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Financial statement analysis is a tool by which one can examine the publicly-available financial statements to determine the financial condition of a company. The role of the financial statements is to provide information for both internal and external stakeholders, including shareholders and regulators, about a company's finances. Thus, the SEC demands that financial statements are produced in a specific format so that there is easy comparison between companies and across industries (SEC.gov, 2014). One of the most common means of analyzing statements is to examine the trends in the statements, and to conduct analysis by a set of ratios that will explain about the liquidity, solvency, efficiency and returns for the company (Investopedia, 2014). This report will contain a financial statement analysis of Starbucks.
Starbucks has demonstrated progressive revenue growth. evenue in FY 2014 was $16.4 billion, compared with $14.8 billion in 2013, an increase of 10.8%, and the…
Burritt, C. (2013). Starbucks to pay $2.9 billion to settle coffee dispute. Bloomberg. Retrieved December 6, 2014 from http://www.bloomberg.com/news/2013-11-12/starbucks-to-pay-2-76-billion-to-settle-grocery-dispute.html
Investopedia. (2014). CFA level 1: Financial statement analysis. Investopedia. Retrieved December 6, 2014 from http://www.investopedia.com /exam-guide/cfa-level-1/financial-statements/financial-statement-analysis.asp
MSN Moneycentral: Starbucks (2014). Retrieved December 6, 2014 from http://www.msn.com/en-us/money/stockdetails?symbol=SBUX&ocid=qbeb
Sayre, K. (2014). Starbucks CEO says drink prices won't go up despite spike in coffee bean costs. New Orleans Times-Picayune Retrieved December 6, 2014 from http://www.nola.com/business/index.ssf/2014/03/starbucks_ceo_warns_rising_cof.html
Financial Statement Analysis
The following is an equity research report on Starbucks. The company competes primarily in the quick service food industry, where it holds the #5 market share in the United States, and #1 in its segment of coffee (QSR Magazine, 2011). The company had revenues last fiscal year (ended 10/2/11) of $11.7 billion and net income of $1.245 billion. The current stock price is $43.91, which gives the company a market capitalization of $32.73 billion and a price/earnings ratio of 27.10.
This report will begin with a qualitative analysis of the firm, its industry and its markets. The next step will be an analysis of its financial statements, followed by an analysis of the stock price. A determination will be made as to whether the stock should be rated a "buy," "hold," or "sell."
The evaluation will be based on careful consideration of the company's recent financial performance…
2010 Starbucks Annual Report. In possession of the author.
Adamy, J. & Wingfield, N. (2009). Starbucks to present recession strategy. Wall Street Journal. Retrieved December 4, 2011 from http://online.wsj.com/article/SB123723335325646025.html
Cannold, J. (2011). Starbucks buys juice maker Evolution Fresh. CNN. Retrieved December 4, 2011 from http://money.cnn.com/2011/11/10/news/companies/starbucks_juice_evolution_fresh/index.htm
Liu, L. (2009). McDonalds' McCafe takes aim at Starbucks in Europe. Business Week. Retrieved December 4, 2011 from http://www.businessweek.com/magazine/content/09_40/b4149070703260.htm
Financial Statement Analysis
Westpac banking corporation is one of the largest banking organizations in Australia, and the largest bank in New Zealand. Westpac provides arrays of banking and financial services in Austria, which include institutional banking, retail banking, and wealth management services. Established in 1817, Westpac is the first bank established in Australia. Since its formation, Westpac has increased in its strength, and at present Westpac has the market capitalisations that reach $69.5 billions and total assets worth 618.3 billions. (Westpac Annual eport, 2010).
The objective of this paper is to analyze whether Westpac could be a potential company to invest my $50,000.
With the present economic crisis where many companies have suffered financial losses, it is critical to subject a company to financial analysis since I have decided to invest my $50,000 on the medium-term investment; there is a need to make thorough analysis on the company…
Amcor, (2011) Annual Report 2011. Australia.
Business Week,(2011). AMCOR LIMITED (AMC:ASX). Bloomberg.
Financial Times,(2011). Westpac Banking Corp. Financial Times. London.
Financial Times,(2011). Amcor Ltd. Financial Times. London.
This has been especially true in China and other Asian countries during the past several decades of economic expansion in that region of the world (Bai et al. 2008). Government stakeholders in many of these countries have benefited along with corporations in obscure and outright false financial statements and analyses as they have attracted money form foreign as well as domestic investors an enabled national growth for many Asian nations (Bai et al. 2008). These investors, on the other hand, as well as many private citizens in these countries, have suffered avoidable losses and unnecessary economic disruptions when the misleading reporting and analysis practices are brought to light and the truth is revealed (Bai et al. 2008).
In the United States, the problem is possibly even more complex. More stringent government oversight supposedly limits issues of outright deception, but questionable and obfuscating techniques are still rampant in financial analysis in…
Bai, B.; Yen, J, & Yang, X. (2008). "False financial statements: Characteristics of China's listed companies and cart detecting approach." International journal of information technology and decision making 7(2), pp. 339-59.
Gauthier, S. (2004). "Presenting information in financial reports." Government finance review. Accessed online 18 September 2009. http://www.allbusiness.com/finance/3584383-1.html
This means that Ferrellgas is in risk of default. The company paid more in dividends last year than it earned in cash from operations. In short, Ferrellgas has an unsustainable burn rate. While Inergy had a poor financial position, it was able to tap into capital markets to alleviate any cash crunch -- Ferrellgas has yet to do this and of all these firms is the closest to default.
Amerigas is a mediocre performer among this group. While the company has very little cash and a low current ratio, it is earning enough to cover its interest. It is also paying less in dividends than its cash flow from operations, although it is probably paying too much given its earnings level and apparent need for capital expenditures. However, there are red flags with this company as well. For example, given its current cash situation, one would want to see an…
Managing its fleet. This pertains to the optimization of an Airline's major assets, which is its airplanes, which is measure by its load factor, which is that percentage of an airplane's sets that are sold and actually filled at departure. The Company's load factor continues to increase from 69.5% in 2004, to 70.7% in 2005 to 73.1% in 2006. The Company is able to maximize its fleet by reducing its ground time (the amount of time planes spend on the ground at airports). Most airlines have an hour ground time compared to the Company's 15-20 minute ground time.
Managing People. Fortune magazine ranks the Company as one of the top 100 best companies to work for. The Company boasts of treating their employees like their customers, this has given the Company with the image and reputation of giving its customers the great value with their money. The dedication of its…
HP: Financial Statement Analysis
There are many approaches one could use to analyze the health, stability as well as financial performance of a business entity. One such approach involves a thorough review of the financial statements of the concerned entity. egarded the leading personal computers manufacturer in the world, Hewlett-Packard - HP amongst other things concerns itself with the manufacture as well as development of both computer hardware and software. In this text, a thorough financial review of HP will be conducted in an attempt to determine the viability of the company's stock as an investment option.
Hewlett-Packard: Background Information
As I have already pointed out in the introductory section, HP is regarded one of the world's largest manufacturers of personal computers. Together with its subsidiaries, HP provides "products, technologies, software, applications and services to individual customers, businesses enterprises, including customers in the government, health, and education sectors" (Mergent Online,…
Arora, M.N. (2009). Management Accounting: Theory, Problems and Solutions. Mumbai: Global Media.
Mergent Online. (2013). Hewlett-Packard Co (NYS: HPQ). Retrieved July 14, 2013, from Ashford University, Clinton, IA, University Library Website: http://www.mergentonline.com
Ramagopal, C. (2008). Financial Management. Daryaganj, Delhi: New Age International.
Smith, B. (2010). Introductory Financial Accounting. Berkshire, GBR: McGraw-Hill Professional Publishing.
The data must be absolutely correct.
3. Effects of Price Level Changes: Price levels changes often make the comparison of figures difficult over a period of time. Changes in price affect the cost of production, sales and also the value of the assets. Therefore, it is necessary to make proper adjustment for price-level changes before any comparison.
4. Quality factors are ignored: atio analysis is a technique of quantitative analysis and thus, ignores qualitative factors, which may be important in decision-making. For example, an average collection period may be equal to standard credit period, but some debtors may be in the list of doubtful debts, which is not disclosed by ratio analysis.
