Determining a Corporation's Health or Illness From Financial Statements

Accounting 201 and Finance301: Accounting 201 Discussion Question: Discuss FASB and IASB. Comment on at least two specific aspects of the two standard setting boards and their role in setting accounting standards. Also, watch 2 provided YouTube videos and post comments. FASB and IASB The Financial Accounting Standards Board (FASB) was established in 1973 to set and improve accounting and reporting standards for private sector U.S. entities (Financial Accounting Standards Board, n.d.).

Though the Securities Exchange Commission (SEC) has the power to set standards for publicly held companies, it relies on private organizations to set and improve standards, and the SEC officially recognizes the FASB's standards as legitimate standards for nongovernmental entities in the U.S. The FASB is independent of any business or organization so it can carry out its duties fairly and impartially.

In order to carry out its mission, the FASB publishes the FASB Accounting Standards; along with SEC standards, the FASB codes set the national accounting and reporting standards (Financial Accounting Standards Board, n.d.). The International Accounting Standards Board (IASB) was established in 2001 by an independent not-for-profit foundation called the IFRS Foundation to set and approve international standards of financial reporting. Just like the FASB, the IASB is independent of any business or other organization so it can fairly and impartially set and approve standards.

In order to carry out its mission of setting and approving international financial reporting standards, the IASB pursues and develops a technical agenda, prepares rough and final drafts of international financial reporting standards according to the IFRS Constitution's due process standards, and improves and issues IFRS interpretations from the Foundation's Interpretations Committee (Deloitte Global Services Limited, 2014). b.

YouTube Video: Quarter close, Q4 2012: Eurozone, FASB disclosure, and other financial reporting The YouTube Video "Quarter close, Q4 2012: Eurozone, FASB disclosure, and other financial reporting" covers several financial and accounting topics that are important in the dynamic business world. The Eurozone debt crisis affects companies even if they operate only domestically because in an interconnected global economy, they are competing with other companies who must directly deal with the Eurozone debt crisis.

The video also gives 5 tips for modern accounting: during uncertain economic times, companies should revisit their accounting and reporting documents to be assured of their accuracy and transparency; communications such as the annual filing should explain to investors the reasons and implications of changes with the knowledge of management; companies that change their debt structure should carefully ensure their accounting is keeping step with those changes; business changes by relationships such as partnerships, consolidations and acquisitions can be challenging to goodwill questions about those possible challenges should be asked early to avoid surprises; and companies should not only be familiar with the new fair value measurement guidance and disclosures that went into effect in 2014 but also with SEC observations so far, which will help a company with its year-end disclosure because the SEC is looking for transparency that will give clear insight into a company's fair value measurement process.

The video also discusses the Disclosure Effectiveness Project in which the FASB is inviting comments about whether flexible disclosures are a good idea, when flexibility should be used and how "relevance" will be defined to determine when and how a company should be flexible in its reporting. Finally, the video presents a discussion about the Guide for Accounting for Financing Transactions, which is a user-friendly system of flow charts organizing complex possibilities and standards for financing transactions.

This Guide makes it easier to navigate and understand the optimal course of action in accounting (PwC U.S., 2012). c.

YouTube Video: Impact of the joint FASB/IASB leasing proposal The YouTube video "Impact of the joint FASB/IASB leasing proposal," a joint project since 2007 to see whether there is a single model that can give a better picture of a company's finances because a lease can be an executory contract that should be reported as a periodic expense over the usage period or whether it represents an asset and a liability. The proposal is anticipated to become effective in 2017 or later.

Companies should marshal their information, develop a plan for responding to the eventual accounting standard through accounting and through lease negotiations and discuss software developments with the companies' providers to ensure that the company's IT systems will be prepared when the proposal becomes a regulation (PwC U.S., 2013). Works Cited Deloitte Global Services Limited. (2014). Overview of the structure of the IFRS Foundation and IASB. Retrieved November 27, 2014 November 26, 2014 from www.iasplus.com Web site: http://www.iasplus.com/en/resources/ifrsf/overview Financial Accounting Standards Board. (n.d.). Facts about FASB.

