ACC 291 Entire Course and Final Guide

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ACC 291 is a online tutorial store we provides ACC 291 Entire Course And Final Guide You can find here.

Current assets

When it comes to a company's classified balance sheets you will find current assets sheet. Current assets is cash or cash equilivants that the company will use. What you will find on a current asset sheet is Cash and equilvants, Short term investments, Accounts receivables, and other assets.

Long-term investments

Long-term investments when it comes to balance sheet are investments that the company intends to hold onto. The investments that are listed are as follows, bonds, stocks and cash. You will also find short-term investments in the company. The difference between short-term and long-term investments is that the short-term investments will be sold and the long-term investments normally the company will choose to keep it.

Property, plant, and equipment

Property, plant, and equipment are what the company calls "fixed assets". Property, plant and equipment are assets that can not be

easily converted into cash. These are basically items such as company car (used to deliver products), computers and copier machine, and freezer used for restaurants.

Intangible assets

Intangible assets are non-monetary items that can not be seen or touched. For example, trademarks, copywriters, patents and goodwill. Intangible assets are normally listed in the separate assets.

references

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ACC 291 Final Exam Guide (New)

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www.acc291genius.comDiscussion Question 1:

Based on what you know about accounting, what role do you see it playing in business operations? How dependent do you think a business is on its accounting department? Why?

For Discussion Question 1: Post your response to the following:

• When reviewing a financial report, why should information be reliable, relevant, consistent, and comparable?

• In other words, why are these accounting characteristics important?

• What kinds of problems could be created if a financial report is not reliable, relevant, consistent, or comparable?

It is extremely vital that the company has accurate financial reporting. This information determines whether or not to invest in your company's stock. This information will help them decide if it is profitable to invest or not to invest in your company based what is in your financial history. The information must be relevant because it will help the company, investors and lenders make decisions. It helps answer questions like, "how stable is your company", or "what future does this company have". The information should be reliable. In other words the information that is reported must be able to be verified, backed up with truthful information. Comparable occurs when different companies use the same accounting principles. This makes it much easier to compare results between company's. Consistency happens when the company uses the same accounting method every year. When the financial statements are reported each year, it paints a financial picture of where the company is headed now and in the future.

What kinds of problems will occur if the information does not include these things?

Falsified or manipulated statements doesn't only effect the company but it also to name a few effects the lenders, creditors, investor's, etc. This will result in the company not having a faithful representation.

Another response

The main objective of generating financial information is providing useful information that can be used in decision-making... only if this information is relevant, reliable, comparable, and consistent, can it be useful for decision makers. (Kieso, 2003).

Relevance gives a basis for making decisions that will impact the future of a business, and it confirms and corrects expectations from the past. If the information makes a difference in making decisions, it is relevant.

Reliability means that the information can be depended on and it can be proven to be free of error, and the information is factual. The information cannot favor one set of users over another. CPAs audit financial statements to ensure reliability.

Comparability is also an important characteristic of financial reporting... this happens when different businesses use similar accounting principles, making it much easier for one to compare companies, and the method used in a business must be disclosed to the users of the information to enable the users to convert the information as accurately as possible.

Consistency simply means that the business uses the same accounting principles on a yearly basis... consistently. This helps decision makers analyze a company's trends. A company can change the methods used if they can justify the change, showing that the new method is more useful for analysis. If the method is changed, it must be disclosed in the notes that go with the statements to show users a lack of consistency.

These characteristics are very important to a business... decisions cannot be made based on incorrect information, and everyone involved in a business venture of any kind, whether they be management, owners, or investors and creditors, as well as consumers, etc. must be able to rely on the financial information provided in order to make any type of decision. Without this information, it is difficult to imagine any business succeeding, even for a short time.

Examples of problems that could occur without reliable, relevant, consistent, or comparable information includes not being able to get loans or investments; management could make decisions that cause irreparable damage to entire operations, consumers could easily lose faith and cut their ties... the possibilities are endless for companies that lack these qualities in their financial reporting.

DQ2

For Discussion Question 2: Post your response to the following:

• How does information from financial reports influence business decisions?

• Why is it important for business managers to understand the information found on financial reports?

How does information from financial reports influence business decisions?

Once the information from the financial reports have been posted then a team will review the company's financial history to see what decision were profitable or not. The decisions that were made previous to the financial reports being posted will show which way the company needs to go to continue to remain #1.

Why is it important for business managers to understand the information found on financial reports?

IT is extremely important for he business managers to understand the information found on the financial reports. The business managers are going to be the people that are going to make decisions for the company. They need to know how to interpret the financial reports and come up with different strategies that will continue to make the company money.

