Management Takeaway: Language

A 10-K is a financial report that US public companies must file with the Securities and Exchange Commission (SEC) annually.  Looking at a company’s 10-K helps you understand that all companies use similar language but often times different words can be used that have the same meaning.  Throughout Chapter 1, you have learned the basic language of business and are able to evaluate a financial statement and discuss basic concepts in a board room setting.

On the www.sec.gov website, find the search box and enter “Lamb Weston Holdings, Inc”.  Under Selected Filings, click on the 10-K: Annual report.

1. Using Lamb Weston’s most recent 10-K, answer the following questions:
   1. In what city and state is the headquarters of Lamb West located?
   2. What is their business model?
   3. Who is Lamb Weston’s largest customer?
2. Using Lamb Weston’s Statement of Earnings (aka Income Statement) found in the 10-K, answer the following questions:
   1. Looking at the past two years, pick two different accounts to compare. Based on the two accounts you picked and the language knowledge you have thus far, explain what the changes in these two accounts represent.
   2. Compare Net Sales and Net Income for the past two years, what surprises you when comparing these two numbers?
3. Using Lamb Weston’s Statement of Cash Flows found in the 10-K, answer the following questions:
   1. Looking at the past year, what activity category (operating, investing, or financing activities) is the company earning the most cash.
   2. Looking at the past year, what activity category (operating, investing, or financing activities) is the company spending the most cash.
   3. During the current year did the company’s cash and cash equivalent increase or decrease?
4. Compare Lamb Weston’s Net Income to their Cash and Cash equivalent, what surprises you?