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Financial Accounting Hormel Foods 2019 2020 Annual Report Case Study

Instructions

Please download Hormel Foods 2019 & 2020 Annual Report and respond to the following questions:

What accounts for the difference between gross sales and net sales for the company? Please

explain what these differences mean.

Please calculate the company’s a) receivables turnover, and b) average collection period for the current (2020) fiscal year and the previous two (2) fiscal year ends. Has it improved or worsened over that time period?

Select the two best major competitors of Hormel Foods, explain why you chose these two companies, and calculate their a) receivables turnover, and b) average collection period for the current (2020) fiscal year and the previous two (2) fiscal years. How does Hormel compare in these categories to the 2 competitors that you selected? Please explain.

Does the company use sales or accounts receivable to estimate their allowance for doubtful accounts? Please explain.

Please calculate the company’s a) inventory turnover, and b) days inventory on hand for the current (2020) fiscal year and the previous two (2) fiscal year ends. Has it improved or worsened over that time period?

Using the two major competitors that you selected in #5 above, calculate their a) inventory turnover, and b) days inventory on hand for the current (2020) fiscal year and the previous two (2) fiscal years. How does Hormel compare in these categories to the 2 competitors that you selected? Please explain.

What method(s) of depreciation is used to depreciate Property, Plant & Equipment? Identify the categories of Property, Plant & Equipment and state their estimated useful lives.

Please calculate Hormel’s return on assets for the 2020 fiscal year and the previous two (2) fiscal years. Has it improved or worsened over that time period?

Using the two major competitors that you selected in #5 above, calculate their return on assets for the 2020 fiscal year and the previous two (2) fiscal years. How does Hormel compare in this category to the 2 competitors that you selected? Please explain.

Please examine Hormel’s long-term liabilities. What makes up the largest item in this category?

Please calculate Hormel’s times interest earned for fiscal year 2020 and the previous two (2) years. Has it improved or worsened over that time period?

Using the two major competitors that you selected in #5 above, calculate their times interest earned for the current (2020) fiscal year and the previous two (2) fiscal years. How does Hormel compare in these categories to the 2 competitors that you selected? Please explain.

How many shares of Common Stock are authorized and issued as of the end of the 2020 fiscal year?

What are the major categories of risk that were identified by the Company in the annual report?

What was the current price per share of the Company’s common stock as of the end of the 2020 fiscal year?

What was the cash flow provided by operations for the fiscal year 2020? What does this mean and how does it compare to the previous 2 years? In your estimation, was 2020 a “good year” or “bad year” from an operational cash flow standpoint? Please explain.

How much cash flow was provided by investing activities for fiscal year 2020? What was the largest positive cash flow in this category? What was the largest negative cash flow in this category?

How much cash flow was provided by financing activities for fiscal year 2020? What was the largest positive cash flow in this category? What was the largest negative cash flow in this category? Please explain what the Company was trying to accomplish in this category.

This is your opportunity to present a comprehensive analysis of your financial examination of Hormel Foods. Please explain in detail if you feel the Company had a “good” or “bad” year from a financial perspective in fiscal year 2020. Also, please explain in detail what you feel the prospects are for the future of this Company? To support your argument, please research and present current events that have occurred since the end of the 2020 fiscal year, and their impact on the Company’s financial performance.