Retrieved November 27, 2014 November 26, 2014 from www.fasb.org Web site: http://www.fasb.org/facts/index.shtml#mission PwC U.S. (2012, December 11). Quarter close, Q4 2012: Eurozone, FASB disclosure, and other financial reporting updates. Retrieved November 27, 2014 November 26, 2014 from www.youtube.com: https://www.youtube.com/watch?v=NFnD4MoLZ54 PwC U.S. (2013, June 12). Impact of the joint FASB/IASB leasing proposal. Retrieved November 27, 2014 November 26, 2014 from www.youtube.com Web site: https://www.youtube.com/watch?v=C9KomlV206o 2. Case Assignment: Familiarity with Corporate Financial Statements a. Agilent Technologies, Inc.: i.

How much cash is available for Agilent Technologies, Inc. To pay its current debts? Is Agilent Technologies, Inc. In trouble or in good shape? Agilent Technologies, Inc. is a publicly traded U.S. company that internationally provides instruments, services, consumables, applications and expertise to laboratories (Agilent Technologies, Inc., 2014). Its web site provides annual financial reports from 1999 through 2013 (Agilent Technologies, Inc., 2014).

According to its 2013 financial report, Agilent has $2,675 million in cash and cash equivalents at the end of 2013, up $324 million from its 2012 $2,351 million in cash and cash equivalents but down $852 million from its 2011 $3,527 million in cash and cash equivalents (Agilent Technologies, Inc., 2014, p. 29). Worse yet, its total liabilities at the end of 2013 were $5,397 million (Agilent Technologies, Inc., 2014, p. 28), meaning that Agilent does not have enough cash to pay its debts. Agilent's indebtedness is $46 million higher than its 2012 $5,351 million indebtedness and $656 million higher than its 2011 $4,741 million indebtedness (Agilent Technologies, Inc., 2014, p. 29).

In sum, Agilent Technologies is in trouble. ii. Is Agilent Technologies, Inc. increasing or decreasing its investment in its operations? Agilent's increased its investment in its operations in 2013. Reviewing operations expenditures piecemeal, expenditures slightly in some respects but decreased slightly in other respects from 2011 through 2013. Its 2013 cost of products was $2,576 million, which was $32 million lower than its 2012 $2,608 million expenditure but $103 million more than its 2011 $2,473 million expenditure. Its 2013 cost of services and "other" was $671 million, which was $25 million higher than its 2012 $646 million expenditure and $58 million higher than its 2011 $613 expenditure.

Its 2013 investment in research and development was $704 million, up $36 million from its 2012 $668 million expenditure and $55 million more than its 2011 $649 million expenditure. Its selling, general and administrative costs in 2013 were $1,880 million, which is $63 million higher than its 2012 $817 million expenditure and $71 million higher than its $1,809 million expenditure. All in all, its total costs and expenses of operations in 2013 were $5,831 million, which was $92 million more than its 2012 expenditure of $5,739 million and $287 million more than its 2011 $5,544 million expenditure (Agilent Technologies, Inc., 2014, p. 26). iii. How well Agilent Technologies, Inc.

doing in its operations? Agilent's operations are lackluster at best. Though it is clearly a giant that deals with the U.S., China and Japan, among others, and though its total assets increased from $9,057,000 million in 2011 to $10,536,000 million in 2012 and $10,686,000 million in 2013, its total liabilities also increased from $4,749,000 million in 2011 to $5,354,000 in 2012 and $5,400,000 million in 2013 (Agilent Technologies, Inc., 2014, p. 30). The smaller increase in its investments in operations cannot account for all those losses and its available cash and cash equivalents could not cover its increasing indebtedness. iv.

Based on your answers to the above questions, give the president of Agilent Technologies, Inc. A letter grade for his/her performance over the most recent year reported in the financial statements. Explain your grade. Agilent's president should receive a D. based on the 2013 financial statement. The company's performance has worsened in 2011 -- 2013, with higher debt, higher expenditures, and lower cash and cash equivalents. The company is still afloat and its equity rose but not at as great a pace as its liabilities.

If the 3-year trend is not reversed, the company could conceivably go out of business. b. Facebook, Inc.: i. How much cash is available for Facebook, Inc. To pay its current debts? Is Facebook, Inc. In trouble or in good shape? Facebook, Inc. is a publicly traded U.S. company that internationally provides online social networking services (Facebook, Inc., 2014). It provides annual reports for 2012 and 2013 on its web site (Facebook, Inc., 2014).

