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Identify the four basic financial statements.
The four basic financial statements include: the balance sheet, income statement, owners' equity and cash flows. The balance sheet is when there is a focus on the current financial strengths or weaknesses inside a firm. This gives managers, employees, investors and regulators the ability to determine what issues are impacting the company. (Ingram, 2011) ("Four Financial Statements," 2010)
The income statement is concentrating on the profits or losses that were made by a company over a specified period of time. This is designed to provide stakeholders with more precise information about: the activities of the firm and their impact on the bottom line results. When this happens, the company is providing increased amounts of transparency and clarity during the process. (Ingram, 2011) ("Four Financial Statements," 2010)
The owners' equity is looking at how effectively the company is using the funds they receive…
Four Financial Statements. (2010). Quick MBA. Retrieved from: http://www.quickmba.com/accounting/fin/statements/
Ingram, D. (2011). The Four Primary Financial Statements. Chron. Retrieved from: http://smallbusiness.chron.com/four-primary-financial-statements-companies-use-11294.html
Kimmel, D. (2010). Financial Accounting. Hoboken, NJ: John Wiley & Sons.
Financial Statement Differentiation
Analysis of the Use of Four Types of Financial Statements
The four fundamental types of financial statements include the balance sheet, income statement, statement of retained earnings and statement of cash flows and each meets a very specific series of needs within a business. Investors are most interested in the risk profiles of companies they are interested in investing in more than any other information element. Creditors are most interested in the cash flow of the business, and if the current level of liabilities and payments to keep them current also allow for payments on potential new debt or investment (Bordeianu, Bordeianu, 2009). Managers often have the most intensive information requirements, as they must balance the planning, organizing, leading and controlling of a business with all available financial information. Managers also have the added responsibility of managing risk on new business ventures while mitigating the costs of…
Bordeianu, G., & Bordeianu, S. (2009). The information offered by financial statements on the company's performances. Economy Transdisciplinarity Cognition, (1), 240-244.
Caramanolis-Cotelli, B., Gardiol, L., Gibson-Asner, R., & Tuchschmid, N.S. (1999). Are investors sensitive to the quality and the disclosure of financial statements? European Finance Review, 3(2), 131-159.
Glover, J.C., Ijiri, Y., Levine, C.B., & Liang, P.J. (2005). Separating facts from forecasts in financial statements. Accounting Horizons, 19(4), 267-282.
Kneer, D.C. (1985). Just how much should a financial statement really disclose? Business Horizons, 28, 65-71.
Financial statements are produced in order to help stakeholders understand the financial condition of the entity in question. Different types of entities, however, have different reporting requirements. A self-employed individual has very different needs from a limited company, and these are different from not-for-profit organisations as well. This paper will examine some of these differences.
The first class of business is the self-employed individual. There are no reporting standards for self-employed individuals. Such individuals, when engaged in business for themselves, need only report to Her Majesty's evenue and Customs their revenues and expenses for the year. A self-employed individual has no other stakeholder besides himself/herself and Her Majesty, so there is no need for complex standardized reporting. The self-employed individual can choose what method of accounting they want to follow -- accrual or cash basis. Cash basis accounting is accepted for the self-assessment tax return, whereas it would not be…
BDO. (2010). International financial reporting standards for not for profit entities. BDO. Retrieved April 13, 2014 from http://static.bdo.uk.com/assets/documents/2010/03/International_finanical_reporting_standards_and_not_for_profit_entities.pdf
BDO. (2011). The future of UK financial reporting. BDO. Retrieved April 13, 2014 from http://static.bdo.uk.com/assets/documents/2011/10/The_Future_of_UK_Financial_Reporting_-_Implications_for_the_financial_services_sector.pdf
HMRC.gov.uk. (2014). Self-employed. Her Majesty's Revenue & Customs. Retrieved April 13, 2014 from http://www.hmrc.gov.uk/self-employed/
The former deducts the inventory figure from the current assets value.
In the years under consideration, both the current ratio and the quick ratio of McDonald's decreased (see table 1). In that regard, the company's ability to settle its debts in the short run seems to have been impaired within the period under consideration. It is however important to note that with a current ratio and quick ratio of more than 1, McDonald's can still comfortably settle its short-term debts or obligations were they to suddenly become due.