5. Effect of window dressing: In order to cover up their bad financial position some companies resort to window dressing. They may record the accounting data according to the convenience to show the financial position of the company…
De Mello-e-Souza, C.A. & Awasthi, V.N. (2009).Probing Financial Statements in PostSarbanes-Oxley world. Strategic Finance. Retrieved on 3rd April, 2010 from http://findarticles.com/p/articles/mi_hb6421/is_10_90/ai_n31947078/
Credit and Finance Risk Analysis (2010). Bank Financial Statement Analysis & Ratio Analysis. Retrieved on 3rd April, 2010 from http://www.credfinrisk.com/bank.html
Sooper Tutorials. (2009). Financial Ratio Analysis and Formulas. Retrieved on 3rd
April from http://www.soopertutorials.com/business/finance/1992-financial-ratio-analysis-formulas.html
Consolidation of Financial Statement Analysis
In the wake of the Enron collapse, the chairman of the Securities Exchange Commission (SEC) repeated his calls for the nation's securities laws to be updated in an effort to avoid another such case. In an article in December 11, 2001's Wall Street Journal, Harvey Pitt wrote that the Enron collapse underscores the need to update and improve the nation's financial reporting and disclosure laws that were first developed in the 1930s. Pitt emphasized that investors needed current, not quarterly or annual, corporate information. The current approach to remedying a clearly broken system have been too little, too late according to some observers. Clarke and Oliver, for instance, point out that, "Paradoxically, one of accounting's grandest inventions to achieve financial clarification is its most virile medium for deception. From its introduction, giving special status to a group of related companies and the methods of consolidating…
Blacconiere, Walter G. And Patrick E. Hopkins. 2002. General Electric: Investment Accounting and Consolidations. Issues in Accounting Education, Volume 17, Issue 3, p. 315.
Clarke, Dean and Oliver. 2003. Corporate Collapse. Cambridge University Press.
FASB Issues Exposure Draft on Accounting for Stock Options, Amends Transition and Disclosure Provisions, 2002, 1-3. October 4, 2002. FASB. Available: http://www.fasb.org/news/nr100402.shtml .
FASB Presents Views on Consolidated Statements. 1994. Journal of Accountancy, Volume 178, Issue 5, p. 22-5.
Financial Statement AnalysisFinancial statement analysis refers to developing and analyzing a particular companys financial statements to help with the decision-making processes. It is also essential since it helps external stakeholders such as investors understand its overall condition and evaluate the business value and financial performance. Internally, it is used as a tool to monitor and manage the organizations finances. A companys financial statements record essential financial data on all organizations activities (Kunnathur, 2017). They can be evaluated based on past, present, or future performance. They are generally centered on the generally accepted accounting principles.Apple Inc. Financial AnalysisCompany BackgroundThis is a multinational technology company with its headquarters in Cupertino, California. It is an American company established in 1977 by Wozniak and Steve Jobs, a great American visionary who aimed to change the world and use technology. His vision of entrepreneurship led to the creation of the essential technological advancement on earth.…
Bing, L., Chan, K. C., & Ou, C. (2014, November). Public sentiment analysis in Twitter data for prediction of a company’s stock price movements. In 2014 IEEE 11th International Conference on e-Business Engineering (pp. 232-239). IEEE.
Fama, E. F. (1990). Term-structure forecasts of interest rates, inflation, and real returns. Journal of Monetary Economics, 25(1), 59-76.
Hernández-Álvarez, M., Hernández, E. A. T., & Yoo, S. G. (2019, February). Stock Market Data Prediction Using Machine Learning Techniques. In International Conference on Information Technology & Systems (pp. 539-547). Springer, Cham.
Khan, U. A., Alam, M. N., & Alam, S. (2015). A critical analysis of internal and external environment of Apple Inc. International Journal of Economics, Commerce and Management, 3(6), 955-961.
Ben and Jerry's Financial Statement Analysis
Through a ratio analysis of Ben and Jerry's comparative balance sheet and comparative income statement for 2004 and 2005 it was determined that Ben and Jerry's appears to be financially stable. Three different types of ratios were used to assess the company's health including liquid rations, profitability ratios, and solvency ratios.
Liquid ratios that were analyzed included working capital, current ratio, and acid test ratio. "Liquidity ratios measure a firm's ability to meet its current obligations" (Credit esearch Foundation, 1999). Based upon the working capital, it was determined that in 2004, Ben and Jerry's had $8,200 on hand to satisfy contingencies and the number rose to $11,100 in 2005, which appears to indicate that Ben and Jerry's was more financially prepared the following year. Furthermore, an analysis of the current ratio, which measures Ben and Jerry's ability to pay off their debts determined that…
Credit Research Foundation. (1999). Ratios and formulas in customer financial analysis.
Accessed 17 August 2012, from http://www.crfonline.org/orc/cro/cro-16.html .
AT&T and Verizon
Both AT&T and Verizon have their roots as Baby Bells, large telecom companies that arose after the breakup of Bell. These are two of the largest telecom companies in the United States. At the time of the breakup, telecom was a highly stable business based on landline telecommunications, but the industry has transformed and is now strongly driven by wireless. As wireless technology continues to improve, being a player in wireless means having a high level of investment in fixed infrastructure assets, something that is evident on the balance sheets of both of these companies.
However, these companies differ significantly on how they are structured. Their businesses are very similar, but AT&T has kept a relatively low debt level, and sought growth through expansion. The massive amount of goodwill on its balance sheet and relatively small amount of long-term debt indicate this. Verizon, by contrast, has…
2016 AT&T Annual Report. Retrieved December 11, 2017 from https://investors.att.com/~/media/Files/A/ATT-IR/financial-reports/annual-reports/2016/att-ar2016-completeannualreport.pdf
2016 Verizon Annual Report. Retrieved December 11, 2017 from https://www.verizon.com/about/sites/default/files/annual_reports/2016/downloads/Verizon-AnnualReport2016_financial.pdf
Elsea, Z. (2017). AT&T\\'s acquisition of Time Warner could be in trouble. Forbes. Retrieved December 12, 2017 from https://www.forbes.com/sites/legalentertainment/2017/11/02/atts-acquisition-of-time-warner-could-be-in-jeopardy/#e24c42876cae
NetMBA (2010) Common size financial statements. NetMNBA. Retrieved December 11, 2017 from http://www.netmba.com/finance/statements/common-size/
Overview of Current Situation'
ABC is generally in good health. he income statement shows that the company saw an increase in revenue for 2009, and this translated to an increase in net income. he company's expenses as a percentage of revenue were 13.6%, down from 15.1% the year before. COGS was 69.6% of revenue, versus 78.2% the year before. he company maintained a similar level of works-in-progress inventory over the course of the year, such that the improved operating performance did not derive from a decrease in inventory. Manufacturing overhead as a percentage of sales also declined. In essence, the improved profit performance comes from incremental improvements in cost control that had the cumulative effect of reducing the overall expenses as a percentage of revenue.
he balance sheet shows that the company's overall value has increased. he key increase here is an investment in new equipment. he value…
There is evidence of continual improvement at ABC. First, there is the fact that the company grew its revenues without a corresponding growth in the expenses. This occurred on multiple fronts. ABC increased its gross margin, which seems to indicate improved manufacturing efficiency. The fact that the company was able to increase its sales, lower its COGS, and only experience a modest increase in its work-in-progress inventories indicates that it has become a more efficient manufacturer. It is difficult to extrapolate continual improvement from a one-year time sample, but the evidence shows that the company was more efficient in 2009, and that is cause for optimism that it will continue to improve going forward, especially given new investments.
The new investments in manufacturing equipment is another good sign. The company can point to this investment in new automated manufacturing equipment as an astute investment with a small amount of debt and a some equity as an investment in future production and revenue growth. This is evidence that the company is not resting on its laurels, but investing some of its success today in building future success in the future.
Furthermore, the company was able to control the growth of its non-manufacturing expenses. Even sales expenses as a percentage of revenue fell, from 7.0% to 6.8%. Other administrative expense categories fell even further as a percentage of sales. These figures indicate that the company has improved its administrative productivity -- it is getting more sales from roughly the same administrative expense. Sales expense increased but at a lower rate that the increase in revenues. Both of these figures also point to a company that has focused not just on selling more, but on improving its efficiency across all expense categories. Often, a company can improve in one or two areas with some focus, but to improve in all areas across the board, while growing, is a sign of mature management that is running a sustainable business. There is good cause for optimism regarding the future of ABC based on its 2008 and 2009 financial statements.
Financial statements are essential in measuring and assessing the real financial strength and position of a company. These financial statements provide quantifiable data for reports and help an individual to obtain an understanding of a company's forthcoming forecasts and risks (Weygandt et al., 2008). The purpose of this paper is to review the financial statement of Doctors Hospital in the two years 2013 and 2014 and analyze these financial statements and its financial well-being. In addition, the paper will outline the role played by advanced practice nurses in the financial welfare of the organization.