The company had cash and cash equivalents of $3,323,000 million at the end of 2013, which was $939 million higher than the 2012 $2,384,000 million and $1,811 million higher than the 2011 $1,512,000 million. Facebook has far more than enough to pay its current indebtedness of $2,425,000 million in 2013, which is $923 million lower than its 2012 indebtedness of $3,348,000 million but $993 million higher than its 2011 indebtedness of $1,432,000 million (Facebook, Inc., 2014, p. 39). ii. Is Facebook, Inc. increasing or decreasing its investment in its operations? Facebook is increasing its investment in its operations.

Research and development expenses in 2013 increased $16 million or 1% compared to 2012, chiefly due to increased payroll and benefits for a 50% growth in employees for engineering and other technical work their payroll and benefits. 2013 also so a 261+% higher than 2011 expenditure for R&D, at least partly due to a 73% increase in employees for engineering, design, product management, and other technical functions. Facebook also plans to continue hiring software engineers and other technical employees, increasing R&D costs even higher for 2014 (Facebook, Inc., 2014, p. 48). iii. How well Facebook, Inc.

doing in its operations? Facebook is doing well in its operations, with total assets significantly increasing from $6,331,000 million in 2011 to $15,103,000 million in 2012 to $17,895 million in 2013. In addition, liabilities are decreasing even as Facebook is making significant investments in its operations, particularly in R&D (Facebook, Inc., 2014, pp. 60-3). It annual statements give Facebook the look and feel of a dynamic company on the rise. iv. Based on your answers to the above questions, give the president of Facebook, Inc.

A letter grade for his/her performance over the most recent year reported in the financial statements. Explain your grade. The president and CEO of Facebook, Inc. should receive an A for his performance over the most recent year reported in the financial statements. The company has grown remarkably, is not hesitant to invest great sums in its operations and operates at a highly positive cash flow.

The company's annual statements give Facebook the look and feel of a wealthy, dynamic company on the rise and its president is the face of Facebook. c. The Gap, Inc.: i. How much cash is available for The Gap, Inc. To pay its current debts? Is The Gap, Inc. In trouble or in good shape? The Gap, Inc. is a publicly traded U.S. company that internationally sells clothing at retail prices (The Gap, Inc., 2014). It provides annual reports from 2008 to February 1, 2014 on its web site (The Gap, Inc., 2014).

The Gap does not have enough cash to pay its current debts. As of February 1, 2014, the company had $1,510,000 million in cash and cash equivalents, down $50 million from its February 2, 2013 $1,460,000 million and down $375,000 million from its January 28, 2012 $1,885,000 cash and cash equivalents (The Gap, Inc., 2014, p. 35). Meanwhile, its total liabilities are $4,787,000 million as of February 1, 2014, up $211 million from its February 2, 2013 $4,576,000 million and up $120 million from its January 28, 2012 $4,667,000 million indebtedness (The Gap, Inc., 2014, p. 35). ii. Is The Gap, Inc. increasing or decreasing its investment in its operations? The Gap, Inc.

seems to be engaged more in shifting operations to a single global concern with affiliated and unaffiliated retailers who sell Gap brands rather than a great increase in investment in operations. The Gap, Inc. pointedly concentrates on paying dividends to stockholders from its surplus income (The Gap, Inc., 2014, p. 13). Because it is a retailer in wearing apparel, it must replenish its inventory, but it had a -$193,000 million change in inventory, down $50 million from its 2012 -$143,000 inventory and down $197,000 million from its 2011 $4,000 million change in inventory.

Gap also closed 22 more stores than it opened in North America, closed six more Old Navy stores than it opened in North America but did open six more Banana Republic stores than it closed in North America in 2013. However, its brand shift to Athleta North America and Intermix North America accounted for the opening of 37 new stores in North America (The Gap, Inc., 2014, p. 20). iii. How well The Gap, Inc. doing in its operations? The Gap, Inc. is doing only so-so in its operations.

It would not be dramatically reducing inventory, closing stores and trying new brands if it was doing well. In addition, its cash and cash equivalents have dropped while its total liabilities have risen dramatically, though its net tangible assets have risen from $2,755,000 million in 2011 to $2,894,000 in 2012 to $3,062,000 in 2013 (The Gap, Inc., 2014, p. 38). Its financial statements and behavior seem to indicate a company that is still afloat but somewhat stagnant in its brand sales and shifting things around to new brands in a global market to see what will work. iv.

