FINANCIAL STATEMENT ANALYSIS PROJECTSummer 2023
Objective
The purpose of this assignment is to synthesize the analytical tools covered in class in order to evaluate
the current financial statements of a publicly-traded company. The Form 10-K is the annual report that
companies trading in the U.S. are required to submit to the SEC. In addition to reinforcing accounting
concepts, this assignment is designed to enhance your understanding of the types of information
available in a company’s Form 10-K. Such information will be useful in future MBA classes (i.e.,
finance, strategy) and potentially valuable throughout your career. I also recommend that you skim the
Form 10-K before interviewing for a job with any public company.
Note: This assignment should be completed as a group assignment. It must represent 100% your
group’s work. You should not give or receive any assistance on this assignment from anyone outside
of your group. All questions concerning this assignment should be addressed to your professor.
Due Date
This assignment is due by 3:00 AM PDT on Monday, August 21st (effectively midnight Sunday
August 20th).
Instructions
As you will see, the Form 10-K contains a lot of information. Don’t get overwhelmed. Focus on the
questions listed in the assignment.1 The structure of the questions works from company and industry
analysis, then financial statement analysis, and finally your conclusions from the analysis. You do not
need to read every word of the Form 10-K to successfully complete this project.
You may use other sources of information to support your answers. I have provided more information
on obtaining external information on Blackboard.
1. Ensure that you have following two files located under the Project tab:
• Salesforce, Inc. Form 10-K
• Instruction and Answer sheet
2. Answer the questions on the answer sheet. A blank copy of the answer sheet is attached to these
instructions. You must keep your answers to within the spaced provided. Do not simply cut and
paste entire paragraphs from the 10-K. You may add exhibits (i.e., computations, tables, figures) to
the back of the answer sheet and refer to these exhibits if you find them useful to support your
answers.
3. Upload your completed answer sheet as a Word document to Blackboard.
1
First, Item 1A Risk Factors is boilerplate language written by lawyers listing every possible negative event that could
happen. Second, there are topics that often take up many pages in the footnotes that are beyond the scope of this class
including: (i) comprehensive income, (ii) financial instruments, (iii) income taxes/deferred taxes, (iv) stock
compensation (v) derivatives, (vi) pensions and other benefit plans (vii) fair value measures. Do not spend any time on
these items.
Questions
NAME:
Keep your answers to within the space provided. One-word answers, bullet points and numbers
are sufficient for question 1-8.
Company and Industry Background
1. What does Salesforce do? What are the “Service Offerings” that Salesforce provides?
2. What world and economic event(s) have occurred and how do they impact Salesforce’s
products and services?
3. Name two companies that are competitors of Salesforce?
4. Name two competitive factors that Salesforce lists as important and how does those
competitive factors influence Salesforce approach within each of their service offerings?
Salesforce Financial Performance
5. What is the percentage change in total net sales from 2022 to 2023? What does Salesforce
attribute most of this change to? Which service offering most accounts for the change?
6. How and when does Salesforce recognize revenue? In particular, how does Salesforce
approach contracts with multiple performance obligations?
7. What is Salesforce’s largest expense in 2023 and how much was it? How did that expense
change from 2022 to 2023?
8. What is the single largest type of asset on the balance sheet? What does this asset represent
and how does it relate with Salesforce’s service offerings?
9. What is the book value of equity for 2023? What is Salesforce’s retained earnings for 2023?
What is Salesforce’s net equity change between 2022 and 2023?
Financial Statement Analysis
10. Discuss Salesforce’s 2023 profitability. Use any ratios and other financial information you
deem appropriate. A good answer will not simply report values but will also evaluate
Salesforce’s performance using benchmarks (over time and across firms) and explain drivers
of that performance.
11. Assess Salesforce’s 2023 cash flow statement, focusing on the most salient components. Also
evaluate the company’s liquidity and ability to manage cash efficiently. What risk’s does the
cash flow statement highlight? How does Salesforce’s management describe their position to
those risks?
12. Discuss Salesforce’s leverage and comment on factors that influence Salesforce’s credit
analysis. Use any ratios or other information you deem appropriate.
Your Conclusions
13. Based the analysis presented in your responses to the prior questions, would you invest in
Salesforce’s equity? What price target would you set for Salesforce’s stock (ie, return
expectation) and why?
14. Based in the analysis presented in your responses would you invest in Salesforce’s 2 debt?
Why or why not?
You don’t need to fill the entire page just because there is
blank space here.
2 Investing in debt means buying an existing corporate debt or corporate loan and receive interest and
principal payments.
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