Another response

The information from financial reports influences business decisions because it shows where the company stands. The managers use the information from the financial report compared to the current year from the previous year, whether the company growths or losses. It is very important for business managers to understand the information found on financial reports because the information from the financial reports enables business managers to see how to improve and keep the business afloat. It also gives business managers an insight what

came in and went out and the total operating cost of the company as well as cutting cost in a certain areas. The information from the financial reports helps the manager manages the business accurately.

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ACC 291 Final Exam Guide

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www.acc291genius.comwe have another New set of Final Exam Guide which could be found on this link 

Financial Statements

Internal Cash Control

By

Kamilah Crooms

Accounting 220

Jess Stern

Internal Cash Control

The accounting department receives from sales invoices once a month. Most of the information is missing on the invoices.

The accounting department relies on each department within the company and all the information has to be submitted completely and in a timely matter. In this scenario most of the information that has been turned in has information that is missing on the invoices. I would say that the internal controls that are not being followed are Documentation procedures. Company documentation is very important and must be turned in complete. These documents show proof of delivery or proof of services to the customer. Any incomplete documents can be very costly and can cause a delay in the company being paid for any services rendered. For example, one of the requirements in a transportation department is to make sure that the drivers verify the load and sign for the load prior to leaving the yard, these documents says that the load left in good condition. Well, it so happened that we allowed a driver to leave without signing the paperwork. This caused a delay in accounting because we had to get signatures from the driver and the customer which took a month later to complete.

Rob, Sue, and Bob use the same cash register at the donut shop.

Rob, Sue, and Bob all use one register has often turned into not the best decision ideally for the company. It can increase the risk for the drawer being short and it will be hard for the company to find out which employee or employees had shorted the register. The internal controls that are not being followed are Establishment of responsibility. Happens when the company assigns one person to be in control of a specific job or have authority to make decisions (pg 161 Internal Control and Cash). When the company signs one person to be responsible over the register it will allow the company to hold that one person responsible for any shortages.

Sam does the ordering of materials at the beginning of every month and pays the bill.

In this case Sam is ordering materials and paying all the bills. This process is actually known as related activities (pg 162 Internal Control and Cash). This occurs when one person is doing two different responsibilities just like Sam. The internal Control that is not being applied is Segregation of Duties. It is better for the two to be a separate responsibility because it will minimize the billing errors.

Bank reconciliations are done by the person who is responsible for all cash responsibilities.

The problem with this scenario is that the same person is responsible for all cash responsibilities, why is this person doing the only one that does this job? Having one person take on such a major responsibility increases the chances of embezzlement and thief. The internal control that is not being applied is rotating employees’ duties and requiring

employees to take vacations. One person should not be completely in control of one job, the company should encourage vacations or switching positions to prevent incorrect handling of the company’s valuable information.

New checks came in and are left on the shelf with other supplies.

This is a tough scenario because there are all sorts of internal controls that are not being used in this case. I would say in my opinion that the first internal control that comes to my mind that is not being applied is bonding of employees who handle cash.

Every employee that works near or with expensive equipment should be held reliable or responsible for the company’s assets. Bonding of employees who handle cash protects the company by insuring that the employee is or isn’t a risky applicant (background checks) or reassuring that the employee that they will be prosecuted to the fullest extinct if they are found guilty of thief. For example, I had worked at Mc Donald’s and

there were my shift managers and one employee that were caught with stealing money from the company. This situation had happen very differently. The armor truck dropped off a deposit that belonged to another company (armors mistake) but they signed it. Those employees thought that nothing was going to be traced back to them but the little did they know, all evidence traced back to them. They each received jail time, and felony records.

Everyone has access to the computer system and the last audit was seven years ago by the former accountant

This scenario has two things that are going on at the same time. I will first start off with the computer system and how everyone has access to the computer. The internal control that is not being applied is Physical, Mechanical, and Electronic Controls. This allows the company to control assets through physical or electronic based systems or programs. It is extremely important for a company to invest in computer or informational protection for the company and for their employees. Today’s technology age most companies are investing in a computerized program. This will help protect from internal errors and external protection. For example, all companies invest in a virus protection this will ensure that the company’s information is protected and not in the wrong hands.

Invest idle cash

Invest idle cash occurs when any excess funds or cash needs to be invested. The money should be highly invest and risk free. For example, a major company should make investments with their assets into profitably investments and risk free.

Plan the timing of major expenditures

This is when a company sets aside money for major cash needs. We live in a world that things happen daily. A good company would set aside emergency funds. For example, during a terrible thunderstorm, the winds practically ripped off the roofing shingles off a commercial business. The company will be able to use the money for emergency.