Based on your answers to the above questions, give the president of The Gap, Inc. A letter grade for his/her performance over the most recent year reported in the financial statements. Explain your grade. The president of The Gap, Inc. deserves a C. For his performance according to the 2013 financial statement. The company has suffered increasing indebtedness and decreasing cash and cash equivalents but is still a major player in the retail clothing market and its net tangible assets have risen in 2013. Also, The Gap, Inc.

is in a very volatile and difficult industry and the President is clearly trying new brands and global strategies to revitalize the business. Works Cited Agilent Technologies, Inc. (2014). Annual Reports. Retrieved November 27, 2014 November 26, 2014 from www.investor.agilent.com Web site: http://www.investor.agilent.com/phoenix.zhtml?c=103274&p=irol-reportsannual Agilent Technologies, Inc. (2014). Company Information. Retrieved November 27, 2014 November 26, 2014 from www.agilent.com Web site: http://www.agilent.com/about/companyinfo/index.html Facebook, Inc. (2014). Annual reports.

Retrieved November 27, 2014 November 26, 2014 from investor.fb.com Web site: http://investor.fb.com/annuals.cfm Facebook, Inc. (2014). Investor relations. Retrieved November 27, 2014 November 26, 2014 from investor.fb.com Web site: http://investor.fb.com/ The Gap, Inc. (2014). Annual reports and proxy. Retrieved November 27, 2014 November 26, 2014 from investors.gapinc.com Web site: http://investors.gapinc.com/phoenix.zhtml?c=111302&p=irol-reportsAnnual The Gap, Inc. (2014). History. Retrieved November 27, 2014 November 26, 2014 from www.gapinc.com Web site: http://www.gapinc.com/content/gapinc/html/aboutus/ourstory.html 3. Session Long Project: Executive Tools for Decision Making a.

Introduction Verizon Communications, Inc., known in the U.S. As simply Verizon, is a global leader in telecommunications and broadband. Its financial statements for 2011 -- 2013 show the sheer size of Verizon, which dwarfs the other three companies in the case assignment. However, Verizon's startling level of debt relative to its total assets and cash flow show that the company may be on a par with Agilent Technologies, Inc. And The Gap, Inc. But is far "sicker" than the financially healthy Facebook, Inc. b. Body i.

A short description of that organization and your relationship to it. Verizon Communications, Inc. is a U.S. telecommunications and broadband company serving private and business customer with technology and equipment (Verizon, 2014). Verizon was formed from one of the "Baby Bells" called Bell Atlantic, which merged with GTE in 2000 and became Verizon. It has grown to become one of the leading global providers of telecommunications and broadband (Verizon, 2014). I have several close relatives in sales management at Verizon who have access to useful company information. ii.

Explain financial status using financial statements. If you use a small size firm, use current and future expected financial plans. Verizon provides its 2011, 2012 and 2013 annual reports on its web site (Verizon, 2014). Verizon is a huge provider, with total 2013 assets of $274,098,000 million, up $48,876 million from its 2012 total assets of $225,222,000 million and up $43,637,000 from its 2011 total assets of $230, 461,000 million (Verizon, 2014, p. 9). However, it also has huge total liabilities of $235,262,000 million in 2013, up $43,197 million from its 2012 total of $192,065,000 million and up $40,771 million from its 2011 total of $194,491,000 million (Verizon, 2014, p. 20).

It net total assets according to its 2013 statement are -$67,345,000 (Yahoo! Finance, 2014). Though its 2013 cash and cash equivalents are $53,528,000 million, up $50,435 million from its 2012 cash and cash equivalents of $3,093,000 million and $40,166 million from its 2011 cash and cash equivalents of $13,362,000 million (Verizon, 2014, p. 40), it clearly could not pay all its indebtedness with cash at this time. It has large sums invested in its plant and equipment, for example, but does not appear to be noticeably investing increased sums in its operations.

Because it is Verizon, it is hard to know how to grade its president: should he receive an F. For operating a highly leveraged company deep in the red or should he receive an A for being so daring and having such a global impact? Though leaning toward F, it seems too early to tell. iii. How much cash is available for next year? Though its cash and cash equivalents are volatile, according to its 2013 statement, Verizon has $53,528,000 million available for next year (Yahoo! Finance, 2014). iv.