Asset Utilization Analysis
In seeking to analyze how effective McDonald's is in the utilization of its assets, I will take into consideration two main ratios including accounts receivable turnover ratio and the inventory turnover ratio. The accounts receivable ratio according to Baker and Powell (2009) "measures how many times a firm's accounts receivable are generated and collected during the year." As the…
Baker, H.K. & Powell, G. (2009). Understanding Financial Management: A Practical Guide. Malden, MA: Blackwell Publishing.
Brigham, E.F. & Houston, J.F. (2009). Fundamentals of Financial Management (12th ed.). Mason, OH: Cengage Learning.
Mowen, M.M., Hansen, D.R. & Heitger, D.L. (2011). Cornerstones of Managerial Accounting (4th ed.). Mason, OH: Cengage Learning.
Table 1: McDonald's Corporation's Financial Ratios
Financial Statement Fraud Report: Rite-Aid
Fraudulent financial reporting can really have unfavorable results on companies, as well as, public confidence in capital markets. This paper will examine the financial statement fraud and will also investigate the financial statement fraud that happened at Rite Aid in the beginning of the 2000's. The outcome of Rite Aid's fraud, as well as a lot of other key accounting scandals, led to the formation of the Sarbanes-Oxley (SOX) Act of 2002. SOX help the increasing need to reestablish customer confidence in reporting and accounting practices. AAER No. 1579 on June 21, 2002 discloses to the public the SEC's commands to Rite Aid appropriate to their activity that is fraudulent. Rite Aid's recounted financial statements were misleading and false, and its records and books were imprecise. Rite Aid was told that they to reaffirm stated cumulative pre-tax income by a total of $2.5 billion and…
Anderson, R.T. (2004). Too Good to Be True CEOs and Financial Reporting Fraud. Consulting Psychology Journal: Practice and Research, 51(6), 35-43.
Bell, M. (2007). What Happened to Rite Aid? . Retrieved from http://www3.villanova.edu/.../Mike%20Bell%20-%20Rite%20Aid.doc
Callahan, D. (2004, Janurary 13). Prescription for Disaster. Baltimore SmartCEO. Retrieved from http://smartceo.com/files/issues/Jan%2004.pdf
Federwisch, A. (2007, September 30). Exploring Ethical Lapses During the Rite Aid Crisis . Retrieved from http://www.scu.edu/ethics/practicing/focusarea/business/rite-aid.html
Financial Statement Fraud eport - Enron
Financial Statement Fraud eport: Enron
The Enron case made the news when investors and employees realized that the company's accounting practices were not in line with what the company was actually telling them. Eventually, the dishonest accounting practices led to the bankruptcy of the Enron corporation and the dissolution of their accounting firm, Arthur Andersen (Foerstel, 2002). That accounting firm was among the five largest in the world, but its auditing of Enron and the deceit in which it was involved became their downfall. In order to clearly understand how this happened, it is necessary to describe the case. Also looked at here are the factors that led to the fraud, what specific fraud actually occurred, and what effects it had on specific groups of individuals who were affected - both directly and indirectly - by Enron's demise. It was not just the employees…
Anderson, A.A. (1999). Downsizing and the Meaning of Work. Babson College Business Ethics Program.
Borger, J., & Teather, D. (2002). As Enron scandal spreads, U.S. starts to question cash for influence culture. Guardian Unlimited.
Feinberg, L. (2002). The Enron scandal: the real crime. Workers World.
Foerstel, K. (2002). Campaign finance bill finds new energy in Enron ruins. Congressional Quarterly Weekly, 60, 168-170.
I agree with Harper (2009) on this, as well. Just scratching the surface of the financial statements will not help a person who is trying to invest in a company, because, as is often said, the devil is in the details. Something can look incredibly good on the first page and simply be terrible as one digs deeper into it. There might also be issues that a company has and that do not appear on the financial statements, but that is a risk that a lot of investors are willing to take if the financials look strong enough. Without being clear on how to examine the financial statements -- as well as what really matters to an investor and what does not -- it is possible to end up losing a great deal of money.