Implications of Economics for Advance Practice Nurses. The ole of the Advance Practice Nurses in the Financial Wellbeing of Healthcare Organizations
In general, very minimal studies have been undertaken in the United States regarding cost effectiveness and economic impact of primary care delivered by advanced practice nurses. esults from different research studies indicate that, on the…
Baker, H. K., Powell, G. E. (2005). Understanding Financial Management: A Practical Guide. United Kingdom: Blackwell Publishing.
Hughes, R. G., & O'Grady, E. T. (2008). Advanced practice registered nurses: The impact on patient safety and quality. In Naylor, M. D., & Kurtzman, E. T. (2010). The role of nurse practitioners in reinventing primary care. Health Affairs, 29(5), 893-899.
Naylor, M. D., & Kurtzman, E. T. (2010). The role of nurse practitioners in reinventing primary care. Health Affairs, 29(5), 893-899.
Nursing World. (2012). ADVANCED PRACTICE NURSING: A NEW AGE IN HEALTH CARE. American Nurses Association. Retrieved 14 January, 2016 from: http://www.nursingworld.org/FunctionalMenuCategories/MediaResources/MediaBackgrounders/APRN-A-New-Age-in-Health-Care.pdf
Re: Financial Analysis
I have completed my financial analysis of Company G. It is my general impression than Company G. is in good financial health. Thirteen financial ratios were calculated and this analysis shows that the company is generally a mid-range performer. With respect to the liquidity of Company G, that is questionable. The current ratio is within industry norms, but declined in the past year. The acid-test ratio is a weakness, and it has declined in the past year significantly. In the long run, we enjoy a favorable debt ratio. It has increased slightly but still outperforms industry norms. As we have a relatively low level of debt, our interest coverage remains very healthy, and has increased in the past year.
Inventory turnover remains a concern. It was below industry norms last year, and this year has declined further. Sitting on this much old inventory invites…
liquidity, the key ratios are the current ratio and the acid-test ratio. These are measures of the firm's ability to meet its coming obligations, based on current asset (current ratio) and current assets less inventories. The current ratio stands at 1.79, down from 1.86 last year. These figures are both below the industry average, and are trending downwards, indicating that performance is sub-optimal. The acid-test ratio is 0.43, compared with 0.64 last year, again a downward trend. The 0.43 figure puts the company in the lowest quartile of the industry, so the acid-test ratio is a weakness and a point of significant concern. While it is a big hyperbolic to consider a current ratio of 1.79 as a weakness, we should be concerned about the downward trend, especially when couple with such a sharp dropoff in the acid-test ratio. Overall, there is reason to be concerned about the liquidity of…
Financial Statement Analysis
In this particular essay, I undertake the financial analysis of five companies, all of which are set in the retail industry. Three of the companies, Tesco Plc, Sainsbury's and Wm Morrison Supermarkets plc are some of the largest food retailers in the United Kingdom. Ocado which is the fourth company is the largest online food retailer in the whole world and lastly Crawshaw Group PLC is also in the business of operating a chain of retail food stores. Every company will be discussed individually and it will encompass information regarding the history of the company, the products and the services, the consumers and also other information.
Tesco Plc is a company that is based in Britain and is the largest food retailer in the United Kingdom. It is one of the biggest retailers in the globe as it is the third in position in the retail industry…
Accounting for Management. (2014). Return on common stockholders' equity ratio. Available: http://www.accountingformanagement.org/return-on-common-stockholders-equity-ratio/
Bloomberg. (2015). Crawshaw Group Plc company information. Retrieved from: http://www.bloomberg.com/research/stocks/snapshot/snapshot.asp?ticker=CRAW:LN
Bloomberg. (2015). Wm Morrisons Supermarket plc. Retrieved from: http://www.bloomberg.com/research/stocks/snapshot/snapshot.asp?ticker=MRW:LN
Investigating Answers. (2014). Operating Leverage. Available: http://www.investinganswers.com/financial-dictionary/ratio-analysis/operating-leverage-2795
Financial statements allow investors to compare the performance of different publicly-traded companies. This is because there are specific rules that govern how each company can compile and present its statements, and these rules are enforced by the SEC. Two companies that compete in the mobile operating system and online advertising businesses are Apple and Google. This report will compare these two companies, using the financial statements for each for the 2012 fiscal year. The balance sheet will be the specific area of comparison.
For both companies, the last few years have been exceptionally profitable, and this is noted on the balance sheets of each. Both companies have had their assets and their equities increase significantly over the past few years as a result of their profits. The current assets for both companies have expanded, indicating that the operating business of each company has grown significantly. As well, the total assets…
MSN Moneycentral: Apple (2013). Retrieved April 9, 2013 from http://investing.money.msn.com/investments/stock-balance-sheet/?symbol=us%3AAAPL&stmtView=Ann
MSN Moneycentral: Google (2013). Retrieved April 9, 2013 from http://investing.money.msn.com/investments/stock-balance-sheet/?symbol=us%3AGOOG&stmtView=Ann
The financial statements of IVK should be closely examined to determine how to increase revenues while decreasing expenses. Concerning the IT Department, the new manager needs to hire a good mix of people with various skills. There will, of course need to be staff members with exceptional technical skills that can develop new technologies to keep the firm growing at the steady rate that it did a few years ago. However, the department should not be saturated with technical staff. The new manager will need to hire individuals who have a strong business sense and are experienced in the fields of accounting, finance as well as other business areas. This is necessary because the technical staff person may favor a technology that seems to be best for the company because of its capabilities, but the person with a good sense of business can evaluate the technology to determine…
Verizon is a national telecommunications company, headquartered in New York City. The company was formed from the breakup of Bell and subsequent mergers and acquisitions. The company has divisions for media, network and technology and customer/product operations. The latter is by far the largest component of the company, encompassing Verizon Wireless, and a number of companies aimed at the enterprise market. Verizon competes against AT&T and Sprint, both of which are large companies in their own right, with similar businesses, in particular in wireless and telecommunications. These divisions reflect an organizational structure that is focused on product. The wireless business is nationwide, but the landline-oriented businesses are focused mainly in the northeast, which is the traditional geography for Verizon's predecessor business Bell Atlantic.
Recent Financial Performance
Verizon's business has fluctuated over the past three years. In FY 2016, it recorded $125 billion in revenue, down from $131 billion…
Financial Statements: Accounting
Accounting: Financial Statements
Are the assets included under the company's assets listed in the proper order? Explain your answer.
When it comes to the listing of current assets in a balance sheet, it is their liquidity that is taken into consideration. In that regard therefore, the assets that would ordinarily be turned into cash quickly come first. Looking at the company's current assets, one would conclude that based on my explanation above, the order of listing is proper and correct. Cash (which is the most liquid current asset in this case) comes first. The other current assets follow -- in the order of their liquidity.
How are the company's assets classified?
With regard to the classification of the company's assets, we first have the current assets followed by the fixed assets. While current assets in this case include all those assets the company would ordinarily expect to…
Lasher, W.R. (2013). Practical Financial Management. 7th ed. Mason, OH: Cengage Learning.
If on the other hand, the individual asks his friend to return the money, he can place it in an investment with a 15% interest rate and, by the end of the year, the $10 will be worth $11.5. In this order of ideas, we come to the realization that having money now is more valuable than having it in the future as, through time, money has the ability to multiply, if wisely invested.
Q11 -- Cash Budgeting
Cash budgeting is a complex process, with a simple definition however. It sees that organizational managers conduct an analysis and estimation of the cash which is expected to enter and leave the organization. The process refers to "an estimation of the cash inflows and outflows for a business or individual for a specific period of time. Cash budgets are often used to assess whether the entity has sufficient cash to fulfill regular…
Moffatt, M., 2009, Recession? Depression? What is the Difference? About, http://economics.about.com/cs/businesscycles/a/depressions.htm last accessed on August 27, 2009
2009, Cash Budget, Investopedia, http://www.investopedia.com /terms/c/cashbudget.asp last accessed on August 27, 2009
Ratio analysis is a useful way of gaining a snapshot of an organization. It is a transparent system of analysis reporting. These ratios can then be analyzed to identify an organization's strengths and weaknesses as well as useful insights. One thing that is important to realize is that the ratios lack the backing of financial theory. Theory says what should be the case or value. In the case of financial ratios, there is no way to identify a "theoretically best" value for any of these ratios. Essentially, financial ratios are simply nothing more measures that have been developed and evolved over time. They are therefore imperfect measures and need to be treated that way. It is usual that financial ratios are grouped together by their purpose in the ledger. There are a host of different classifications. However, the most commonly used classifications are liquidity, debt, activity. Typically one would not…
Dollery, B., & Crase, L. (2006). A comparative perspective on financial
sustainability in Australian local government. (pp. 1-27). Armidale. New South Wales: Centre for Local Government,.