Delay payment of liabilities

Delay payment of liabilities is when a company pays bills not too soon and not late. This allows the company to have money available for bills that that really need to be paid allowing excess funds to be free for other uses.

Keep inventory levels low

This occurs when the company keeps the inventory low so that it will bring in more profits. For example, if the managers at a fast-food over plan and fix too many hamburgers and the customers don’t buy it, then the food will go bad and the company will lose profit.

Increase the speed of collection on receivables

This occurs when money is owed to the company, the company cannot claim these until the funds have been received. Some companies offer incentives to encourage customers to pay early or on time. For example, my job encourages their customers by letting them know that there will be a price increase on or after a certain date and this really works because the customers want to pay at a lower price.

References:

http:yourdictionary.com /accounting_statements.org Retrieved 2/13/2010

Thomas, Y. 2005-08-27 “Accounting 101 pg. 52 Stateme

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ACC 291 Final Exam Guide

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www.acc291genius.comACC 291 Final Exam Study GuideQuestion 207On January 1, a machine with a useful life of five years and a residual value of $40,000 was purchased for $120,000. What is the depreciation expense for year 2 under the double-declining-balance method of depreciation?IFRS Multiple Choice Question 01

Axia College MaterialAppendix B

Cash Management Matrix

Directions: Using the matrix, list how each of the principles of internal control works, and give an example for each. Next, list how each of the principles of cash management works, and give an example for each. 

Principles of Internal Control

How it Works Example

Establishment of responsibility Happens when the company assigns one person to be in control of a specific job or have authority to make decisions.

My job, Our Sales department is the only one that can waive a restocking fee. It allows the Sales team to be in control of the customers returns

Segregation of duties This is when the company has more than one person to control a task or job

A church- You have people who count the offering and then you have someone who writes down and logs in what was received

Documentation procedures Evidence or proof of all company transactions

My job we deliver ship shingles to our customers, and we make the driver sign prior to leaving and we make the customer sign a “Proof Of Delivery” form

Physical, mechanical, and electronic controls

Allows the company to control assets through physical or electronic based systems or programs.

Our job has a system called Cisco and this tracks the employees breaks and lunches. Also, monitors how long the CSR have been ready or working.

Physical control would be the security guard, they require identification prior to entry.

Independent internal verification

Any information that can be reviewed , compare, and reconciliation by a employee

My job has a way of tracking our inventory and when someone says that they were shorted on their order we can go back and track the inventory and compare the numbers in the system and a physical count to determine if the numbers were

incorrect

Other controls Bonding of employees, company protects against abuse of assets.

Our company fired a girl just recently because she had used the company card business card for personal us that was not work related.

Principles of Cash Management

How it Works Example

Invest idle cash Occurs when any excess funds or cash needs to be invested,

My father’s company makes wise investments and it turns around in his favor

Plan the timing of major expenditures

A company wants to make sure that there is money set aside for major cash needs

During the recession profits dropped lower than expected so some companies pulled from these funds

Delay payment of liabilities When a company pays the bills at an appropriate time not late and not too soon.

Ok, when times are tough at home and bills are due I organize the bills by which bills needs to be paid the soonest, because if I pay the bills too early I will cut off my excess funds that could be used for something else

Keep inventory levels low Happens when a company keeps the inventory low so that it will continue to bring profit

See’s Chocolate factory has to make sure that they are not over producing or making too much or else the sit and the company will lose money

Increase the speed of collection on receivables

Money that is owe to the company by other people or customers is money that can not be counted towards the companies funds

When a customer places a order for a product and has not paid yet, the company can not count the money as their’s until it is received.

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ACC 291 Week 1 Assignment Comparative Analysis

Problem

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www.acc291genius.comPurpose of Assignment The purpose of this assignment is to help you understand the basics of financial statement analysis using financial ratios on the assets section of the balance sheet, data interpretation, and how ratios are used to gain insight about the management of receivable. Assignment Steps Resources: Financial Accounting: Income statement is a financial statement that shows how much money is coming from product sales and services prior to any expenses being taken out. Both internal and external users such as managers and investors are able to access this. For example, if a investor wanted to see if the company made money or lost money they would use this financial statement report.

Balance sheet shows what condition the company is currently in. whereas the other financial statements only came monthly or annually. For example, what if the management planning team wanted to see the company's current assets, ownership equity and liabilities? All they have to do is run the balance sheet report.

CVP income statement or Cost Volume statement reports or monitors the effects of the changes in cost and volume when it comes to the company profits. For example, I work at a manufacturing plant for roofing shingles. The CVP analyst studies the cost which includes but not limited too, manufacturing, material, labor cost. This financial statement report would help the management team budget the cost of manufacturing goods.