Wellness and financial situations compared with companies of case assignment. Verizon dwarfs the three other companies in the case assignment due to its huge assets and liabilities. Verizon, Agilent Technologies, Inc. And The Gap, Inc. do not have enough cash to pay their debts (Agilent Technologies, Inc., 2014; The Gap, Inc., 2014), though Verizon's indebtedness is on a far grander scale than that of the other two companies. Facebook, Inc., alone has enough cash to pay all its indebtedness (Facebook, Inc., 2014). Facebook, Inc.

is dynamically investing in its operations (Facebook, Inc., 2014) while Agilent is investing to a lesser degree (Agilent Technologies, Inc., 2014), The Gap, Inc., seems to be shifting more than generously investing (The Gap, Inc., 2014) and Verizon does not appear to be generously investing in its operations, either. Facebook's total equity far outweighs its total liabilities, unlike Verizon and the other two companies (Facebook, Inc., 2014).

On paper, Verizon clearly is not as well as Facebook, Inc., though its financial situation of high indebtedness and significantly lower total assets seems akin to the financial situations of Agilent Technologies, Inc. And The Gap, Inc. (Agilent Technologies, Inc., 2014; The Gap, Inc., 2014). To recap their grades, the president of Agilent Technologies, Inc. deserves a D, the president of Facebook, Inc. deserves an A, the president of The Gap, Inc. deserves a C. And the president of Verizon deserves an A or an F. c.

Conclusion The size and impact of Verizon Communications, Inc. could lead one to believe that the company is a healthy fiscal specimen. However, review of its 2011 -- 2013 show a behemoth awash in debt, with far too little cash to pay its indebtedness and assets that are initially impressive but are ultimately overshadowed by its total liabilities.

Compared to the three companies in the case study, Verizon is surely not as healthy as Facebook, Inc., which has ample cash flow, assets and large investment in its operations to be a dynamic fiscal example. Agilent Industries, Inc. And The Gap, Inc., on the other hand, are each sick in their own ways. Agilent is struggling with debts and losses, though it does invest considerably in its operations.

The Gap appears to be struggling against competition in the volatile retail clothing industry and is shifting business globally, closing and opening stores strategically and introducing new brands in an apparent attempt to shake things up and revitalize its business. All in all, Facebook, Inc. is the most impressive of all 4 companies. Works Cited Agilent Technologies, Inc. (2014). Annual Reports. Retrieved November 27, 2014 November 26, 2014 from www.investor.agilent.com Web site: http://www.investor.agilent.com/phoenix.zhtml?c=103274&p=irol-reportsannual Facebook, Inc. (2014). Annual reports.

Retrieved November 27, 2014 November 26, 2014 from investor.fb.com Web site: http://investor.fb.com/annuals.cfm The Gap, Inc. (2014). Annual reports and proxy. Retrieved November 27, 2014 November 26, 2014 from investors.gapinc.com Web site: http://investors.gapinc.com/phoenix.zhtml?c=111302&p=irol-reportsAnnual Verizon. (2014). Annual reports. Retrieved November 27, 2014 November 26, 2014 from www.verizon.com Web site: http://www.verizon.com/about/investors/ Verizon. (2014). Our Company. Retrieved November 27, 2014 November 26, 2014 from www.verizon.com Web site: http://www.verizon.com/about/our-company/verizon-glance/ Yahoo! Finance. (2014). Verizon.

Retrieved November 27, 2014 November 26, 2014 from finance.yahoo.com Web site: http://finance.yahoo.com/q/bs?s=VZ+Balance+Sheet&annual B. Finance 301 1. Discussion Question: There has been a trend across corporate America of promoting financial officers to CEO. What are some advantages and disadvantages of this practice? (Based on the article of Financial Managers and other reading you may have done). Also, watch provided YouTube videos and comment. a. Promotion of financial officer to CEO Promotion of a financial officer to company CEO has several advantages and disadvantages.

The CEO leads an entire company and is largely held responsible for its success or failure while a CFO's work is confined to the fiscal life of the company: its financial data and information, its financial reporting and sometimes its budgeting and investments (Rakoczy, n.d.).

In these economically challenging times, a CFO will know the "nuts and bolts" of running a business, whether or not a business is profitable, and which financial business decisions can or should be made to make the company as profitable as possible (Euromoney Institutional Investor, PLC, April 2005). In addition, a CFO who is promoted to CEO within his own company will already know how that business works and will know and be used to working with others on the executive staff (Rakoczy, n.d.).