Financial ratios. (2010). Retrieved from http://www.netmba.com/finance/financial/ratios/
Fridson, M., & Alvarez, F. (2009). Financial statement analysis: a practitioner's guide. New York, NY: John Wiley and Sons.
As a customer, I will expect quality services from BDO.
Mutual funds portfolio turnover is one of the easily explained investment qualities for investors. While expressed as percentages, it shows the portion of securities in the fund's portfolio of those sold and bought in a year. All these information is found in the reports and financial statements we present. When the lower percentage figure is reported, it will equate to a long portfolio-holding period. For example, if the turnover is 10% it means that the portfolio would be reconstituted after five years. On the other hand, when the turnover is 100% the portfolio will be reconstituted in one year. I will select one with 100% turnover because it can be reconstituted in a period of only one year (Feldman & Libman, 2011, p. 43). This will be economical and profitable instead of waiting for a long period to be reconstituted.…
Feldman, M. & Libman, a. (2011) Crash Course in Accounting and Financial Statement Analysis. Brooklyn, NY: John Wiley & Sons.
Epstein, L. (2012). The Business Owner's Guide to Reading and Understanding Financial Statements: How to Budget, Forecast, and Monitor Cash Flow for Better Decision Making. Brooklyn, NY: John Wiley & Sons
Wal-Mart is the world’s largest retailer. They operate in many countries around the world, and have over 2 million employees. The largest market for Wal-Mart is the United States. Wal-Mart is the biggest grocer in the country, one of the biggest online retailers as well. By analyzing the financial statements of Wal-Mart, one can ascertain the company’s financial health as of 2015.
Financial statements for publicly traded companies are compiled according to a specific set of rules, and a format that is established both by convention and by the governance of the Securities Exchange Commission. The value of having these rules is that the information contained in the financial statements is reliable, and comparable. Not only can one compare Wal-Mart’s financial performance across different years, but it is also possible to compare Wal-Mart’s performance against other companies in its industry.
One of the means by which financial…
pex Printing has a generally healthy financial condition. First, the company is liquid, with a current ratio of 1.13. While this is down from the prior year, it is still at a healthy level over 1.0. The long-term debt-to-equity has declined in the past year. This might indicate that some of the long-term debt is coming due this year, so it is important to know what the precise structure of this debt is, but getting the LTD to equity ratio under 1.0 is a healthy sign for the solvency of pex.
pex has been able to improve its gross margin in the past year, which is a positive sign for its profitability. s a result, its net margin has also increased, meaning that it has contained its costs to a point where all of the increase in the gross margin flows through to the net margin. The result…
All of the firms earn a reasonable gross margin, usually in the low 20s. Last year for Apex is an outlier, and more data will be needed to see if Apex can sustain this higher level for the gross margin. Last year, Apex also significantly outperformed the competition with respect to the net profit margin. RR Donnelly lost money in 2012 and turned a slim profit in 2013. Quad turned a slim profit in both years. Last year, it barely earned any net income at all. In that sense, Apex is clearly performing better, even if last year's performance cannot be sustained.
The ROE for Apex is 31%, much higher than it was for 2012, but that is mainly due to the fact that it increased its profitability in the year. RR Donnelly also experienced a high ROE in 2013, after recording a loss in 2012. However, we know that RR Donnelly does not have much equity, so it should have a higher ROE. Apex has a similar ROE, but a much lower level of leverage, which makes Apex the better investment. Quad has almost no equity, but a very low ROE as well. This is attributable to the fact that it has a very low net margin as well. Quad appears to just be scraping by, earning a minimal return on minimal equity.
Overall, Apex is the best investment of the three by far. It earns the best returns on equity, relative to the degree of leverage. Quad has generally lousy metrics other than the current ratio, and should be ruled out on that basis. RR Donnelly is less profitable than Apex, and while it earns a healthy ROE, it has a high level of leverage, so it should have a high ROE. Apex has an ROE almost as high but with a much healthier degree of leverage, which makes Apex the best investment among the three companies, even if last year's exceptional profitability is ultimately non-sustainable.
An unaware analyst may think the second company to be better but in reality its low encouraging level is due to the fact that it is unable to secure additional funding. The companies may possess different capital structures and to attempt comparison of performance when one is all equity financed and another is a geared company may not suffice for a good analysis. The chosen application of government incentives to several companies may also twist the inter-company evaluation. There may be the possibility of providing a company with the tax holiday while the other within the same line of business not, and evaluation of such two enterprises may be misleading. (Session 15: Limitation of atio Analysis)
As a matter of principle, the accounting strategies are required to be applied persistently. Changes are required to be emphasized and the influence of variations from an original policy revealed. This is applicable when…
Accounting and decision making - Ratio analysis. Retrieved from http://www.learn.co.uk/cima-mc/lesson4/page4.htm Accessed on 22 April, 2005
Basic Financial Statement Analysis: Objective 3: Explain the limitations of ratio analysis. Retrieved from http://www.wu-wien.ac.at/usr/h93/h9352467/Limitations%20on%20Ratio%20Analysis/limitationonra.html Accessed on 22 April, 2005
Cars, Andreas. 2002. The Dynamic Current Ratio. 3 September. Retrieved from http://www.investopedia.com /articles/02/090302.asp Accessed on 22 April, 2005
Covers Information from Accounting 200 and 201. Retrieved from http://www.everettcc.edu/emplibrary/Financial%20Ratios.pdf Accessed on 22 April, 2005
Financial Analysis of Bestwish Limited
Bestwish Limited produces extensive range of quality products such as gift dressing, greetings cards, and plush merchandise of more than 50,000 stocks. The production of different categories of products involve between 2 and 15 processes. The company produces standardized products and custom designed products ordered from customers on contract basis. However, Bestwish Limited is facing challenges to control the costs because of varying production process, reliance on indirect costs and large number of stock keeping units.
Bestwish Limited has just closed the 2010 fiscal year account and the company is finalizing the 2011 budget. Bestwish intends to analyze the 2010 financial statement to present the accurate picture of the company financial performances.
Objective of this report is to analyze 2010 financial statements to assess the viability of Bestwish Limited.
Audit Committee of the Board
Subject: Financial statement Analysis
Drury, C. (2009). Management Accounting for Business, 4th Edition (Cengage Learning EMEA, ) ISBN 1408017717.
Harris, R. And Sollis, R. (2003).Applied Time Series Modelling and Forecasting (John Wiley and Sons) ISBN 0470844434
Glynn, J. Perrin, J. Murphy, M. And Abraham, A. (2003).Accounting for Managers, 3rd Edition.(Thomson Learning) ISBN 186152904X
The Times 100, (2012). Financial statements and reporting A Cadbury Schweppes case study. The Times 100 Business Case Studies.
Had the organization employed the techniques of activity-based costing, they would have realized the need to change their approach and had started manufacturing small size and fuel efficient engines, as most of the customers were requiring these items. "If Ford [...] had used activity-based costing, they would have realized early on the utter futility of their competitive blitzes of the past few years, which offered new-car buyers spectacular discounts and hefty rewards" (Drucker, 2003).
Unlike absorption costing, marginal costing uses the traditional division into direct, indirect, fixed and variable costs. The accounting method sees that the final marginal cost of a product will be calculated by summing up the direct costs of labor, the direct costs of materials, the direct expenses and the variable overheads (Brown). The applications of marginal costing revealed that Ford was able to support a price advantage relative to General Motors and Chrysler due to its…
Bernstein, L.A., Wild, J.J., 1999, Analysis of Financial Statements, 5th Edition, McGraw-Hill Publishers, ISBN 0070945047
Berry, a., 1999, Financial Accounting: An Introduction, 2nd Edition, Cengage Learning EMEA, ISBN 186152479X
Brown, G., Introduction to Costs Accounting: Methods and Techniques, http://www.globusz.com/ebooks/Costinglastaccessed on March 9, 2009
Drucker, P.F., 2003, Peter Drucker on the Profession of Management, Harvard Business Press, ISBN 1591393221
financial statements Hawaiian Airlines 3 years. Access information contained Hawaiian Airlines balance sheet income statement calculate: • Liquidity ratios o Current ratio o Acid-test, quick, ratio o eceivables turnover o Inventory turnover • Profitability ratios o Asset turnover o Profit margin o eturn assets o eturn common stockholders' equity • Solvency ratios o Debt total assets o Times interest earned Show calculations ratio
Hawaiian Airlines Financial Analysis
Hawaiian Airlines is a relatively small airline operator at a global level, being the 11th by size in its own country. Still, the notable element about the company is that it is the flag carrier, which virtually means that the company receives governmental support in order to conduct its operations (Bennett, 2006). Hawaiian Airlines is an integrant party of the larger company Hawaiian Holdings, which has placed itself within the market as the company ensuring a quick access to a good time in…
Bennett, S. (2006). A sociology of commercial flight crew. Ashgate Publishing
Cento, A. (2008). The airline industry: challenges in the 21st century. Springer (2012). Investopedia. http://www.investopedia.com accessed on October 4, 2012
Website of Hawaiian Airlines, http://www.hawaiianairlines.com / accessed on October 4, 2012
financial statements of Marriott Hotels and discusses measurement bases they employ. The essay also surveys the literature for current thinking on fair value measurement.