Statement of cash flow tracks the movement of cash coming in or out of the business. This financial statement will show if the company made cash or not, or if the net income increased or decreased. For example, the owner or the management department will use this to

determine if the company has earned enough money to be able to for any expenses.

Retained earnings statements is a percentage that is kept by the company to be reinvested or to be used to pay debts. For example, if a company was looking to expand their business by purchasing top of the line equipment they can use this statement to see how much money the company has put away.

References:

statements.suite101.com/article.cfm/financial_statements_the_p_l. Retrieved 2/18/2010

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ACC 291 Week 1 Discussion Question 1

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www.acc291genius.comHow would you describe the entries to record the disposition of accounts receivables? 

Discussion Question 1: Post your response to the following:

• How would you describe the difference between financial and managerial accounting? What are the distinguishing features of managerial accounting?

There are many differences between financial and managerial accounting. The financial accounting statements are available to external users such as employees, stockholders, creditors, investors, etc. This is available to them so that they can monitor the company's performances quarterly or annually. Managerial accounting provides financial information for managers and other internal people or department. Managerial accounting is confidential so it is only observed by internal users such as management, owner, and will provided to external users such as the public. Management uses this for budgeting purposes or to monitor profit loss/gain within the company. Managerial accounting can be available to them as often as needed. Managerial accounting statements is a great way for management to make decisions based on what has been reported.

Another response

The differences between managerial accounting and financial accounting are distinct. Managerial accounting reports are for those in managerial and decision making positions. The managers use the financial report to answer questions, which would advance the company and its employees. The manager would want to know if certain investments should be made and should the company advance an employee's salary. The manager needs the report to decide if a factory is built or if a certain stock is brought. The financial accountant has the job of showing the external users such as creditors and stockholders a picture of the company's stability.

The manager's purpose is to manage by making stable plans, delegate duties, motivate the workers, and control the atmosphere. Distinguishing features of managerial accounting are the fact no cpa will audit the report, and there is no specific frequency of the report. The reports are done in a need to know basis and for a specific reason, which is for business purposes. The reports are detailed and pertain to specific business decisions. The financial accountant need only be concerned with the company's finances.

DQ2

Discussion Question 2: Post your response to the following:

• Select a management function (planning, directing and motivating, or controlling) and explain how that function relates to business as a whole. Next, select a different function listed by a classmate. Discuss with your classmate how the functions you each selected complement each other.

The management functions that I choose was controlling. Controlling job is to make sure that the each department/person is keeping the company's activities or plans on track and in order to achieve that they must work closely with Management planning function. Controlling continually compares the company's performance to make sure that the planned standards are being met. In my opinion this is known as the "dirty work". Controlling operations have to know what to look for and how to keep track of all the company's activities. They have to take actions and quickly correct any errors and make sure that the company goals are being achieved in a timely matter or the time that it was planned. If there are errors it is job of the controlling operations to take quick action. The controlling operations not only correct errors after it happens but they also are in charge of foreseeing any potential errors and act quickly to get that resolved.

Another response

I chose Controlling as part of the management function. The controlling function relates to business as a whole because it helps monitoring the firm’s performance to make sure the planned goals are being met. Managers need to pay attention to costs versus performance of the organization. let say, if the company has a goal of increasing sales by 10% over the next two months, the manager may check the progress toward the goal at the end of month one. If they are not reaching the goal the manager must decide what changes are needed to get back on track.

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ACC 291 Week 1 Discussion Question 2

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www.acc291genius.comHow are bad debts accounted for under the direct write-off method? 

Cost, Volume, and Profit Formulas

By

Kamilah Crooms

Due February 28, 2010

Explain the components of cost-volume-profit analysis.

The components of cost volume-profit analysis consist of Level or volume of activity, Unit Selling Price, Variable Cost per unit, total fixed costs, and Sales mix.

What does each of the components mean?

Level or volume of activity is the activity that causes change or behavior when it comes to the cost. Unit selling Price is the cost for the product basically how much each unit is selling for. The Variable Cost per unit is something that can change depending on the activity. The total fixed cost does stay the same as activities change but differ per unit. The Sales mix is basically what the name says. It’s a mixture of sale items when more than one product sold the sales will remain the consistent.

Based on the formulas you have reviewed, what happens to contribution margin per unit when unit selling prices increase?

Contribution margin is the amount of revenue left over after subtracting the variable cost. So basically Unit sales price subtracting or minus variable cost.

Illustrate your explanation with an example from a fictitious company of how an increase in unit selling prices might affect contribution margin.