The chief disadvantage of promoting a CFO to CEO is that his/her focus, which is on finance, may be too narrow to make the best business decisions for the company, as not all decisions are strictly based on dollars and cents (Rakoczy, n.d.). In addition, focusing on a finance-centered career may mean that the CFO lacks or has not sufficiently developed other skills needed by a good CEO, such as management and marketing skills (Rakoczy, n.d.), communications and business strategy (Euromoney Institutional Investor, PLC, April 2005).

While a CFO is certainly an attractive candidate for CEO, particularly in difficult economic times, he/she may not have the developed broader skills for most effectively leading the company. b. YouTube Video: David Mudrick - CFOs Becoming CEOs The YouTube video "CFOs becoming CEOs" focuses on Mr. Mudrick, who became a CFO at Topcon America Corporation in 2000 and the CEO in 2007 and has been an employee of Topcon for 19 years.

Topcon promoted Mudrick to CEO because it is a technology-based company that shifted to looking outside sales, marketing and engineering for a likely CEO. The opening occurs in that company every 3 years and Mudrick was approached as a finalist for the position and was obviously chosen. Mudrick enjoys identifying people who want responsibility and will also seek and accept accountability and developing them to move to the next level in the company. Mudrick also has exceptional people skills, which he uses for the broader responsibilities of a CEO.

If Mudrick was now approached for the CEO position, he would have done some things differently: he would have used a Human Resources senior executive to use his/her skills to encompass all the other needed areas. Mudrick stays connected with his distributors because that is where the business is happening for Topcon to hear what is actually happening in the business. He also stays connected with trade shows that put their sales people and products in display, allowing him to view his own people and competitors and customers.

Finally, those who aspire to become a CEO should build relationships at the senior level but also at every other level of the organization because lower level employees can also give valuable insights into what is happening in the business (CFO Studio, 2012). c. YouTube Video: Ron Gaboury - CFOs Becoming CEOs This "CFOs becoming CEOs" YouTube video focuses on Ron Gaboury, the CEO of Yorktel, a corporation that provides managed video conferencing for Fortune 500 companies and the federal government.

He began as a finance executive in 1995 when the company had $4 million in annual revenue; the company now has $98 million in annual revenue. According to Gaboury, in the Fortune 500 companies, there are approximately 100 CFOs who became CEOs, 50 from within the companies and 50 from outside sources. In the hard financial times, CFO knowledge is considered highly valuable to make the company as financially stable as possible.

When asked about the most important traits for becoming CEO, Gaboury stated that the number 1 trait is wanting the job because many CFOs do not want the headaches and responsibility. In addition, the CFO has to gain the trust of the rest of the executive staff, get out and know the people and work closely with the current CEO to observe and learn appropriate skills.

The CFO must also consider what he/she will do to replace himself/herself as CFO when promoted to CEO; if you are indispensable as CFO, you will never be promoted to CEO. Some of Gaboury's greatest challenges upon becoming CEO were: replacing himself as CFO, which he has done several times because the CFO and CEO must "click" and be very closely aligned; and learning about the company's business by finding a trustworthy information source because his company's business is high tech and that is not his background.

Gaboury believes the trend of promoting CFOs to CEOs will continue because companies are now looking for strategic leaders. With that in mind, a CFO aspiring to be CEO should: be broader than a mere numbers person in terms of being a strategic thinker and skilled in management; get into other people's business without encroaching on their business so one can learn from them; stay strategic and learn management. In sum, a CFO who wishes to become a CEO should start thinking like a CEO (CFO Studio, 2012).

Works Cited CFO Studio. (2012, April 2). David Mudrick - CFOs becoming CEOs. Retrieved November 27, 2014 November 26, 2014 from www.youtube.com Web site: https://www.youtube.com/watch?v=E2GxuhDRVYg CFO Studio. (2012, February 1). Ron Gaboury - CFOs becoming CEOs. Retrieved November 27, 2014 November 26, 2014 from www.youtube.com Web site: https://www.youtube.com/watch?v=y5HkWah-bfs Euromoney Institutional Investor, PLC. (April 2005). CFO to CEO. Corporate Finance, 1. Rakoczy, C. (n.d.). Pros and cons of hiring a CFO to be a CEO.

Retrieved November 27, 2014 November 26, 2014 from business.lovetoknowcom Web site: http://business.lovetoknow.com/wiki/Pros_and_Cons_of_Hiring_a_CFO_to_Be_a_CEO 2. Case Assignment: The Role of the Financial Manager a. Do you think finance departments are the best place to train future CEOs? Finance Departments are the best place to train future CEOs, provided the trainees have leadership skills and their skills are developed.