According to the International Financial Reporting Standards (IFRS), measurement "involves assigning monetary amounts at which the elements of financial statements are to be recognized and reported" (Deloitte, 2011). Accounting measurement consists of quantifying financial information in dollars or units. These measurements are then used to report information to internal and external users through the use of financial statements that accountants prepare. Financial accounting measurements may be recorded at historical cost or adjusted to reflect current market values (Conjecture Corporation, 2011).
Generally Accepted Accounting Principles (GAAP) require companies to record balance sheet information using a fair value accounting measurement. Companies must therefore use this measurement technique to value assets and equity investment at the current market rate which thee items would bring if they sold in an…
Barth, M.E. (2006). Including estimates of the future in today's financial statements. BIS Working Paper No. 28. Available at SSRN: http://ssrn.com/abstract=947525
Cairns, D. (2006). The use of fair value in IFRS. Accounting in Europe 3, 5-22. Available at:
Conjecture Corporation. (2011). What is an accounting measurement? Retrieved August 30, 2011 from: http://www.wisegeek.com/what-is-an-accounting-measurement.htm
Balance sheet items can also be used by investors to determine the financial health of a given company. This can be done through the analysis of the relevant financial ratios including but not limited to liquidity ratios.
4. The Cash Flow Statement
Of the financial statements discussed in this text, the cash flow statement is typically the last financial statement prepared. A cash flow statement in the opinion of Cunningham et al. (2011) "shows the changes in a business' cash during an accounting period by listing the cash inflows and outflows from its operating, investing and financing activities..."
easons for Preparing the Financial Statements in the Order Above
One of the main reasons why financial statements have to be prepared in a prescribed logical order has got to do with the need to transfer some pieces of information from one financial statement into the next. In this case, entries in…
Cunningham, B., Nikolai, L.A., Bazley, J., Kavanagh, M., Slaughter, G. & Simmons, S. (2011). Accounting: Information for Business Decisions. South Melbourne, Victoria Australia: Cengage Learning.
Porter, G.A. & Norton, C.L. (2010). Financial Accounting: The Impact on Decision Makers (7th ed.). Mason, OH: Cengage Learning.
financial statements of Barnes and Noble and Borders Group for fiscal year 2009. The companies' statements provide information about their financial health, as well as discuss plans for the coming fiscal year.
The balance sheet reveals detailed information about each company's assets, liabilities and owners' equity (net worth). It is based on the accounting equation Assets = Liabilities + Stockholders' Equity; the two sections of the balance sheet must equal each other just as they do in the equation. This equation represents the basic accounting premise: assets, the means used to operate the company, are balanced by a company's financial obligations, along with the equity investment brought into the company along with its retained earnings (Investopedia, n.d.).
As both the Barnes and Noble and Borders Group statements show, there are four main financial statements:
The balance sheet, which shows what a company owns and what it owes at a fixed…
Investopedia Staff (n.d.). Reading the Balance Sheet. Retrieved on 4/6/2011 from http://www.investopedia.com /articles/04/031004.asp
U.S. Securities and Exchange Commission. 2007. Beginners' Guide to Financial Statements. Retrieved on 4/6/2011 from http://www.sec.gov/investor/pubs/begfinstmtguide.htm
Investor Dictionary, (n.d.). Off-balance sheet activities. Retrieved on 4/6/2011 from http://www.investordictionary.com/definition/off-balance-sheet-activities
Siegel, J.G., & Shim, J.K. (2006). Barron's Accounting Handbook. New York: Barron's Educational Series.
The statement of cash flows separates out the cash flows from the non-cash flows on the income statement. This gives the reader a better indication of the cash position of the company, rather than the position with regards to accounting profit. The statement of cash flows separates cash flows into three categories -- operations, investing and financing. This can help analysts to determine where profits and changes in cash position come from -- do they come from successful operations or from other activities.
The statement of changes to owner's equity explains the changes in retained earnings. It illustrates how the company's activities over the period have impacted the value of the owners' stake in the firm.
These statements are all interrelated. The income statement and the statement of cash flows work together to explain not just profits but the sources of positive and negative cash flows. The statement of changes…
No author. (2007). The 4 financial statements. QuickMBA.com. Retrieved November 23, 2009 from http://www.quickmba.com/accounting/fin/statements/
Discuss at least 1-2 ratios that you believe are important to ascertain the financial position of the company. Do you believe this company has the means to pay its debt?
Financial ratio analysis makes it possible to examine the financial health of a company. The financial statements of a company provide limited understanding and knowledge into its performance. So as to attain a much stronger and richer insight of what takes place, there has to be a relevant basis of evaluation and appraisal. Various financial ratios are key to ascertaining the financial position of XYZ Company. One of these ratios are profitability ratios, which indicate the ability of a firm to convert its sales into profits. The return on assets of the company is 12.0%, return in equity 21.82% and gross margin 32.21%. This indicates that the company is profitable and therefore in a financially stable position. For instance, for…
Personal Financial Situation
This essay examines the personal financial statements of Manny Harris, part-time student and part-time sales associate at Wal-Mart. Manny is considering three significant life events that will affect details of his financial statements.
The first significant change in his personal circumstances that Manny is considering is whether to apply for a loan so that he can afford to attend college full-time. Manny is concerned with the trade-offs involved; he wonders whether a bachelor's degree will help him obtain a job with sufficient compensation to justify the burden of paying back student loans. According to Oloffson in her Time magazine article, Manny's concerns are well-founded. The cost of average tuition rose by 6.5% during the fall of 2009, and the average amount of student debt rose to $23,200 in 2008. However, the unemployment rate for recent graduates rose as well, and stood at a record high…
Mantell, R. (2010). Changing economy poses challenges for job seekers. The Wall Street Journal Market Watch online. Retrieved June 14, 2011 from http://www.marketwatch.com/story/changing-economy-poses-challenges-for-job-seekers-2010-05-07
Oloffson, K. (2009). The job market: is a college degree worth less? Time online. Retrieved June 14, 2011 from http://www.time.com/time/business/article/0,8599,1946088,00.html
Stanny, B. (2011). 16 things I wish I knew about money when I graduated college. Forbes online. Retrieved June 14, 2011 from http://blogs.forbes.com/barbarastanny/2011/06/14/16-things-i-wish-i-knew-about-money-when-i-graduated-college/
financial statements by business entities. The purpose of this is so that one can understand about the business cash, how the business acquired or generated it, how it was used and in what ways and tomorrow's business plans, financial position of a business, performances and its position. The paper will go ahead to analyze if there is any significance of cash for the survival of a business and the impacts of the various financial sets. The arguments that will prevail will be based on the importance of the different financial statements to a business survival.
Cash is a crucial constituent of a business and I do agree that a business cannot survive without it. 'As a matter of fact the main aim and goal of a business is to generate cash and profits not only in the short run but also in the long-term.' (Minnery, 2006) Every business has everyday…
Elliot.B, 2005, Financial Accounting and Reporting; Financial Times/Prentice Hall, United Kingdom
Graham B. 1998, The Interpretation of Financial Statements Harper Business, amazon
Minnery.B. 2006, 'Don't question the importance of cash flow' The independent, viewed date 28 May 2006, www.independent.co.uk
MoneyInstructor.com. 2009, The importance of cash flow statement; viewed; Aug 19, 2009 www.moneyinstructor.com/doc/importance....
e. they ignore other key indicators and measures of financial performance. Other equally important measures and/or indicators of performance in this case include but they are not limited to employee morale, client service and satisfaction, quality of goods or products, etc.