Kelly’s Sweetheart Flowers

The owner of Kelly’s Sweetheart Flowers is selling their bouquet of flowers for $10 per unit. The Variable Cost per unit is $4.00. The contribution margin will be ($10-$4) = $6. If the sells price increases to say $15, then the contribution margin will be ($15-$6) = $9 per unit.

When fixed costs decrease, what does this do for sales? Illustrate your explanation with an example from a fictitious company.

Kelly’s Sweetheart Flowers

When the fixed cost decreases, the contribution margin ratio the net income and sales will increase.

For example,

The flowers are $10 per unit. The variable cost per unit is $4.00. The contribution margin will be ($10-$4) = $6. The fixed cost is $3. We subtract Contribution margin – Fixed Cost= Net income. The net income is $3.00.

Define contribution ratios

The contribution margin ratio is the contribution margin per unit margin divided by the unit selling price.

What happens to contribution ratios as one of the components changes?

Shown in the example above, if one or more of the components changes is will cause the net income to increase or decrease.

Reference

statements.suite101.com/article.cfm/cost_volume_profits*the_p_l. Retrieved 2/28/2010

//http:yourdictionary.com /CVP.org Retrieved 2/26/2010

Thomas, Y. 2005-08-27 “Accounting 101 pg. 52 Sta

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ACC 291 Week 1 Wileyplus Assignment E8-4, E8-11,

BYP8-1, and BYP8-2 (New)

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www.acc291genius.comWiley Plus Assignment Week 1

·E8-4, E8-11, BYP8-1, and BYP8-2 in MS Excel

Exercise 8-4 Wainwright Company Exercise 8-11 Fedex Corporation 7 How should mixed costs be classified in CVP analysis? What

approach is used to effect the appropriate classification?According to our class materials all mixed cost must be classified into their fixed and variable and variable elements. The method that can be used to determine is called the high/low method. To determine the variable cost the analysis takes the total cost and divide it with the low activity level. To get the fixed cost then the company would have to subtract the total variable with either the high or low activity level.9. Cost volume profit CVP analysis is based entirely on unit costs. Do you agree? Explain.In my opinion when it comes to making financial decisions for the company, often times more than one method is used. Cost volume profit is also based on Volume or level activities, unit selling prices, variable cost per unit, total fixed and sales mix.

14. You can find the break point in dollars by drawing a horizontal line to the vertical axis. I you want to find the break even point in units it will be a vertical line from the break even point to the horizontal axis.

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ACC 291 Week 2 - Fordyce and Atwater (New)

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www.acc291genius.comP10-5AFordyce Electronics issues a $400,000, 8%, 10-year mortgage note on December 31, 2007. The proceeds from the note are to be used in financing a new research laboratory. The terms of the note provide for semiannualinstallment payments, exclusive of real estate taxes and insurance, of $29,433. Payments are due June 30 and December 31. 

Axia College MaterialAppendix C

Budgets Matrix

Directions: Using the matrix, define each of the budgets listed and briefly describe its uses.

Budget Definition Describe its uses

Sales budget Estimate of the expected sales for the period. All of the other budgets depend on the sales budget. This is where all the other budgets will start from

The sales budget shows dollars and units. This will allow management to see how many units will be produced for the period

Production budget A production of units needed to be produced in order to meet the projected sales

Shows management how many units will be produced during each budget period and what amount is needed to fulfill inventory demands

Direct materials budget Is the estimated quantity or cost of the raw materials that is needed in order to produce the units required to fulfill inventory

Shows management how much raw materials that is already on hand and or that needs to be ordered to meet inventory demands.

Direct labor budget A estimate of cost and quantity of direct labor needed in order to meet production

Shows how many hours, how many laborers needed to produce the units for that budget period. Management will decide what will be the right amount of laborers needed and if the company will be able to meet the budget

Manufacturing overhead budget

An estimated expected amount of manufacturing cost for the budget period

This list all overhead cost involving cash disbursement in a quarter

Selling and administrative expense budget

Anticipated selling and administrative expenses in the budget period

Shows area of budget expenses that are not listed other than manufacturing. Expenses such as

marketing, promotion cost etc for the budget period

Budgeted income statement Estimate of expected profitability of operations in a budget period

Is a very important tool because it shows the company estimated profit for the budget period.

Cash budget A projection of expected cash flows in and out of the business.

Cash budget helps management keep a tally or total of all cash balances.

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ACC 291 Week 2 Assignment Financial Reporting Problem, Apple Inc

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www.acc291genius.comPurpose of Assignment The purpose of this assignment is to help you understand the basics of financial statement analysis related to the assets section of the balance sheet, data interpretation, and how financial information is obtained to understand how a company accounts for its long-lived assets. Assignment Steps Resources: Financial Accounting For Discussion Question 1: Post your response to the following:

• When reviewing a financial report, why should information be reliable, relevant, consistent, and comparable?

