Acct 611, Financial Report Project, Winter 2017 Page 1 of 7 Eagle Bulk Shipping, Inc. and DryShips, Inc. are competitors in the global bulk shipping industry. Here are descriptions of their businesses, from their websites. Eagle Bulk Shipping,

Acct 611, Financial Report Project, Winter 2017
 
Page 1 of 7
 
Eagle Bulk Shipping, Inc. and DryShips, Inc. are competitors in the global bulk shipping
industry.  Here are descriptions of their businesses, from their websites.
 
Eagle Bulk Shipping, Inc.
Eagle Bulk Shipping Inc. (NASDAQ: EGLE) is a US-based owner and operator of dry
bulk vessels, providing its customers with reliable and responsible global
transportation services for the carriage of bulk commodities including: coal, grain,
iron ore, steel, cement, and forest products, among others.
Our owned fleet currently totals 40 vessels, all of which are focused on the mid-
size asset class, referred to as Supramax. These vessels are between 50,000 and
59,000 deadweight tons and are ‘geared’, meaning they are equipped with
onboard cranes allowing for the self-loading and unloading of cargoes. This
feature distinguishes them from the larger classes of bulk carriers and provides
greatly enhanced flexibility and versatility – both with respect to cargo diversity
and port accessibility. Eagle operates 39 Supramax, 1 Handymax (48,000
deadweight) and 1 Handysize logs-fitted bulk carrier (37,000 deadweight), both
of which are also geared.
 
DryShips, Inc.
DryShips Inc. is an owner of drybulk carriers and offshore support vessels that
operate worldwide. DryShips owns a fleet of 13 Panamax drybulk carriers with a
combined deadweight tonnage of approximately 1.0 million tons, and 6 offshore
supply vessels, comprising 2 platform supply and 4 oil spill recovery vessels.
 
 
Eagle Bulk Shipping experienced financial hardship, leading to it filing for chapter 11
bankruptcy protection on September 4, 2014.    
 
This project must be submitted no later than Sunday, February 26, 11:30pm, electronically
through the Canvas assignments function.  
 
 
This project will consist of preparing two reports.  
 
Report 1: a comparative financial analysis of Eagle Bulk Shipping and DryShips, for the years
2008 – 2011.    What you will do is use analytical techniques to evaluate the relative financial
health of both of these organizations.  Will your analysis show that Eagle Bulk Shipping was in
greater financial trouble?  We’ll see.  
  DryShips’s balance sheets and income statements are on pages F-6 and F-7 of their 2011
20-F and pages F-7 and F-8 of their 2009 20-F.   Eagle Bulk Shipping’s income statements and
balance sheets are on pages F-4 and F-5 of their 2011 10-k and pages F-4 and F-5 of their 2009
10-k.   For your information, the form 20-F is required from foreign companies, both non-U.S.
and non-Canadian companies, whose securities are traded in the United States. The goal of Form
20-F is to standardize the reporting requirements of foreign-based companies so investors can
evaluate these investments alongside domestic equities. Form 10-k is required to be filed for U.S.
based companies with publicly traded stock. Acct 611, Financial Report Project, Winter 2017
 
Page 2 of 7
 
The benefit of this analysis is to expose you to analytical techniques that will be useful in
assessing the financial health of businesses.  Industry averages are available to compare analyses
with, but for this project all you need do is compare Eagle Bulk Shipping with DryShips.  You
will be given instructions by chapter on the analyses to be performed.  Your finished product is
to be prepared in Microsoft word, logical, and easy to follow.  Be careful not to have analyses
split inappropriately by page breaks.    Your final report should have all detailed analyses you are
instructed to do, with an assessment made after each comparative analysis.  Also, an executive
summary is to be prepared and shown at the beginning of your paper, giving your final judgment
of the relative financial health of Eagle Bulk Shipping and DryShips, giving reasons for your
conclusion regarding the relative strengths of each organization.  Your analyses are to be to the
point and brief, easy to follow and understand.  
Report 2: a report on various disclosures in the 2011 Eagle Bulk Shipping 10-k.  Please
only refer to the 2011 10-k when answering questions for this part of the assignment.  You will
be examining the financial statements (balance sheet, income statement) and the footnotes
following those financial statements.  You need not refer to any other material in the 10-k.  Your
answers are to be typed, immediately below the question asked.  They should be easy to
understand and follow. They should not consist of numbers, alone.  For example, if asked “What
was the total current assets for Eagle Bulk Shipping?” your answer should not simply be $55,890
thousand, instead your answer should be “Current assets for Eagle Bulk Shipping for 2011was
$55,890 thousand, as reported on page F-4.”  Include the page number from which the
information was obtained.  
 
Begin your paper with an executive summary of conclusions derived from Report 1.  This
executive summary is to be no longer than 1 page.  
 
Both reports are to be prepared in one word document, and submitted in electronic
format, through the Canvas Assignments function.  This is not a group project.  Thanks.  
 