Another key limitation of ratios is that they are only useful when it comes to the comparison of firms operating in the same industry. Utilizing ratios in the analysis of financial statements of companies in different industries could lead to a distortion of the information desired. This is more so the case given that entities in different industries are more often than not exposed to different regulations, market conditions, etc. In practice, finding two companies that are identical in every way is impossible.
atios could also be affected by changes in price levels. According to Lasher (2010), financial statements are often distorted by inflation. In the author's words, "during…
Lasher, W.R. (2010). Practical Financial Management (6th ed.). Mason, OH: Cengage Learning.
Siegel, J.G. & Shim, J.K. (2006). Accounting Handbook (4th ed.). New York: Barron's Educational Series, Inc.
Starbucks 2014 Annual Report
Cost of sales
Store operating expenses
other operating expenses
D & A Exp
Total Operating Expenses
Income from Equity Investees
Earnings before taxes
Income tax expenses
The vertical analysis shows some interesting things. First that the bottom line reveals basically nothing -- the net income in 2013 is entirely a reflection of the litigation charge for a lawsuit the company lost. So to understand the actual trend in the business one needs to look at the other line items.
Top line revenue is increasing at a fairly rapid rate, up 10% in 2014 and almost 12% in 2013. This reveals that Starbucks in this period was in a period of steady, rapid growth. The growth was spread across different business units as well, indicating a healthy broad-based…
McDonalds is a fast food restaurant chain that operates globally. The company is the leader in the industry, and is one of the most recognized brands in the world.
The income statement can reveal a number of things about a company. First, it reveals the revenues that the company has earned. McDonalds has seen its revenues fluctuate over the past three years. In 2012, revenues were $27.567 billion. They increased to just over $28 billion in 2013 but then fell back again in 2014 to $27.441 billion. The second valuable piece of information from the income statement is the company's expenses. These are broken down into different categories but overall the operating expenses were reduced in 2013 and then spiked back up in 2014. As a result of these changes, the third bit of useful information is revealed -- the net income. McDonalds has seen a substantial decline…
2014 McDonalds Annual Report. Retrieved October 17, 2015 from https://www.aboutmcdonalds.com/content/dam/AboutMcDonalds/Investors/McDonald 's%202014%20Annual%20Report.PDF
"Guide to SEC Filings" (no date). In possession of the author.
MSN Moneycentral (2015) McDonalds Corp. Retrieved October 17, 2015 from http://www.msn.com/en-us/money/stockdetails?symbol=MCD&ocid=qbeb
Yahoo! Finance (2015) McDonalds: Cash flow statement. Retrieved October 17, 2015 from http://finance.yahoo.com/q/cf?s=MCD+Cash+Flow&annual
financial analysis and more specifically financial ratios has been noted by Finkler, Marc and Baker (2007, p.253) to be important to managers since it can help them in making informed decisions. In this paper, we present the concept of ratio analysis as applied to healthcare facilities.
The concept and purpose of ratio analysis
Financial statement analysis is noted by Flex Monitoring Team (2005) to be very important to managers, boards, payers as well as lenders for them to effectively make the right judgments on the financial health of their organizations. atio analysis is one of the most accepted methods of assessing the financial health of an organization. The data that is used for ratio analysis is derived from income statements and balance sheets. It is a fact that most health care systems, hospitals as well as various other healthcare organizations routinely employ ratio analysis in evaluating their financial condition and…
Eichler HG, Kong SX, Gerth WC, Mavros P, Jonsson B. (2004)Use of cost-effectiveness analysis in health-care resource allocation decision-making: how are cost-effectiveness thresholds expected to emerge?. Value Health. 2004 Sep-Oct;7(5):518-28.
Finkler, SA.,Ward, DM ] and Baker, JJ (2007).Essentials of Cost Accounting for Health Care Organizations. Jones & Bartlett Learning,
Flex Monitoring Team (2005). Financial Indicators for Critical Access Hospitals. Available online at http://www.flexmonitoring.org/documents/BriefingPaper7_FinancialIndicators.pdf
According to these analysts, "The implicit assumption underlying the price-to-earnings method is that the fair market value of the closely held business can be approximated from the market value of comparable publicly traded businesses. To implement this method, the valuator must be able to identify a set of presumed-to-be comparable publicly traded companies and obtain sufficient information on each to verify the extent of comparability from an economic, management, and financial perspective. No publicly traded company will be precisely comparable to the closely held business being valued, so informed judgment must be exercised" (p. 81). As a general rule, the smaller in size and the more limited the scope of activities of the business being valued, the less likely there will be a set of publicly traded companies that are comparable, or even a single comparable publicly traded company. Publicly traded companies are for the most part large, measured in…
Allen, M.F. & Cote, J. 2005, "Creditors' Use of Operating Cash Flows: An Experimental
Study." Journal of Managerial Issues 17(2): 198-199.
"Asset/equity ratio." 2009, Investor Glossary. [Online]. Available: http://www.investorglossary.
Using these different techniques reveals different information about the company. So for example we know that Tesco earned £67.6 billion in revenue last year, and that this is an increase of 8.1% over the previous year. This is the top line number; we can see that the bottom line number is £3.8 billion, an increase of 11.7% from the year before. This basic analysis reveals that the company has increased its revenues faster than it costs. This is valuable information for all types of stakeholders. Investors find such facts reassuring. Unionized workers may see an opportunity to take their share of the increased profits, and customers may be upset that the company is earning higher margins from them, although it is hard to see where margins might come from on a 19p can of tomatoes.
The balance sheet is used to understand Tesco's financial condition. The assets, liabilities and equity…
Grant Thornton. (2011). The future of UK GAAP. Grant Thornton. Retrieved November 22, 2011 from http://www.grant-thornton.co.uk/services_/audit_and_assurance_x/the_future_of_uk_gaap-1.aspx
Investopedia. (2011). Efficient market hypothesis. Investopedia. Retrieved November 22, 2011 from http://www.investopedia.com /terms/e/efficientmarkethypothesis.asp
SEC. (2007). Beginner's guide to financial statements. Securities and Exchange Commission. Retrieved November 22, 2011 from http://www.sec.gov/investor/pubs/begfinstmtguide.htm
Tesco 2011 Annual Report. Retrieved November 22, 2011 from http://ar2011.tescoplc.com/
Article 3: Evaluation of high- and low- risk investment projects
Ispas, Constantin, Eduard Lovin, & Dana Tilina. (2009). Risk analysis in investment projects.
Annals of DAAAM & Proceedings. Retrieved October 23, 2010 at FindArticles.com http://findarticles.com/p/articles/mi_7105/is_2009_Annual/ai_n53386583/
Accurately evaluating the technical, economic and social risk of a new investment project is critical. Common potential risks include errors in evaluating opportunity growth; errors in data-gathering; misevaluating the priority of the economic objective to be achieved, mis-projections of project scope (otherwise known as 'project creep'); and radical and unexpected changes in the economic environment. Evaluating risk is a multi-faceted process. It entails an understanding of the physical, functional, and staff required to realize the project; assessing vulnerabilities and possible remedies; risk adjustment; prioritizing on organizational risk hierarchies; making risk comparisons within the organization and globally; and appropriate use of risk matrices.
Article 4: Valuation of stock and stock portfolios
Lerzan, Aksoy, Bruce Cooil, Christopher…
The role of financial statements in investing is that they provide a consistent format that can be used by potential investors and other stakeholders to evaluate a company. There are several components that facilitate this happening. For publicly-traded firms, Generally Accepted Accounting Principles (GAAP) play a key role in the creation of financial statements. GAAP is a common set of accounting principles and procedures that companies use to compile their financial statements (Investopedia, 2012). ith companies having to produce their statements according to a common set of criteria, the information is easier to compare not only between different years at the same company, but also against other firms in the industry and all other publicly-traded firms.
