• Develop skills in interpreting financial statements and calculating key financial ratios by applying the DuPont Analysis model
• Reflect on the benefits and limitations of using AI tools in financial analysis

• DuPont Analysis: An equation or model used to break down a company’s Return on Equity (ROE) into three key components: profit margin, asset turnover, and equity multiplier. This analysis helps identify the specific areas where a company is performing well or needs improvement, offering a clearer understanding of its financial health.
• Return on Equity (ROE): A measure of how effectively a company is using its equity (the money invested by shareholders) to generate profits. It’s calculated as net income divided by shareholders’ equity.

Prior to starting, please review your course’s equivalent to “Student Guidelines for Proper AI Use” for warnings and best practices. In this assignment, you will conduct a DuPont Analysis of Coca-Cola’s 2022 performance using real-world data and then ask Copilot (formerly called Bing Chat) to conduct the same analysis. The primary goal is to evaluate and compare the accuracy and insights provided by human and AI-generated financial analysis. There are three required parts to the assignment.

Part 1: Conduct a DuPont Analysis of Coca-Cola’s 2022 Return on Equity (ROE)

1. Go to the U.S. Securities and Exchange Commission’s page on “Search Filings,” which provides free public access to millions of informational documents filed by publicly traded companies: https://www.sec.gov/edgar/searchedgar/companysearch.
2. Enter Coca-Cola’s stock ticker symbol (KO) in the Company Search box and select Coca-Cola from the dropdown choices.
3. In the right column, click the plus sign (+) next to “10-K (annual reports) and 10-Q (quarterly reports).”
4. Select the 10-K dated February 21, 2023 for the year ended December 31, 2022. The 10-K is the firm’s annual report that gives a comprehensive summary of a company’s financial performance.
5. Scroll down to the Table of Contents and find Item 8–Financial Statements and Supplementary Data. Click on Item 8.
6. You will see links to the Income Statement (“Consolidated Statement of Income”) and Balance Sheet (“Consolidated Balance Sheet”). Either click on the link or scroll down to see the financial statements.
7. Collect the necessary information and conduct the DuPont Analysis of Coca-Cola for fiscal year 2022.
8. Draft a short write-up of your results that includes the following information:
   • Data collected from financial statements that were used in your calculations
   • Work showing calculations of financial ratios used in DuPont Analysis
   • Final ROE calculation
   • Brief interpretation of the results. What does your DuPont Analysis show about the company’s financial health?

Part 2: Instruct Copilot to Conduct a DuPont Analysis

Let’s now analyze how well AI does at generating a DuPont Analysis. Standard LLM warnings and suggestions apply.

1. Go to Microsoft Copilot and log in with your account credentials.
2. Set Copilot’s conversation style to “More Creative.” This mode is useful for tailoring information about complex topics in a particular way.
3. Enter the following prompt into the text box:
   You are a friendly expert in financial statement analysis and financial ratios. Your job is to conduct a DuPont Analysis based on information found on a website provided by the user. Make sure you work step by step through the calculations and always show your work. First introduce yourself and let the user know that you’ll ask them a couple of questions that will allow you to help them or customize your response and then ask 2 questions. Do not number the questions for the user. Wait for the user to respond before moving to the next question. Question 1: Ask the user to provide you with a link to the website with the financial information necessary to conduct the DuPont Analysis. Wait for the user to respond. Question 2: Ask the user for the fiscal year on which to conduct the DuPont Analysis. Wait for the user to respond. Using the information on the website, conduct the DuPont Analysis. Think step by step. Make sure to calculate the DuPont Analysis for the correct year or years. Show your work. For each component of the formula, tell the user where you found the necessary information. End on a positive note and ask if the user has any questions about the analysis.
4. Respond to Copilot’s questions by providing the following information:
   • Link to The Coca-Cola Company and Subsidiaries Consolidated Statements of Income: https://www.sec.gov/ix?doc=/Archives/edgar/data/21344/000002134423000011/ko-20221231.htm#i11a8acba758b424e8f2f8c2d3090367b_103.
   • Fiscal Year: 2022
5. Pose at least one question to Copilot about the analysis. For instance, you might ask: “How does Coca-Cola’s asset turnover compare to industry benchmarks?” or “Can you explain how the equity multiplier affects the overall ROE?”
6. Submit a transcript of your correspondence with Copilot as well as Copilot’s DuPont Analysis output.

Part 3: Reflection on Copilot’s DuPont Analysis

Write a 300-word reflection on your experience having Copilot conduct the DuPont Analysis. The reflection can focus on whatever aspect of the experience resonated with you. It can be a comparison of your results and Copilot’s results, an analysis of what you needed to do to guide Copilot to a correct analysis, a discussion of how Copilot allowed you to dive deeper into explanations of the results using information in the 10-K, or something else.