Knowing how to analyze financial statements does not guarantee investing success, though, and that is…
Financial Statement Analysis (2009) Accounting for Management. http://www.accountingfor management.com/accounting_ratios.htm
Harper, D. (2009). Financial Statements: Introduction. Investopedia. http://www.investopedia.com /university/financialstatements/Default.asp?&viewed=1
All publicly-traded firms are required to produce financial statements. These statements are produced according to standardized guidelines, and their production is an essential component to the efficient function of modern capital markets in the west. This paper will discuss the nature of financial accounting statements, and will provide insight into how these statements provide a benefit to different stakeholder groups, both internal and external.
The production of consistent, reliable financial statements is essential to the function of modern capital markets. Financial accounting statements, which are constructed according to Generally Accepted Accounting Principles, are designed to meet the needs of multiple stakeholders, both internal and external, including regulators, investors, managers, competitors and creditors. There are four major types of financial accounting statements -- the income statement, the balance sheet, the cash flow statement and the statement of changes in owner's equity (SEC.gov, n.d.).
The income statement tracks the accounting…
SEC.gov. (no date). Beginner's guide to financial statements. Securities and Exchange Commission Retrieved April 9, 2011 from http://www.sec.gov/investor/pubs/begfinstmtguide.htm
Accounting is a means of keeping track of a firm's financial transactions. There are two different types of accounting, financial and managerial. Financial accounting focuses on the construction of financial statements with the intention of providing an accurate overview of the firm's financial condition. The four major financial statements are the income statement, the balance sheet, the statement of changes in owner's equity and the statement of cash flows (Singer, 2007). Each of these four serves its own purpose. The income statement and balance sheet are the main statements, but the cash flow statement is important because sometimes it is valuable and necessary to separate out the non-cash transactions from the income statement; additionally the cash transactions are broken down into different types. For shareholder's, the statement of changes in owner's equity is a valuable statement to illustrate what happened to the book value of the owner's equity…
SEC.gov. (2007). Beginners' guide to financial statements. Securities Exchange Commission. Retrieved April 17, 2011 from http://www.sec.gov/investor/pubs/begfinstmtguide.htm
Singer, H. (2007). Purpose of financial statements. HBS Management Consultants. Retrieved April 17, 2011 from http://www.hbsmc.com/purpose-of-financial-statements/
orking capital reduction is not always a bad thing -- tightening receivables and inventory turns is often considered to be good financial policy.
In the case of Unilever, it is important to synthesize the two statements. e can see, for example, that "unusual expense" is the category most responsible for the change in working capital. At this point, it would be advisable to delve deeper into the comments in the annual report to discern the precise nature of these unusual items, as they will reveal the cause for the steady decrease in "unusual items" that has fueled the widening gulf between net income and cash flow from operations in the past five years.
I would predict that Kraft will work in the next few years to reduce costs. Their revenues have experienced steady increase, but their net income has not. They will focus their efforts on reducing the selling/general/administrative expenses.…
No author. (no author). Generally Accepted Accounting Principles. Federal Accounting Standards Advisory Board. Retrieved April 26, 2009 from http://www.fasab.gov/accepted.html
No author. (2009). Liquidity Ratios. Investopedia. Retrieved April 26, 2009 from http://www.investopedia.com /terms/l/liquidityratios.asp
Kraft financials from MSN Moneycentral. Retrieved April 26, 2009 from http://moneycentral.msn.com/detail/stock_quote?Symbol=KFT
Unilever financials from MSN Moneycentral. Retrieved April 26, 2009 from http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=UL
Companies use the income statement to show how successful the company is during specific time frames. Investors often want to know how much money is being brought in, they want to know that the company has enough funds to pay the operating expenses and any liabilities the company has.
Those same investors oftentimes wish to receive dividends on their shares of stock. They can ascertain whether the company has the means to do this by perusing the retained earnings statement. The retained earnings statement shows how much money the company has paid out, as well as how much the company has kept for future growth. If investors wish to buy a company that is going to be a strong growth company, then retained earnings is important because it will show that the company has the funds to do so.