The IFRS is essentially the international version of GAAP. Financial statements in many countries, especially those in Europe, are produced according to IFRS. There are a many areas where GAAP and IFRS diverge,…
AICPA. (2011). International financial reporting standards (IFRS): An AICPA backgrounder. AICPA. Retrieved March 22, 2012 from http://www.ifrs.com/pdf/IFRSUpdate_V8.pdf
Beiersdorf 2011 Annual Report. Retrieved March 22, 2012 from http://www.beiersdorf.com/GetFile.ashx?id=3243
Investopedia (2012). Generally Accepted Accounting Principles (GAAP). Investopedia. Retrieved March 22, 2012 from http://www.investopedia.com /terms/g/gaap.asp#axzz1pmKm2c8C
Revlon Fiscal Year 2011 Form 10-K. Retrieved March 22, 2012 from http://services.corporate-ir.net/SEC/Document.Service?id=P3VybD1odHRwOi8vaXIuaW50Lndlc3RsYXdidXNpbmVzcy5jb20vZG9jdW1lbnQvdjEvMDAwMTE5MzEyNS0xMi0wNjUzMTAvZG9jL1JldmxvbkluYy5wZGYmdHlwZT0yJmZuPVJldmxvbkluYy5wZGY=
0703 = 7.03%
2,390 / 27,000
= .0885 = 8.85%
The next ratio used in the analysis is Return on Assets. This ratio also shows significant reduction year-over-year from $14.57% in 2008 to 10.58% in 2009, a reduction of 27%. This indicates the internal systems and processes within Shisa Wasabi are more anemic than the gross margin calculation had shown. It also indicates that the assets may be aging quickly and needing repair to continually stay at a level of deliver higher ROA year-over-year. Unfortunately for this company their ROA is declining nearly a third in just a year, which signals significant slowdowns and lack of effiencies internally.
Return on Assets Calculations
Net Profit Margin
2,100 / 19,400
=.1058 = 10.58%
2,390 / 16,400
= .1457= 14.57%
The third financial ratio used to evaluate the potential investment…
The reduction in liabilities represents a move to reduce financial leverage in a period of tightening credit and risk profiles. The cash build-up too is an assertive move to combat liquidity concerns and build structural soundness to the balance sheet. AMD management implicitly understood that their internal financial condition was threatening to unravel the company with stagnant revenues and bloated expenses. As such the repositioning of AMD to take advantage of new revenue opportunities in their fusion process technology was an important step. Add to this a streamline of operations to improve the income statement, a strengthening of the balance sheet through targeted asset increases and strategic debt reductions; and the result are 2010 financial statements which show AMD "achieved many financial milestones: increasing revenue 20% year-over-year, restructuring the balance sheet, reducing overall debt, improving gross margin and delivering positive adjusted non-GAAP free cash flow" (AMD Annual eport. 2010)
Advanced Micro Devices. AMD. (2009). 2009 Annual Report. Advanced Micro Devices.
Retrieved September 19, 2011 from http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzI2ODh8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1
Advanced Micro Devices. AMD. (2010). 2010 Annual Report. Advanced Micro Devices.
Retrieved September 19, 2011 from http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9ODUyNDV8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1
In order to refer to this, we need to mention that the cash flow statement for the year generally reflects three different cash flow positions or categories: cash flows from operating activities, cash flows from investing activities and cash flows from financing activities. I have discussed the interrelationship between the cash flow from operating activities and the balance sheet. The other two categories are also reflected in the balance sheet.
Indeed, the company may invest during the financial year in fixed assets, such as property or equipment. The negative difference reflected on the statement of cash flows will be noted as an increase in the total asset value on the balance sheet, that is, an increase in the value for "property, plant and equipment."
This is the same for the cash flows from financing activities, which are strictly connected to the "liabilities and owners' equity" fields on the balance sheet.…
1. Halpern, Paul; Weston, Fred; Brigham, Eugene. Canadian Managerial Finance. Dryden, Fourth Edition. 1994
4. Business Owner's Toolkit. On the Internet at http://www.toolkit.cch.com/text/P06_7040.asp
Accounting Process and Financial tatements.
A reliable internal system of accounting is an essential element of a solvent profit or nonprofit business entity. By recording virtually every business activity or endeavor, with regards to the creation of monetary inflows of sales revenue and monetary outflows of expenses resulting from operating activities; an accounting system should provide the financial information needed to evaluate the profitability or effectiveness of past and operations. Along with maintaining data for reporting purposes, an effective accounting system will effectively report the status of asset resources, creditor liabilities, and ownership equities of the business entity. With today's rapid and ever expanding technological developments have lead to increasing operating speeds, convenient data storage capabilities, reliability and significantly reduced costs.
Historically, maintaining an effective accounting system involved extensive manual labor which was described as tedious, aggravating, and time exhaustive. Recording transactions, adding subtracting, summarizing, and checking for errors were…
BASIC FINANCIAL ACCOUNTING REVIEW: media.wiley.com/product
Smith; Outlines & Highlights for Financial Accounting Basics. AIPI; 3 edition (October 19, 2006).
Stickney, Clyde P., Weil, Roman L.; Financial Accounting: An Introduction to Concepts Methods, and Uses. South-Western College Pub; 10 edition (July 2, 2002).
Maher, Michael W., Stickney, Clyde P., Weil, Roman L.; Managerial Accounting: An Introduction to Concepts, Methods and Uses. South-Western College Pub; 10 edition (March 13, 2007)
Valuation and Financial Statements
The question of shareholder interest as it pertains to a takeover bid is dependent on a variety of factors, not the least of which is the valuation of the company as determined by the board of directors and executive management. While current stock price plays a relevant role, valuation depends on analysis conducted in key areas including but not limited to: earnings multiple times EBITDA, price to book ratio, forward looking earnings guidance, and perhaps most crucial enterprise value. The current scenario of ABC Company pursuing the acquisition of XYZ Company for $35.00 a share, a $10.00 premium over the current $25.00 stock price, allows for an explication of these valuation techniques.
XYZ management believes that the $35.00 offer price is undervaluing the company and as such is not in the shareholder's interest. In identifying the rationale for this position a logical place to…
Mission and Vision Statement Analysis
Linking Wal-Mart's Mission and Vision to Their Strategic Goals ands Objectives
Assessing the Link Between Wal-Mart's Financial Performance And Its Strategic Goals
Wal-Mart Competitive and Marketing Analysis
Wal-Mart Marketing Analysis
Selecting An Appropriate Strategy (low cost, differentiation or niche) For Maximizing Organization's eturn on Shareholders
Potential Wal-Mart Merger & Acquisition Strategy
Incentive and eward Strategies for Wal-Mart Employees
Evaluating How Current Strategies Define Ethicacy Levels at Wal-Mart
Wal-Mart atio Analysis
Income Statement Analysis, 2007 -- 2011
Wal-Mart Capstone Analysis
Mission and Vision Statement Analysis
The foundations of the Wal-Mart value chain and its global success is predicated on how well this company aligns every internal system and strategy to their unique value proposition of Low Price Everyday (LPED) leadership. This unique value proposition galvanizes the mission and vision statement of Wal-Mart and is one of the foundations of their success and continued growth.…
Nabil Alghalith (2005). Competing with IT: The UPS Case. Journal of American Academy of Business, Cambridge, 7(2), 7-15.
Jonathan Birchall. (2009, October 23). Walmart set to focus on growth outside U.S.. Financial Times,16.
Susan Christopherson 2007. Barriers to 'U.S. style' lean retailing: the case of Wal-Mart's failure in Germany. Journal of Economic Geography: Transnational Retail, Supply Networks, and the Global 7, no. 4 (July 1): 451-469.
Richard De Santa. (1998, January). Technology. Supermarket Business, 53(1), 18.
Despite the highly purposeful construction of the annual report, however, there are no inaccuracies or deliberate attempts to mislead investors immediately apparent in MD's assessment of its financial situation, and indeed the annual report provides an excellent roadmap for the company's decision-making process during the year. Its divestment of certain operations was a direct response to the reduced capital -- through heightened repayment obligations and the loss in sales -- that the company experienced and continues to predict for the immediate future (MD 2009). Other company decisions were likewise based on appropriate and immediate recognition of and response to financial data.
t the same time, some of the financial figures that MD presents in its annual report show operating losses extending back several years before the onset of the recession, in some departments (MD 2009, pp. 60). The company's responsiveness to this issue seems to have been slower…
At the same time, some of the financial figures that AMD presents in its annual report show operating losses extending back several years before the onset of the recession, in some departments (AMD 2009, pp. 60). The company's responsiveness to this issue seems to have been slower than the annual report indicates; though the organization was spurred into restructuring and divesting itself of some of its less profitable operations by the recession, some of these problems existed previously. The new partnerships that the company formed during the year also seem to be the result of analysis of rising operating costs, especially when paired to the reduced sales and income that the company experienced during 2008. Most of AMD's decision-making appears to come form an analysis of projected (and real) costs and income; it was not until the recession severely hurt income levels that the extra costs the company was accruing became a significant problem.
Many of the major decisions made by AMD in 2008 were, of course, the result of complex and long-term analyses that are beyond the scope of the current paper. Even a brief analysis of the 2008 annual report, however, demonstrates the company's reliance on and utilization of financial data and analyses. It is only with accurate and complete information that responsible and effective decisions can be made, by both investors and the company itself, and AMD definitely strives to provide that in its annual report. This does not prevent the company from presenting the information in such a way that puts it in an advantageous light, however.
