder with 1million share gets 1million votes while a shareholder with 10 shares gets only 10 votes. In a company with 3million shares outstanding, the shareholder with 1million shares has much more influence and power than the shareholder with 10 shares.

Proxy Statement

The company’s annual proxy statement will disclose the number of shares owned by the each member of the Board of Directors. It will also identify all shareholders who own 5% or more of the common stock and voting stock of the company. The annual proxy statement must be filed with the Securities Exchange Commission using Form DEF 14a, the definitive annual proxy statement.

4.6 – Who owns the stock?

A

How many shares are held by Officers and Directors? What does this tell you?

B

Who is the largest stockholder? What does this tell you about the company?

C

What other classes of stock are outstanding?

Question 4.7 – First look at the company’s strength