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Financial Statement Analysis for Intel

Get a copy of the 2010 Intel Annual Report from http://www.intc.com/annualsArchive.cfm . Using the annual report, answer the following questions:

a. Describe the type of business in which Intel operates.
b. Read the letters from the CEO and the chairman and discuss any information learned from this letter that might be useful to an analyst.
c. What type of audit opinion was given for the financial statements and the interĀ­nal financial controls of Intel? Explain the key items discussed in the audit report.
d. Read the Management Discussion and Analysis (MD&A). Discuss whether the items that should be addressed in the MD&A are included. Support your answer with examples from the Intel MD&A.
e. After reading the MD&A, discuss the future prospects of Intel. Do you have any concerns? If so, describe those concerns.

Case 2.1

(a) Prepare a common-size balance sheet for Intel for all years presented.
(b) Describe the types of assets Intel owns. Which assets are the most significant to the company? Using the notes to the financial statements, discuss the accounting methods used to value assets. What other information can be learned about the asset accounts from the notes? Have there been significant changes to the asset structure from 2009 to 2010?
(c) Analyze the accounts receivable and allowance accounts.
(d) Describe the types of liabilities Intel has incurred. Which liabilities are the most significant to the company? Have there been significant changes to the liability and equity structure from 2009 to 2010?
(e) Describe the commitments and contingencies of Intel.
(t) Under which classification(s) are deferred taxes listed? What item is the most
significant component of deferred taxes?
(g) What equity accounts are included on the balance sheet of Intel?

Solution Preview

a. Describe the type of business in which Intel operates.

Intel sells devices (processors) for PCs and internet servers. They design and manufacture these devices but hope to expand and cover complete hardware and software products and not just the devices to support gear for others.

b. Read the letters from the CEO and the chairman and discuss any information learned from this letter that might be useful to an analyst.

The president's assertion that Intel will enter new markets seems important as it signals a new direction to increase customers but also increase competition. Traffic crossing the internet in 2010 was greater than in ALL PRIOR YEARS combined. That is pretty startling and the rate of growth is interesting to investors and analysts. Intel is the largest purchaser of green power in the U.S. An analyst may or may not notice that this likely signals that Intel is a huge power consumer and so if an analyst thinks that power costs will rise, it will impact Intel.

c. What type of audit opinion was given for the financial statements and the internal financial controls of Intel? Explain the key items discussed in the audit report.

The audit opinion was "clean" meaning no exceptions. That is, the financial reports are ...

Solution Summary

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