Mission and Vision tatement Analysis
Linking Wal-Mart's Mission and Vision to Their trategic Goals and Objectives
Assessing the Link Between Wal-Mart's Financial Performance And Its trategic Goals
Wal-Mart Competitive and Marketing Analysis
Wal-Mart Marketing Analysis
Potential Wal-Mart Merger & Acquisition trategy
Incentive and Reward trategies for Wal-Mart Employees
Evaluating How Current trategies Define Ethicacy Levels at Wal-Mart
Wal-Mart Ratio Analysis
Income tatement Analysis, 2007 -- 2012
Analysis of WalMart Corporation
Mission and Vision tatement Analysis
All internal systems, processes, external stakeholder management initiatives, supply chain management, sourcing, quality management and merchandising initiatives in WalMart revolve around the fulfillment of the expectations they create with their customers daily. Their Low Price Everyday (LPED) value proposition permeates their entire value chain, galvanizing it around the mission of delivering exceptional value on a consistent basis to customers. The mission and vision of WalMart rely on LPED as the catalyst and unifying…
Sources: (Wal-Mart, 2012) (Sodhi, Son, 2009) (Gosman, Kohlbeck, 2009)
Selecting the Best Possible Strategy for Maximizing Return to Shareholders
For WalMart to deliver the greatest potential value to shareholders, they need to pursue a mid-tier market strategy that differentiates store product
Apple and Google: Interpretation of Financial Statement Changes
Based on the computations presented in Table 1, Apple comes across as being the best performer. My assertion is in this case largely based on the changes in the revenue figure. In the two years under consideration, the company registered a 66% increase in revenues. The enhanced revenue could in this case be an indicator of enhanced sales as a result of aggressive marketing or new product launch. An increase in unit selling price of the company's products could also have contributed to the change in revenue. Google on the other hand managed to increase its revenues by 29% within the same period. It is however important to note that in each case, the cost of goods sold also increased significantly.
From a managerial perspective, the information derived from the computations and comparisons in Table 1 are useful for a number of…
Duchac, J.E., Reeve, J.M. & Warren, C.S. (2006). Financial Accounting: An Integrated Statements Approach (2nd ed.). Mason, OH: Thomson Higher Education.
Yahoo Finance. (2012). Apple Inc. (APPL)-NasdaqGS. Retrieved October 24, 2012, from Yahoo Finance website: http://finance.yahoo.com/q/is?s=AAPL+Income+Statement&annual
Yahoo Finance. (2012). Google Inc. (GOOG)-NasdaqGS. Retrieved October 23, 2012, from Yahoo Finance website: http://finance.yahoo.com/q/is?s=GOOG+Income+Statement&annual
alance sheet of a business describes a picture of that business from a financial point-of-view. The balance sheet represents a real time analysis of the company and can assist all those who understand its purpose in gaining a full understanding of conducting the operations of that business. The balance sheet of a company will have sections identifying the company's assets liabilities and equity.
Assets describe the positive and liquid attributes of a company. Liabilities have the opposite effect. The equity of a balance sheet highlights the relationships between the liabilities and the assets of the organization. The owner's equity of the balance sheet helps introduce capital that is unaccounted for in either the liabilities or assets portion of the balance sheet.
Liquid assets include cash, inventory, money received from paying customers, prepaid expenses. Investments, property and other intangible assets are included within balance sheets. Liabilities include money owed to accounts,…
Tulisan, P. (2010). Understanding the importance of a balance sheet. Interview on MSNBC 20 June 2010. Viewed 20 Aug 2011. http://www.youtube.com/watch?v=mjcy - UI90wE&feature=related
"U.S. Small Business Administration sample spreadsheet for a small business." Archived from http://web.archive.org/web/20070715223932/http://www.sba.gov/library/balsheet.xls . Retrieved 2011-08-20.
Measuring inventory effectively is paramount in keeping financial statements of a company up-to-date. Inventories represent a large proportion -in most companies- of short-term assets on the balance sheet. If valuation method is not prudent the assets and shareholder's equity will be over or underrepresented on the balance sheet. This will give an inaccurate picture of financial statements on which an investor based his financial decisions on.
Why does the Canada Customs and Revenue Agency not allow companies to use LIFO when calculating Net Income for Income tax purposes?
In economies with high inflation and industries with rising prices using LIFO inventory system, new sales will be matched against higher production costs, therefore net income will be lowered. The cost of goods sold will be higher and inventory value is consequently lower on the books. Organizations can manipulate the inventory method to lower tax liability.
What would happen to…
Accounting 201 and Finance301:
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…
Agilent Technologies, Inc. (2014). Annual Reports. Retrieved November 27, 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 27, 2014 from www.agilent.com Web site: http://www.agilent.com/about/companyinfo/index.html
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
JD Wetherspoon is one of the largest pubcos in Britain, with 880 properties, and had annual turnover last year of ?1.409 billion (Yahoo! Finance, 2015). The company competes with a cost leadership strategy, something that should be reflected on its income statement. It seeks to undercut competitors using its economies of scale in purchasing, and other cost-saving techniques, ranging from zero guaranteed hours for 80% of its workforce to deliver labour cost flexibility (BBC, 2015), to its focus on real ale, which sells at lower price points than lagers. The company is an industry leader, and has been able to win a substantial amount of market share away from both traditional independent pubs and from other pubcos alike, despite operating in a market characterized by intense competition (Aldalou, 2015). This paper will examine the financial performance of JD Wetherspoon over the past five years, along with the performance…
Aldalou, M. (2015). Wetherspoon sales up but profits under pressure. Insider Media Limited. Retrieved March 15, 2015 from http://www.insidermedia.com/insider/central-and-east/135530-revenues-wetherspoon-profits-under-pressure/
Armstrong, A. (2015). C&C to walk away from Spirit Pubs takeover. The Telegraph. Retrieved March 15, 2015 from http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/leisure/11324235/CandC-to-walk-away-from-Spirit-Pubs-takeover.html
BBC. (2015). JD Wetherspoon aims to triple breakfast and coffee sales. BBC News. Retrieved March 15, 2015 from http://www.bbc.com/news/business-31866708
IBISWorld. (2014). Pubs & bars in the UK: Market research report. IBISWorld. Retrieved March 15, 2015 from http://www.ibisworld.co.uk/market-research/pubs-bars.html
Therefore, I do believe that qualitative research is necessary. The financial statements can reveal much, but there are definitely instances in which the financial statements require contextual understanding for proper interpretation. Without this understanding, the firm's numbers may only reveal raw data. Raw data can be interpreted any number of different ways, so it is essential that qualitative analysis be conducted in order to place the numbers within a framework that will make understanding easier. or example, Landry's is taking on debt, but we know from the company's statements that this is to finance expansion and that hopefully when those properties are open, the returns will begin to improve.
How the firm makes money is an important consideration. This can help to not only place past performance into perspective but also to provide greater understanding of the firm's future prospects as well. Competitive advantages can be derived sometimes from the…
Free Cash Flow = Cash from Operating Activities -- Capital Expenditures (aka Cash from Investing Activities)
2003: $121,529 -- 189,930 = ($68,401)
2002: $111,637 -- 274,913 = ($163,276)
Financial analysis is a tool that allows third parties to analyze corporate financial statements. One of the main reasons that the Securities and Exchange Commission requires that statements are compiled and presented in a consistent manner is to ensure that third parties will be able to use the statements to compare different companies. These comparisons can, among other things, help with investment decisions. This paper will compare PepsiCo and Coca-Cola Company, the two leading soft drink marketers in the world. PepsiCo is actually the larger of the two companies, because it is more diversified, with its snack food properties. These properties also alter the company's finances, creating certain points of difference between the two companies. This report will cover a number of different forms of financial analysis, arriving at a conclusion about which company has the stronger financial position.
The first set of ratios to be studied…
FTC. (2010). FTC puts conditions on PepsiCo's $7.8 acquisition of two largest bottlers and distributors. Federal Trade Commission. Retrieved May 19, 2012 from http://www.ftc.gov/opa/2010/02/pepsi.shtm
Leckey, A. (2010). Coca-Cola Co. outlook strong after big acquisition. Los Angeles Times. Retrieved May 19, 2012 from http://articles.latimes.com/2010/oct/31/business/la-fi-leckey-20101031
Loth, R. (2012). Financial ratio tutorial. Investopedia. Retrieved May 19, 2012 from