As mentioned in the discussion questions, in these economically challenging times, a financial manager will know the "nuts and bolts" of running a business, whether or not a business is profitable, and which financial business decisions can or should be made to make the company as profitable as possible (Euromoney Institutional Investor, PLC, April 2005).

In addition, financial manager who is promoted to CEO within his/her own company will already know how that business works and will know and be used to working with others on the executive staff (Rakoczy, n.d.). However, the financial manager's role is too narrow to run an entire company well.

A financial manager's basic educational requirement is a bachelor's or master's degree in finance, accounting or a related field (NetCent Communications, 2014) because the finance department is interested in a limited area: the fiscal life of the company (Rakoczy, n.d.). A CEO, on the other hand, leads the entire company and must have management, marketing (Rakoczy, n.d.), communications and business strategy skills (Euromoney Institutional Investor, PLC, April 2005) for guiding the company to success.

As we have seen in the examples of David Mudrick (CFO Studio, 2012) and Ron Gaboury (CFO Studio, 2012), both men had and consciously developed their leadership skills before they became CEOs. Also, in the area of healthcare, some experts realize the need for leadership development in CFOs who wish to become effective CEOs (Kowalski & Campbell, April 2000). These experts call for consciously mentoring CFOs who wish to move beyond the financial department and into the presidential/CEO seat. b.

Provide two actual examples of CFOs of publicly-traded companies who became CEOs of publicly-traded companies within the past 5 years. Do these individuals have the CPA and/or CFA designations? There are many examples of CFOs in publicly-traded companies who became CEOs of publicly-traded companies within the past 5 years. For example, Lynn J. Good was the chief financial officer of Duke Energy Corporation from July 2009 to July 1, 2013, when she became the President and CEO of the publicly-traded corporation.

She earned Bachelor of Science degrees in systems analysis and accounting from Miami University in Oxford, Ohio (Duke Energy Corporation, 2013). Another example is Ben Fowke, Chairman of the Board, President and CEO of Xcel Energy, Inc., a publicly-traded company. Fowke was CFO of Xcel from 2000 to 2009, when he was promoted to his current position. Fowke earned a Bachelor of Science degree in finance and accounting from Towson University and obtained his CPA in 1982 (Xcel Energy, Inc., 2014).

Both Good and Fowke were dynamos whose influence and experience clearly extended beyond the confines of finance before their promotion to CEOs. They each held a variety of executive positions that extended beyond their financial departments in order to assist their companies and assist themselves in learning about the entire workings of their companies (Duke Energy Corporation, 2013;Xcel Energy, Inc., 2014).

In sum, both Good and Fowke are examples of an excellent idea: the advancement of financial managers to CEO because those financial managers are far more and know far more than mere financial managers. Works Cited CFO Studio. (2012, April 2). David Mudrick - CFOs becoming CEOs. Retrieved November 27, 2014 from www.youtube.com Web site: https://www.youtube.com/watch?v=E2GxuhDRVYg CFO Studio. (2012, February 1). Ron Gaboury - CFOs becoming CEOs. Retrieved November 27, 2014 from www.youtube.com Web site: https://www.youtube.com/watch?v=y5HkWah-bfs Duke Energy Corporation. (2013, October 21).

Lynn J. Good. Retrieved November 29, 2014 from www.duke-energy.com Web site: http://www.duke-energy.com/about-us/leaders/lynn-good.asp Kowalski, R.B., & Campbell, M.W. (April 2000). Leadership skills help financial managers achieve career success. Healthcare Financial Management, 54(4), 50-2. NetCent Communications. (2014). Financial Managers. Retrieved November 29, 2014 from www.ncbuy.com Web site: http://www.ncbuy.com/careers/blsj/job010.html Rakoczy, C. (n.d.). Pros and cons of hiring a CFO to be a CEO.

Retrieved November 27, 2014 from business.lovetoknowcom Web site: http://business.lovetoknow.com/wiki/Pros_and_Cons_of_Hiring_a_CFO_to_Be_a_CEO Xcel Energy, Inc. (2014). Ben Fowke. Retrieved November 29, 2014 from www.xcelenergy.com Web site: http://www.xcelenergy.com/About_Us/Our_Company/Leadership/Ben_Fowke 3. Session Long Project: The Role of.