Corporations And Their Financial Performance

In accounting there is much to be learned, about the financial aspects of a business. In the past five weeks I have learned the importance of financial reports and how they relate to the success of an establishment. These reports may include balance sheets and income statements, which help accountants and the public grasp the overall financial condition of a company. The information in these reports is really significant to, managers, owners, employees, and investors. Managers of a business can take and deduce financial

What makes a large organization like Wal-Mart financially successful? One could say it is the result of outstanding personnel or perhaps a strong determination to succeed. These factors certainly contribute. However the key to financial success in organizations lies in good accounting. Since early civilization began, accounting has been an important part of our financial transactions. In today’s world our use of modern accounting systems and accurate financial statements are critical components that make modern organizations successful. To facilitate understanding of this point one must understand how

(Ohara, 2007) Most financial statements are made public for the benefit of stakeholders and potential investors. The bottom-line is that financial statements are the main source for analyzing how well a company is operating. The income (or profit and loss) statement is simply a report card of how much activity (revenue) was performed in the period, how profitable that activity was (gross profit/loss), and what it cost the contractor to run the business (overhead). (Murphy, 2006)

Mohana, R (2011). Financial Statement Analysis and Reporting. New Delhi: Asoke K. Ghosh, PHI Learni

Learning Objective: 04-03 Present an income statement with earnings per share, statement of stockholders equity, balance sheet, and statement of cash flows.

Edmonds, T. P., Tsay, B., & Olds, P. R. (2011). Fundamental managerial accounting concepts (6th ed.). New York, NY: McGraw-Hill Irwin.

An organizational leader, one with familiarity of financial statements and their impact on the business as a whole, has an opportunity to play a vital role in his or her position. The purpose of this paper is to collect, sort, and report on the financial data of publicly traded company. This is much like that which is performed by a Certified Public Accountant. In the case of this exercise, the information is presented from the perspective of a student and future business leader. A summary of both the company’s business and financial health is also included in this paper. Without further ado, let’s delve in to the company chosen for this assignment.

The “financial statements are formal reports providing information on a company's financial position, cash inflows and outflows, and the results of operations” (Hermanson, p.22). There are four main components that make up a financial statement. The four parts are, balance sheet, income statements, cash flow and, statement of owner’s equity. The balance sheets role is to define the company’s assets liabilities and revenue of the business. The income statement shows the income within the company. Cash flow reviews the position of the company by cash payments and receipts. Lastly, the statement of owner’s equity shows the amount of earnings, stock and other capitals of people in the company. (Hermanson, p.34-35).

Both The Microsoft Corporation and Apple Computers, Inc. have become names with which the public is familiar. Both companies have many divisions, and both must manage extensive assets and liabilities. Since both companies report large amounts of income, the matter of accounting checks and balances becomes more complicated than many smaller companies, but equally as important. Financial reports and the audits of these reports are public information and serve to provide a process to decrease errors and omissions and questionable accounting practices.

The success of a business entity depends on its ability to properly create, understand and analyze the financial statements. Financial statement analysis is important for understanding profitability and a firm's financial condition. These documents help a firm in many ways, such as in making better financial decision and creating a clearer picture to attract creditors and investors. In highlighting the financial numbers for Wal-Mart, Team A will address the owner¡¦s equity and the cash flow pieces of the business ending fiscal period January 31, 2004. Supportive explanatory notes will help in providing the analysis needed to understand the firm and to state our position in support

There is an old saying by Earl Wilson (2015) that states “Today, there are three kinds of people: the haves, the have-nots, and the have-not-paid-for-what-they-haves” (p. 1). This saying also applies to businesses, and investors will try to identify which category a company falls in as they conduct their research. Investors want to know they are committing their money to an organization that can effectively manage its cash. Cash is the fuel within every organization. It is extremely important for every executive, manager, and investor to understand the cash flow battle rhythm within their organization by utilizing the statement of cash flow. Analyzing the statement of cash flow, will enable investors to determine if a company is effective at managing their finances.

The financial health of a business greatly depends on its ability to maintain current commitments and obligations. Liquidity or the ability to generate cash from current assets to meet short-term obligations as well as unforeseen responsibility is important for the subsistence of a company. “A reasonable level of liquidity is essential to the survival of a company, as poor cash control is one of the main reasons for business failure. (Pyke, 2007) Through utilization of tools, such as liquidity ratios, or financial metrics, to evaluate the company’s ability to meet current business obligations, should the debt needs to be settled, we are able to assess its immediate financial strength. Liquidity ratios provide creditors as well as businesses a quick analysis tool, using data, which are readily available from annual financial statements, to complete these assessments. These ratios are critical to creditors and are “the most widely used ratios, perhaps next to profitability ratios.” (Joe Lan, 2002) Liquidity ratios include current ratio, quick ratio (also referred to as acid-test ratio), net working capital ratio, and cash ratio. Current ratio is the most basic or fundamental of the four and focuses mainly on current assets, while quick ratio is more stringent, eliminating inventory and prepaid expenses, as both are more difficult to liquidate (Morningstar, 2016). Cash ratio is the most “conservative”, as it mainly focuses on cash and investments

An income statement shows a firm’s sales revenue and expenses over a period of time, such as a month, quarter, or year (Melicher & Norton, 2014, pg 319). The purpose of an income statement is to help company decision makers evaluate the firm’s current situation and make changes as needed (Reeves, Unk). Income statements also help creditors make decisions on loans they might supply to the company (Reeves, Unk). Finally, income statements assist stock investors in deciding whether the company would make a good investment (Reeves, Unk).

Public companies have a variety of stakeholders, such as shareholders, bondholders, bankers, suppliers, employees, and management. All these stakeholders need to monitor the firm and to ensure that their interests are being served. They rely on the company’s financial statements to provide the necessary information (Brealy et al., 2008).

Doing so reduces the cost investors receive while collecting company information. Although these disclosure obligations are primarily linked with large publicly traded companies, many smaller companies choose to raise capital by making shares in the company available to investors. (1) These financial statements are also displayed in the form of a business plan. Through the use of income statements and balance sheets corporations are able to successfully record their financial flow. An income statement also known as the statement of revenue and expenses reports a company 's financial performance over a specific accounting period. Corporations use this to provide investors with information about their revenue costs