• In other words, why are these accounting characteristics important?

• What kinds of problems could be created if a financial report is not reliable, relevant, consistent, or comparable?

It is extremely vital that the company has accurate financial reporting. This information determines whether or not to invest in your company's stock. This information will help them decide if it is profitable to invest or not to invest in your company based what is in your financial history. The information must be relevant because it will help the company, investors and lenders make decisions. It helps answer questions like, "how stable is your company", or "what future does this company have". The information should be reliable. In other words the information that is reported must be able to be verified, backed up with truthful information. Comparable occurs when different companies use the same accounting principles. This makes it much easier to compare results between company's. Consistency happens when the company uses the same accounting method every year. When the financial statements are reported each year, it paints a financial picture of where the company is headed now and in the future.

What kinds of problems will occur if the information does not include these things?

Falsified or manipulated statements doesn't only effect the company but it also to name a few effects the lenders, creditors, investor's, etc. This will result in the company not having a faithful representation.

Another response

The main objective of generating financial information is providing useful information that can be used in decision-making... only if this information is relevant, reliable, comparable, and consistent, can it be useful for decision makers. (Kieso, 2003).

Relevance gives a basis for making decisions that will impact the future of a business, and it confirms and corrects expectations from the past. If the information makes a difference in making decisions, it is relevant.

Reliability means that the information can be depended on and it can be proven to be free of error, and the information is factual. The information cannot favor one set of users over another. CPAs audit financial statements to ensure reliability.

Comparability is also an important characteristic of financial reporting... this happens when different businesses use similar accounting principles, making it much easier for one to compare companies, and the method used in a business must be disclosed to the users of the information to enable the users to convert the information as accurately as possible.

Consistency simply means that the business uses the same accounting principles on a yearly basis... consistently. This helps decision makers analyze a company's trends. A company can change the methods used if they can justify the change, showing that the new method is more useful for analysis. If the method is changed, it must be disclosed in the notes that go with the statements to show users a lack of consistency.

These characteristics are very important to a business... decisions cannot be made based on incorrect information, and everyone

involved in a business venture of any kind, whether they be management, owners, or investors and creditors, as well as consumers, etc. must be able to rely on the financial information provided in order to make any type of decision. Without this information, it is difficult to imagine any business succeeding, even for a short time.

Examples of problems that could occur without reliable, relevant, consistent, or comparable information includes not being able to get loans or investments; management could make decisions that cause irreparable damage to entire operations, consumers could easily lose faith and cut their ties... the possibilities are endless for companies that lack these qualities in their financial reporting.

DQ2

For Discussion Question 2: Post your response to the following:

• How does information from financial reports influence business decisions?

• Why is it important for business managers to understand the information found on financial reports?

How does information from financial reports influence business decisions?

Once the information from the financial reports have been posted then a team will review the company's financial history to see what decision were profitable or not. The decisions that were made previous to the financial reports being posted will show which way the company needs to go to continue to remain #1.

Why is it important for business managers to understand the information found on financial reports?

IT is extremely important for he business managers to understand the information found on the financial reports. The business managers are going to be the people that are going to make decisions for the company. They need to know how to interpret the financial reports and come up with different strategies that will continue to make the company money.

Another response

The information from financial reports influences business decisions because it shows where the company stands. The managers use the information from the financial report compared to the current year from the previous year, whether the company growths or losses. It is very important for business managers to understand the information found on financial reports because the information from the financial reports enables business managers to see how to improve and keep the business afloat. It also gives business managers an insight what came in and went out and the total operating cost of the company as

well as cutting cost in a certain areas. The information from the financial reports helps the manager manages the business accurately.

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ACC 291 Week 2 Discussion Question 1

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www.acc291genius.comWhat are the differences among valuation, depreciation, amortization, and depletion?Is it appropriate to calculate depreciation using two different methods? Why?What is a Flexible budget?

• A Flexible budget is a budget that change or is flexible during different levels or activity. Unlike the static budget which is a budget based on one activity level, the flexible budget is based off of more than one activity level.

• The steps to development a flexible budget is :

a) Identify the activity index, and the range of activity

b) Find out what the variable cost, and determine the variable cost per unit

c) Find out what the fixed cost and determine the budgeted amount for each unit

d) Organize the budget for selected additional activity within the appropriate range

• The information found on a flexible budget cannot begin with the master budget. The flexible budget uses the same guidelines the original budget. The budget consists of Sales, Cost of Goods Sold, Selling Expenses, General and Administrative Expenses, Income Taxes, and finally the Net Income.

