Balance Sheet and Income Statement Commentary Essay

In the world of business, it is crucial to keep track of revenues and expenses in order to evaluate the economic condition of one’s business. Other than revenues and expenses, accountants must also document the changes within a business’s assets and liabilities. Changes in assets and liabilities affect the owner’s equity. The revenue and expense accounts are recorded in the income statement, while assets, liabilities, and owner 's equity are recorded in the balance sheet. The balance sheet and income statements make up the general ledger.

The accounting information of this paper provides a financial statement analysis for three distinct companies: Mercedes Benz, a foreign manufacturer of vehicles; Macy’s Inc, a retail department store, and American Airlines, an airline company. The analysis for each company includes the quick and current liquidity ratios, the DuPont ratio, profit margin, asset utilization, and financial leverage. Discussions in this paper include how the differences of each industry affect presentations as they relate to different

The balance sheet, also known as the statement of financial position, includes an analysis of all the firm’s assets and liabilities. The balance sheet is a description of the firm’s financial standing at an instance in time. When navigating through a balance sheet one notices that it is divided into two sections, the left side includes all of the firm’s assets and the right side lists all of the firm’s liabilities. A firm’s assets accounts for the cash, property, inventory, facility, equipment, and other investments the firm has made in order to operate. The liabilities of a firm are the legal debts and obligations the firm obtains during its course of business. Included on the side of liabilities is the stockholders’ equity, which accounts for the difference between the firm’s assets and liabilities. Stockholders’ equity is a measure of the net worth of a firm. The expression “balance” sheet describes the equilibrium set by the balance sheet identity:

On January 4, 2010, Harley, Inc. acquired 40% of the outstanding common stock of Bike Co. for $2,400,000. This investment gave Harley the ability to exercise significant influence over Bike. Bike's assets on that date were recorded at $10,500,000 with liabilities of $4,500,000. There were no other differences between book and fair values. During 2010, Bike reported net income of $500,000. For 2011, Bike reported net income of $800,000. Dividends of $300,000 were paid in each of these two years.

This is a serious question. When was the last time you looked at your Income Statement? When did you look at your Balance Sheet? If you could look me in the eye and tell me that it has been in the last four weeks, I will be happy.

The following four companies are related to the companies that have been in review over the last four weeks. These four following companies show how well the company has been doing over the last two years or not so well. The company has pulled their balance sheets and income statement to see if all the company’s financial needs are being met. If the company’s needs are not being met, the company will show where the company needs to cut back and where the company needs to improve.

This report will analyse Greggs’ 2010 annual report on the purpose of evaluating the company’s current operating condition and providing suggestions of improvement to the company’s management team. According to ASB'S Statement of Principles for Financial Reporting, the selected information will be provided to the following users: shareholders, loan creditor group, analyst-adviser group, employees, customers, suppliers, government and the public. Then, based on the key ratio calculations, the company’s financial performance is to be evaluated from two parts: profitability analysis and liquidity analysis. For the profitability analysis, the profitability ratios go up. It is mainly because the sale increases through adding the

The very high amount in other assets could be pinpointed to patents on drugs. Furthermore, the profit margin (15.8%) of this company is very close to the ones that pharmaceutical companies, like Novartis (ADR), would get.

The process of developing financial statements for a business is to provide supporting documentation to what has been reported as annual or quarterly income. Within the financial statement analysis strengths and weaknesses are identified through the comparison of data from the balance sheet. There are many different ways to interpret the data that is utilized for the analysis; those include but are not limited to comparative statements, schedule of changes in working capital, common size percentages, and ratio analysis. The following paper will be reviewing the financial data from Verizon Communications (VZ). Through the

Accounting treatment adopted by the for elements in measuring the elements of the financial statement influences accounting information produced. The high quality information presented in the financial report should be able to represent characteristics of financial statements such as relevant and faithfulness representative, to reduce the information asymmetry. The appropriate method applied by a company would influence not only the external party but also management decisions regarding future corporate actions.

2.1 Agency costs and financial reporting. The original development of accounting and financial reporting appears to be driven by control of agency costs. These costs arise when a principal delegates decision-making ability to an agent who maximizes his own welfare rather than that of the principal. There is considerable evidence that writing itself was developed in order to allow for accounting and control of the costs of agency relations such as that between a noble and a steward (de Ste Croix 1956; Yamey, 1962; Chadwick, 1992). Millennia later the wardens of English medieval guilds would prepare and present audited financial accounts as a mechanism to reduce agency costs (Watts and Zimmerman, 1983). The early English companies inherited this mechanism from the guilds. For example, even in its first years the British East India Company prepared annual audited financial statements and presented those statements

Producing financial accounting statement is very crucial for business because it should adequately provide a picture of the financial performance of a business. To concern this issue businesses produce financial statements on regular basis adhering to one common standard. On of these documents is the statement of financial position, also known as a balance sheet. It basically shows business’s assets or resources that it holds against its obligations or claims to other parties (McLaney and Atrill, 2014). Balance sheet analysis is useful for investors to verify the profitability of investment for a business. Analysis can warn of potential problems and, if done accurately determine what the business really “worth”. The aim of this essay is to

Financial statement analysis assists a business entity, business shareholders and other people interested, to analyze the figures in financial statements to present them with superior information about such most important factors for decision making and ultimate business survival. As exemplified by Gibson (2001), income statement, balance sheet, and cash flow statements project the financial performance a company at the present and probably the future. According to the annual report 2014, Woolworth’s revenue is projected to rise by 4.09% annually. The group’s financial performance for the past four years is shown below.

Commercial enterprises are in the business of making money. This endeavor may be served by producing widgets, providing resources, services, or any other number of possibilities. While businesses may have differences in what they do to generate revenue, they all share a need to accurately reflect their financial situation. This information is critical to business management, business strategy, their shareholders (present and future), and in credit transactions. Companies utilize financial statements to report their financial health. These documents include income statements, balance sheets, and cash flows. Together they provide insight into the firm’s financial health.

Once the decision to invest is taken the next step is to decide the mode of finance suitable to the company based on its analysis, and then they have to decide whether the company has sufficient internal finance available for making investment, or it has to go for external sources such as bank loans. By examining the cash flow critically one can access the company’s policies and procedures related to cash collections, payments, and policies related to financing activities, as well as operating, investing activities. In the analysis of balance sheet there are three areas to be examined assets (fixed and current) Liabilities (fixed and current) and Equity (share capital, Retained earnings, other reserves). Every item in each area provides specific financial information. Income statement includes expenses and income detail (including tax expenses) related to the current period. Although it does not reveal much about the company’s current financial condition, but instill it does provide indications of its future viability. The balance sheet, profit and loss and cash flow statements are interrelated and they all need to study with one another for a more detailed bigger picture of the financial situation of the company. For example company makes sales (P&L) which creates debtors (BS) who pay