A company's cash flow is a high priority to bankers, venture…
The Book ***
Weinstock, M.; (2008) Where Main Street & Wall Street cross, Hospitals & Health Networks, Vol. 82, No. 6, pg. 41
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
Financial Statements (Regulatory oversight)
The rapid failure and bankruptcy of Enron has prompted severe criticism of the nation's financial reporting and auditing systems, which are fundamental to maintaining investor confidence in U.S. capital markets; there are four areas in which the Enron failure revealed serious problems: corporate governance, the independent audit of financial statements, oversight of the accounting profession, and accounting and financial reporting issues (GAO, 2002). The financial statements are the frontline in determining a company's integrity and accountability. hen a company makes its financial statements public, then they can be scrutinized by many external entities to be used in the market.
However, before financial statements are made public, they should be examined by an external auditor. Auditing is one of the most essential functions in the entire accounting business function and mistakes made in accounting can cost an organization everything. Therefore the auditing process…
GAO. (2002, March 5). Protecting the Public Interest. Retrieved from U.S. Government Accountability Office: http://www.gao.gov/products/GAO-02-483T
Guilding, C., Drury, C., & Tayles, M. (2005). An empirical investigation of the importance of cost-plus pricing. Managerial Auditing Journal, 20(2), 125-137.
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…
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
Importance of Financial Statements
The Importance of Accurate Financial Statements to Outside Business Interests
The four financial statements are the balance sheet, income statement, statement of cash flow, and statement of owner's equity. All of these statements are interactive even though they each serve a unique purpose. They are intended to assess the health of a business and their accuracy is vitally important to investors, creditors and other outside interests. The income statement, statement of cash flow, and statement of owner equity, close out at the end of each year. The balance sheet amounts are carried over from year to year (Kurtz, 2010).
Both internal and external entities use these statements in order to inform the decision making process. These documents provide pertinent information on the financial position (balance sheet), profitability (income statement), and operating, investing, and financing activities (statement of cash flow and statement of owners…
"Cash vs. accrual accounting." (2000). Inc. Nolo.com Inc. Retrieved September 27, 2012, from http://www.inc.com/articles/2000/04/19194.html
Horngren, C.T., Harrison W.T., & Oliver, M.S. (2012). Accounting (9th ed.). Upper Saddle River, NJ: Pearson Prentice Hall.
Kurtz, D.L. (2010). Contemporary business, 13th ed. Hoboken, NJ: John Wiley & Sons Inc.
Lasher, W.R. (2008). Practical financial management (5th ed.). Mason, OH: Thomson South-Western.
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.
MICOSOFT: No terrorist is going to try to blow up Microsoft; no oil products are needed to run computer hardware and software; computers run the world of commerce; and Bill Gates owns a huge percentage of all things computer software-related, so the Microsoft steamroller is a great investment and not as vulnerable to world conditions as are the first two companies reviewed in this section.
One final conclusion: for EXXONMOBIL, albeit their fortunes can change because of the war and oil's vulnerability to war, their earnings for the 4th quarter of 2004 were their highest ever ($8,420 million), and they have friends in the White House in Bush and Cheney, so their financial picture remains very bright; for FOD, they experienced a $5 billion pre-tax profit from their "financial services" (auto loans) division, which is very impressive; moreover, car sales are booming and Ford will, in the near future, realize…
AllBusiness (2005). What Are Generally Accepted Accounting Principles? Retrieved February 8, 2005, at http://www.allbusiness.com/articles/content/17954.asp .
Anderson, Curt. (2005). Microsoft Reports Record Revenue and Earnings. Retrieved February 9, 2005 from Microsoft Investor Relations Web site: http://www.microsoft.com/msft .
Bruebaker, Gary H. (1999). A Question of Value. Government Finance Review, 15(3),
Ensman, Richard G. (1999). Accrual Basis vs. Cash Basis Accounting. Doors and Hardware, 63(10), 20-22.
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
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.
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
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…
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....
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.