• The information on the budget is a great tool to be used for evaluation performances. The flexible budget can be used for monthly comparison purposes. Also during the process that management is identifying the activity index and the range of activity it will allow them to see the cost of direct labor hours for that budget period.

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ACC 291 Week 2 Discussion Question 2

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www.acc291genius.comWhat types of industries have unearned revenue? Why is unearned revenue considered a liability? When is the unearned revenue recognized in the financial statements?Discussion Question 1: Post your response to the following:

You know how important it is to create budgets for your household. How does budgeting help management make good business decisions?

Budgeting is a very important skill that can be applied to everyday life and also when it comes to making good business decisions. I really like the way our class resources says about Budgeting. Budgeting is used as a planning tool used by management to make good decision for the company. If a company is successful than more than likely that means that the management team is very good at managing the company finances. Budgeting helps management plan ahead, defines what is most important,

shows warning signs, reach a company target without over or under budgeting and etc.

Another response

In a business, a budget helps a business make good decisions because they are used by the company to plan for future events and coordinate the events and duties in the company. They also gives objectives used to evaluate the performance of the company on each level which can help to make future decisions that will not hurt the company based on the projected objectives. It can also be used to alert the company of possible problems or negative trends in the company that need to be addressed so that there is a clear picture of the overall health of the company before decisions are made. The budget helps the company to be able to make an informed decision when making one. It is there in order to make sure that making a decision like taking on another company will not hurt the company and is something that the compnay can sustain based on the budget.

DQ2

Discussion Question 2: Post your response to the following:

What are some of the different types of budgets?

Describe in detail one type of budget covered in the text.

Describe what the budget is used for and what information it provides a business.

Then, as you respond to your classmates, discuss how the budget you described relates to the budgets they described.

Discuss how a business benefits from each of the budgets.

There are many different types of budgetting. For example, there sales budget which allows management to see how many units that need to be produced, production budget which will allows everyone to see how many units are going to be produced in or needed to be produced in order to meet the inventory for that budget period. One budget that I can describe in detail is called the direct labor budget and this budget shows how many people, hours is needed in order to meet the required budget for that period. This will give management an idea of how much money is needed such as paying the cost of labor. The company benefits by each of these budgets because it will help manage just how much money it will cost the

company during this period. Management can also see if there are different ways to cost the company out of pocket cost down during this period.

Another response

I chose to write about the Production Budget. The Production Budget shows the cost of each unit needed to produce an item or manufacture a product. The formula used by the Production Budget :

Budget sales units + Desired ending finished goods units - Beginning finished goods units = Required production units.

An example would be, every Easter the bakeries in the Bronx loads up on Hot Cross Buns. My mother and grandmother would buy these tasty sweet breads,and eat them for breakfast. I personally would like to eat them every week but, they are only sold during the Easter season. Maybe, it has something to do with the glazed cross on the top.

Every Easter Holiday, there appears these Hot Cross Buns and the bakeries production department allows for the purchases for items needed to make the buns. After Easter has gone, Hot Cross Buns are not included in the budget.

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ACC 291 Week 2 Individual WileyPLUS Assignment Week

Two

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www.acc291genius.comwe have another New set of week 2 Willeyplus assignment which could be found on this link 

 Resource:WileyPLUSComplete the followingWileyPLUS Week Two Exercises and Problem: 

Exercise E8-3 Exercise BE9-13 Exercise Do It! 9-4 Exercise E9-9 Exercise E9-10 Problem P9-5A Capstone Discussion Question: Post your response to the following:

Think back over what you have studied and learned in this course. Do you have a new perception of or appreciation for the field of accounting and how it contributes to business? Explain.

To be perfectly honest with you I truly had no clue what accounting did for a company and how important it was. I always thought that accounting only dealt with payroll. In fact accounting does much more that just payroll and monitor company supplies (coffee, paper, pens & pencils). The accounting sets budgets for the entire company, monitors outflow and inflow of profits, plans budgets for each department, and much more.  When I first begun this class I was really nervous, I truly thought that I was going to have a hard time understanding the accounting but I happy to say that I was wrong. I understood every part of this course.

On a personal note I would like to thank you Jess. If it wasn't for your pep talk I probably would had gave up. You are truly a great instructor. I wish you all the best! God Bless 

Another response Accounting has taken a whole new meaning to me in my vocabulary. Prior to this course, I

just took accounting as a calculator and crunching numbers. I now have a new respect for accounting and all the aspects that are involved. I never once took into consideration profit, sales, revenue, and balance sheets also being included with accounting. There is so much more involved with accounting, and had I not taken this course I would have never known. Accounting is a very important part of running a business. I feel that it is imperative to all people thinking of opening a business should take some type of accounting class to become more aware of how to run the accounting part of a business.