   Acct 611, Financial Report Project, Winter 2017
 
Page 3 of 7
 
Chapter 1
 
 
 
 
Report 1, Financial Analysis Questions 
For both businesses, for the years 2008 – 2011, perform a trend analysis on Revenues, Operating
Expenses, and Operating Income (Revenues minus Operating Expenses).   The trend analysis
shows the percentage change from year to year of the items.  The formula I use for yearly change
is (y2 – y1)/y1.  Compare Eagle Bulk Shipping and DryShips performances based on this
analysis.  
 
Report 2, Financial Report Questions (For this report, you will need the financial statements
and footnotes following the financial statements, and nothing else, for Eagle Bulk Shipping 2011
annual report).  Only Eagle Bulk Shipping and 2011, nothing else.   
 
  What are the beginning and ending page numbers beginning with the first financial
statement shown and ending with the final footnote following the financial statements?
  The purpose of footnotes is to explain and clarify items shown on the financial
statements.  Please list the number and name of each of the footnotes, as well as the page
the footnote appears.  For instance, the first footnote following the financial statements is
usually named “Summary of significant accounting policies.” 
 
   Acct 611, Financial Report Project, Winter 2017
 
Page 4 of 7
 
 
Chapter 2
 
 
 
Report 1, Financial Analysis Questions 
  Solvency.  For both businesses, for the years 2008, 2009, 2010 and 2011, compute the
Current Ratio (p332 of textbook, 7th
 edition).  Give the definition of the current ratio, and
state which of the two businesses appear stronger with respect to this ratio, and why.    
  Solvency.  For both businesses, for the years 2008, 2009, 2010 and 2011, compute the
Quick Ratio (p332 of textbook, 7th
 edition).  Give the definition of the quick ratio, and
state which of the two businesses appear stronger with respect to this ratio, and why.  
  Solvency.  For both businesses, for the years 2008, 2009, 2010 and 2011, compute the
Ratio of Liabilities to Stockholder’s Equity (p337 of textbook, 7th
 edition).  Give the
definition of this ratio, and state which of the two businesses appear stronger with respect
to this ratio, and why.  
  Profitability.  For both businesses, for the years 2008, 2009, 2010 and 2011, compare net
incomes (or net losses).  State which of the two businesses appear stronger with respect to
this item, and why.  
  Profitability.  For both businesses, for the years 2008, 2009, 2010 and 2011, compare
basic earnings per share (given at the bottom of the income statement).  State which of
the two businesses appear stronger with respect to EPS, and why.  
 
Report 2, Financial Report Questions (For this report, you will need the financial statements
and footnotes following the financial statements, and nothing else, for Eagle Bulk Shipping 2011
annual report).  Only Eagle Bulk Shipping and 2011, nothing else.   
  No questions for chapter 2. 
 
 
 
   Acct 611, Financial Report Project, Winter 2017
 
Page 5 of 7
 
Chapter 3
 
 
 
Report 1, Financial Analysis Questions 
  No questions from chapter 3.
 
Report 2, Financial Report Questions (For this report, you will need the financial statements
and footnotes following the financial statements, and nothing else, from Eagle Bulk Shipping’s
2011 annual report).  Only Eagle Bulk Shipping and 2011, nothing else.   
  Describe Eagle Bulk Shipping’s revenue recognition policy (this is usually in the first
footnote, Summary of Significant Accounting Policies).
  Does Eagle Bulk Shipping have any unearned revenues?  Please describe what, in your
opinion, constitutes this item (also sometimes referred to as deferred revenues).
 
 
   Acct 611, Financial Report Project, Winter 2017
 
Page 6 of 7
 
 
Chapters 4 and 6
 
 
Report 1, Financial Analysis Questions 
  Compute the inventory turnover (p335 of textbook) and days’ sales in inventory (p336 of
textbook) for both businesses for 2009, 2010, and 2011.  Draw conclusions.  
  Compute the accounts receivable turnover (p334 of textbook) and days’ sales in
receivables (p334 of textbook) for both businesses for 2009, 2010, and 2011.  Please
note; an alternative formula for days’ sales in receivables, that I prefer, is (360/AR
turnover).  Draw conclusions.  
 
Report 2, Financial Report Questions (For this report, you will need the financial statements
and footnotes following the financial statements, and nothing else, from Eagle Bulk Shipping’s
2011 annual report).  Only Eagle Bulk Shipping and 2011, nothing else.   
 
  What inventory cost flow assumption, if any, does Eagle Bulk Shipping use, FIFO,
LIFO?  This information will be in a footnote to the financial statements.  
 
 
   Acct 611, Financial Report Project, Winter 2017
 
Page 7 of 7
 
 
 
Chapter 7
 
 
 
Report 1, Financial Analysis Questions 
  For 2009, 2010, and 2011 compare the rate earned on total assets (p339).  Draw
conclusions.
 
Report 2, Financial Report Questions (For this report, you will need the financial statements
and footnotes following the financial statements, and nothing else, from Eagle Bulk Shipping’s
2011 annual report).  Only Eagle Bulk Shipping and 2011, nothing else.   
  Name the dollar amounts and categories of plant and equipment.  Also state the amount
of accumulated depreciation.