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 Statements: Hay and Barnabas Company
There are five adjustments that need to be made before the financial statements of Hay and Barnabas Company are prepared at year end. Show the effect of each of the following (a -- e) on the accounting equation
The accounting equation is essentially indicative of the relationship between assets, liabilities, and the owner's equity in a particular business. According to Clarke (2011), the three components reflect the company's financial position. Assets are the resources owned by the business and liabilities are the claims other parties, such as creditors, have in the business. Investors also contribute to a business and buy ownership hence have a claim in the business. The following are the adjustments deemed necessary and the effect they had on the components of the accounting equation:
a) Equipment purchased on January 1, 2003 with a useful life of 12 years and no salvage…
Clarke, E.A. (2011). Accounting: An Introduction to Principles and Practice. South-Western: Cengage Learning
Warren, C.S., Reeve, J.M. & Duchac, J.E. (2013). Financial Accounting. South- Western: Cengage Learning.
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
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
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/
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=
The four financial statements are the balance sheet, income statement, statement of cash flow, and statement of owner's equity. Briefly, the balance sheet is comparison of assets to liabilities and equity. This statement is indicative of a company's position at a specific time. The income statement is a record of a company's operations over a given period of time. It shows a company's expenses, losses and revenues and is indicative of the company's net income during that period of time. The statement of cash flows is intended to provide information about a company's cash receipts and cash payments for operations, investments and financing during an accounting period. Finally, the statement of owner's equity is intended to show changes in owner's or shareholder's equity from one fiscal year to the next. Owner contributions and any additional capitol, such as the sale of new shares, are added to the equity,…
Kurtz, D.L. (2010). Contemporary Business, 13th ed. Hoboken, NJ: John Wiley & Sons Inc.
U.S. Security and Exchange Commission. (2007, February 5). Beginner's guide to financial statements. U.S. security and exchange commission. Retrieved August 24, 2012, from http://www.sec.gov/investor/pubs/begfinstmtguide.htm
"Uses of the income statement in financial accounting." (2010). Financial-accounting.us, Retrieved August 24, 2012, from http://www.albany.edu/news/pdf_files/impact_of_aging_excerpt.pdf
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…
ATTN: Aunt Cookie
Re: Specific Financial Statement Questions
With regard to the questions you raised about your financial statements for last year and the current year (about prepaid rent, interest on notes payable, cash advances as revenue, and how owner equity is affected by each of these items), I have prepared explanations for each topic below.
A) Prepaid rent is shown as a cash asset because the early payment creates an increase in the firm's property. It does this by guaranteeing an expense is paid for early, decreasing the firm's expenses for future months and in doing so increasing property owned (the
rent). It also reduces the rent column by the same amount as cash is reduced by, since both are being decreased by the payment. This transaction does not affect liabilities, since it is not incurring debt, and also does not affect equity, since the asset increased…
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
Healthcare Financial Statements emphasizes on how accountants belonging to a healthcare organization make use of the accounts rule to evaluate their organization's financial statements. This paper also outlines the troubles a company could be into if its manager has no knowledge of interpreting the financial statements. This paper also highlights the steps taken by managers who have no background of finance.
Healthcare Financial Statements
All organizations whether they are linked to business, education or healthcare make excessive use of Accounts and Financial Statements to keep a check on their finances. If financial statements are not maintained then a check on the company's profit or loss or simple money expenditure cannot be analyzed. Hence, it is extremely important for healthcare organizations to acquire professional accounting services. Personnel who are in charge of the accounting department need to establish what and how the procedures will be carried out. An organization that is…
Advanced Financial. Eclipsys Technologies Corporation. 2003. Available on the address http://www.eclipsys.com/solutions/Software/DATASHEET_SearchAmerica_med.pdf. Accessed on 20 Feb. 2004.
Alan R. And Robert D. Applying New AICPA Accounting Rules On Special Reports. Healthcare Financial Management. Apr. 1998.
Don't Sit Back When The Accountants Hold The Floor! Available on the address http://melbrooks.co.za/bus_broc.htm. Accessed on 20 Feb. 2004.
John B. The New Health Care Organizations Guide: Practical Implementation Issues. The CPA Journal. 1 Jul. 1997.
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
But my annual expenditures are estimated at about 21,400, which mean that I will lack 3,400 to keep this level of my expenses up.
Professionally prepared personal financial statements can be required to admit in many different situations, such as various financial transactions; working out estate, retirement, or other financial plan; making a guarantee; identifying the property before signing the marriage contract or under a divorce proceeding; running for a public office; or, of course, obtaining a loan. In my current financial situation, I am considering obtaining a student loan to pay for my future studies and meet my financial needs. In this very situation I will have to provide a clear financial statement of my current assets and liabilities. This will give the bank the precise information on what kind of borrower I am.
