Financial Statement Analysis Questions

April Cruz, Litesha Forbes, Phillip Gibson, Jessica Hewlett, Lily James, Velda Justin, and Nzingha Reel

Cost method: A method of accounting for stock investments in which the investor company records its investment at cost and DOES NOT adjust the investment account balance later. Dividends received from the investee are credited to a Dividend Revenue account.

External users (shareholders, lenders, directors, customers, suppliers, regulators, lawyers, brokers, and the press) rely on financial statement analysis to make decisions in pursuing their own goals.

They also report additions to property and equipment of $162.9 million. Which of the following disclosures would appear on the 2003 statement of cash flows? (5P)

List four basic financial statement analysis procedures, describe how you would calculate each procedure and discuss why you would use each procedure. Based on your reading and outside research, please communicate your own understanding of the requirements. Citations and references are required.

If there is a reduction in the benefit plan, there is a decrease in the defined benefit obligation. The amount if past service costs is calculated by an actuary, and add or deduct to the beginning balance of the obligation for calculation of interest cost for the year.

3. Which of the following measures of accounting income is typically reported in an income statement?

The balance sheet for my company, Intel, has provided the financial position for the past few years. The information provided by the balance sheet shows that Intel Corporation has many assets. These are things that the company owns and the assets are also considered the resources of the company. The resources have been acquired through transactions that have been made between certain dates. Intel’s assets include, cash and cash equivalents, which have been on the rise. However cash and cash equivalents are just one factor of the company’s assets. All together the total current assets have been declining, and rising. In September of 2014 the total current assets were at 27,509,000 and it declined until

It is important to understand the differences in how earnings and liabilities are generated or reported for different financial institutions. This paper will describe key points regarding the balance sheets of different financial institutions. Commercial Banks must mitigate interest rate and default risk, however, when a major financial crisis erupts they must have enough reserves on hand to cover their liabilities. Insurance companies use the float from the premiums paid in to invest their

There are several items that stand out when looking at the FY 2014 balance sheet. First, the majority of current assets are in the form of high liquidity investments, such as mutual funds or stocks. The organization has enough cash to cover its liabilities, so it is appropriate to invest any money not being used. Also, 99% of WPP 's net assets are unrestricted. This is preferred by many not-for-profit organizations because it allows them to use funds freely (Finkler, et al., 2013, p. 313-355). However, the WWP has made headlines recently because of extravagant spending (Phillips, 2016). It is in the organization’s best interest to allow donors to place restrictions on their donations to

Liquidity ratios are used to address the financial health of a company and potential investors should consider whether a company has the ability to generate enough cash to meet its everyday demands, noting that a decline in liquidity leads to a greater risk of bankruptcy (Cagle et al. 2013). As insolvency is one of top reasons businesses fail, such ratios are vital in determining the liquidity of a company. The current ratio and quick ratio are static measures of liquidity which consider a company’s current assets as the primary source of funds needed to repay existing and maturing financial obligations (Titman et al., 2015).

Chapter 17 covers the financial statement analysis and ratios. Financial statement analysis is the process of examining financial statements that will depict the financial position of the company allowing them to make better financial decisions. A typical financial statement consist of a balance sheet, income statement, cash flow statement and notes to account. The most common being the balance sheet and the income statement. The balance sheet, also referred to as a statement of financial positon, is usually made up of assets and liabilities and provides information about the financial position of the company. It is a two sided report, assets on one side, and liabilities on the other. Liabilities typically include accounts payable, accrues expenses, income tax owed, stockholders’ equity (net worth), and loans. The income statement, also referred to the earning and loss statement, depicts the profitability of the company. It shows to total sales revenue for one year. The expenses the company incurs in producing finished good to sell is subtracted from the sales revenue. Also deducted is the operating cost expenses and the deprecation. When analyzing the income statement, it is important to note that the profitability isn’t just the total profit. It is important to look at the ratio of expenses as a percentage of profit. A company with high profits and high expenses could easily be mismanaged.

The methods of accounting for investments, depends on the intended length of holding and the size of the investment.

The accounting equation-: Accounting equation tells us a easy way to understand that law assets, liabilities of a company is measured by these three only like accounting equation for corporation is assets are equal to liabilities and stockholders.(accounting tools 2015 may 14)

Brandon Ltd. is an investment company and has no debt outstanding. The only investment for Brandon Ltd is ABC security. Imagine the company bought 100 shares of ABC at $100/share on January 1, 2001, the company sold 30 shares of ABC a year later at $60/share, and another 30 shares of ABC two years later at $50/share. Suppose the market price per share of ABC was $70, $80, and $90, respectively, by the end of