I would like to apply for financial aid from the state. If I do not…
Accounting and Financial Statements
The purpose of accounting is to provide managers with the information they need to evaluate the liquidity of an organization. The balance sheet, income statements, statement of owner's equity, and statement of cash flows are financial statements that provide a basis on which managers, investors and creditors can make decisions. Of the four financial statements only the balance sheet, whose amounts are carried over from year to year, is considered to be a permanent statement. The income statement, statement of owners' equity, and statement of cash flows close out at the end of each fiscal year and are considered temporary. David Kurtz (2010) describes each of the four financial statements and their individual purpose.
The Balance Sheet
The balance sheet is based on the following accounting model: assets equal liabilities plus equity. A company's balance sheet reflects its position on a specific date. The picture it…
Kurtz, D.L. (2010). Contemporary Business, 13th ed. Hoboken, NJ: John Wiley & Sons Inc.
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
Health Management and Financial Statements
Describe the four basic financial statements. What are some ways in which accounting for health care organizations (HCOs), especially not-for-profit (NFP) ones, tends to differ from accounting in other industries?
According to the textbook Essentials of Health Care Finance, "the primary outputs of financial accounting are four financial statements that detail the organization's current financial position and how the organization reached that position over some period of time (usually 1 year)" (Cleverley, Song & Cleverley, 2012). These four financial statements are 1.) Balance Sheet, 2.) Statement of Operations (or income statement or statement of revenues and expenses), 3.) Statement of Cash Flows, and 4.) Statement of Changes in Net Assets (or statement of changes in net assets). Health care organizations (HCOs) utilize each of these four financial statements under guidelines known as the Generally Accepted Accounting Principles (GAAP) to ensure an accurate financial accounting of…
Cleverley, W., Song, P., & Cleverley, J. (2012). Essentials of health care finance. Jones & Bartlett Learning.
Friedman, M. (2013, September 16). Groups trying to make hospital prices clear. Arkansas Business. Retrieved from http://www.arkansasbusiness.com/article/94632/groups-trying-to-make-hospital-prices-clear
Financial statements are the primary way for an investor, creditor, and other financial statement users to evaluate a company's financial performance, financial stability, profitability, and net worth to determine whether putting investments in the company would provide profitability and adequate return on investments (Way, 2013). Financial statements are also a way for managers to communicate achievements in performance to potential investors and creditors. The various statements brings various information components in the determination of evaluating companies for potential investments.
In evaluating Apple, Inc., the Income Statement shows net income for 2012 at $41,733 million (Form 10-K, 2012), up from $25,922 million in 2011. The income statement reports sales, expenses, and profits or losses. This is important to an investor because it shows results from operations in how profitable a company has been for the particular period. y evaluating present results against past performance, investors can assess for uncertainty…
Form 10-K. (2012, Sept 29). Retrieved from Apple, Inc.: http://files.shareholder.com/downloads/AAPL/25...21359901x0xS1193125-12-444068/320193/filing.pdf
Way, J. (2013). What is the importance of a company's financial statements? Retrieved from Chron: http://smallbusiness.chron.com/importance-companys-financial-statements-21332.html
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)
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…
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…
J. Heinz Company
Strengths: it is short and concise; it is constructed in a formal means which also uses specialized language to promote the company's commitment to customers and employees.
Shortcomings: it lacks an introduction and it does not mention the well-being of other categories of stakeholders aside customers and employees
Strengths: offers detailed input on the company's visionary goals; includes several categories of stakeholders
Shortcomings: it is rather long and too detailer, creating as such the possibility for the reader to lose interest and not remember what he read; seems explicative and responsive to the criticism of environmental threats to which the company has been subjected.
ank of vision statements from best to worst: I (4); II (1); III (2); IV (5); V (3)
ed Hat 2009 Annual eport, http://files.shareholder.com/downloads/HAT/763006950x0x304106/3145E646-AE56-4FE1-9C59-B79F4491C4C5/FY09_Annual_eport_on_Form_10-K.pdf last accessed on November 2, 2009
Red Hat 2009 Annual Report, http://files.shareholder.com/downloads/RHAT/763006950x0x304106/3145E646-AE56-4FE1-9C59-B79F4491C4C5/FY09_Annual_Report_on_Form_10-K.pdf last accessed on November 2, 2009
2009, Red Hat Website, http://www.redhat.com last accessed on November 2, 2009
ABC/123 Version X
Financial Statement Review
al-Mart's Financial Statement Review by Ellen Talley
hat is the net income for the current fiscal year?
Is it up or down from the prior year?
hy would this information be important to investors?
hat is the ending balance in stockholders' equity?
hy would a labor union potentially be interested in this information?
hat is the total value of assets?
hy would this information be important to a potential creditor?
hat is the total cash flow from operation?
hat financial statement user would find this information most important?
alMart's Income Statement
alMart's Stockholder Equity
alMart's Statement of Cash Flows
alMart's Full Balance Sheet
hat is the net income for the current fiscal year?
The net income per for the current fiscal year per Yahoo Finance is 16.999 billion after taxes and interest and such. This is on a net sales…
http://stock.walmart.com/annual-reports http://finance.yahoo.com/q/bs?s=WMT+Balance+Sheet&annual http://finance.yahoo.com/q/cf?s=WMT
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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.
Government accounting is substantially different from other accounting formats, and at the same time the two methods are essentially alike. Accounting for any entity involves, on the most basic level, balancing expenditures and revenues. However, government accounting has one major departure from standard accounting statements: it mush be reconciled with a budget set up in advance by a governing body, like the city council, state legislature, or, in the federal realm, Congress. This difference does not, however, make the basic precepts of governmental accounting significantly different from other types of accounting.
A government accounting statement must track all cash flows, both expected and realized, for an entity that is comprised of possibly hundreds of relatively autonomous entities. Each of these smaller entities has separate budgets, accounts, and in many ways operates independently of the larger entity, such as the state or city. Despite this individuality, a comprehensive report on the…
Georgia Comprehensive Annual Financial Report, 2004. Prepared by State Accounting Office and Georgia Department of Audits and Accounts.
Publicly and privately-held companies are run very differently. They each have different laws and statutes to obey, different policies and procedures for operation, and different accountability measures. This difference shows in an examination of a government CAFR, that of the city of Housong, compared to the corporate CAFR of Southwest Airlines.
Both CAFRs summarize the organization's expenditures and revenues. Each category is, of course, divided into more specific sections; for example, Southwest's revenue is divided into passengers, freight, and other sources of income. Their expenditures include equipment, fuel, insurance, and employee salaries and benefits. Houston has a similar expression of its expenditures and revenue: it lists what the City is spending its money on (employee salaries and benefits, claims and settlements, and maintenance fees for equipment and property) as well as where the City is getting its income -- property taxes, hotel and other city taxes, and licenses and permits,…
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
Working With Financial Statements:
There are four main principles that have led to the success of the accounting system which the accountants use in preparing financial report of a company but we shall only focus on two. One of the principles is the evenue ecognition Principle whereby the accountant is expected to present a financial report by indicating the cash flow of the company. As one of the main accounting principles in the U.S. Generally Accepted Accounting Principles, revenue recognition can basically be considered as how revenue is recognized or treated. On the basis of cash accounting, revenue is simply recognized when cash is received despite the performance of the services and delivery of goods. On the contrary, revenue is recognized in accrual basis accounting when they are realizable or earned regardless of when cash is received. However, revenue is recognized when two conditions are met i.e. The completion of…
Davoren, J. (n.d.). Four Types of Adjusting Journal Entries. Retrieved October 21, 2012, from http://www.ehow.com/info_8210116_four-types-adjusting-journal-entries.html
"Expenses Recognition -- The Matching Principle." (2008, July). Accounting Financial & Tax.
Retrieved October 21, 2012, from http://accounting-financial-tax.com/2008/07/expense-recognition-the-matching-principle/
"Revenue Recognition." (n.d.). Tenrox. Retrieved October 21, 2012, from http://glossary.tenrox.com/Revenue-Recognition.htm
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
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
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.
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)
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/