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ACC 291 Week 2 IndividualWileyPLUS PracticeCh 8,9,10

Quiz

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www.acc291genius.comResource:WileyPLUS

Complete the WileyPLUS Week Two Practice Quizzes for chapters 8,

9, and 10

Business Plan

By

Kamilah T. Crooms

The name of my business is called DestinyWear. DestinyWear is a urban fashion

clothing company for woman, men and youth. DestinyWear specializes in making clothing

for every occasion. My name is Kamilah Crooms and I am the owner and CEO of

DestinyWear.My goal is to ensure that my company will be succesfull in all areas and in

each department. In order for me to make sure that the company was going to begin in the

right direction I had to priortize what was most important in establishing my business plan.

The main priority is that I had to first choose the appropriate business structure, a high

demanding product, and most of all an outstanding accounting team.

Business Structure

Upon establishing DestinyWear I had to decide which business struture that I felt was

best for me to pursue. I decided that as a Entreprenuer the best choice for me abd the

direction of the company would be for me to be sole proprietorship. Sole proprietorship

allowed me to be the sole owner of DestinyWear. The first and most important reason that I

wanted sole proprietorship is because it is much easier to start a business as sole

proprietorships. Sole proprietorship takes all the profit that and doesn't have to split it

between any other owners or corporations. I also want the power to make and change

decisions along the way without having to first consult anyone else.

DestinyWear Products

DestinyWear products will range from jeans, shirts, accessories and shoes. The

company will first start off with its most profitable product and that will be the DestinyWear

designer jeans line. The jeans line has over twenty different jeans designs

from straight leg, baggy, cargo, overalls, shorts and much more. The jeans line will provide

services within the United States and Canada and will eventually service International

customers. The DestinyWear jeans line will have its own building. In this building the bottom

floor will consist of the factory and the top floor will have the different departments such as

management, marketing and most importantly the accounting department.

DestinyWear Accounting Department

The accounting plays a major role in establishing my company DestinyWear. The

accounting department does more than managing and reporting the company’s financial

documents it is the greatest tool in establishing my business. The key to a powerful

accounting department here at DestinyWear is applying the principles of internal control.

These principles consist of establishment of responsibilities, segregation of responsibilities,

documentation procedures, Physical, mechanical, and electronic controls, Independent

internal verification and other controls such as Bonding of employees. In order to ensure

that this business plan works DestinyWear has to hire nothing but the best qualified

employees.

DestinyWear Accounting Staff

DestinyWear accounting team of fine employees will all be hired through the

company. There are several requirements that have to be met in order for myself as the

owner and Human Resource department to even consider the applicant for accounting. We

looked for characteristics, education and work history experience. The first and far most

important qualifying requirements are education. The applicant has to have a Bachelor

BA/BS in accounting degree a plus if he or she has a master’s.

The second requirement is experience. The applicant must have the minimum of five

years of experience working in accounting. He or She must have knowledge and

employment experience of working with financial statements, cash management and internal

control. Employees must be experienced in Invest idle cash, planning the timing of major

expenditures, delay payment of liabilities keeping inventory levels low, and increasing the

speed of collection on receivables. In the category of experience we had to hire applicants

according to the position that had to be filled in accounting. For example, if a position in

accounting such as management or supervisory needed to be filled, then we would look for

years of experience in management or supervisory positions. I personally prefer that every

employee have some type of management experience.

Last but not least, the employees characteristics. It is a must that every accounting staff

member has and applies professionalism, great ethic and moral skills, accuracy, and most

importantly punctuality, and reaching company deadlines. These characteristics are very

important to have at DestinyWear.

DestinyWear Accounting Management Team

The DestinyWear accounting management team will be reporting to me and to the

other head staff each week to report updates and any new changes. The management team

is responsible to have all the different types of budgeting reports that includes Sales, Labor,

etc. Management must follow the responsibility reporting system for each department. The

managers will use the company’s financial information to predict outcomes of the business. I

require a report from each responsibility center, cost center, profit center and investment

center to be reported each month. Management is responsible to ensure that the company

does not over or under budget and if any changes it must be reported immediately.

Conclusion

DestinyWear will be a very successful team not only because of the products that we

produce but because of having a great accounting team. With the help of accounting team I

DestinyWear products will be in every wardrobe in America.

REFERENCES

//http:yourdictionary.com /CVP.org Retrieved 3/20/2010

Thomas, Y. 2005-08-27 “Accounting 101 pg. 52 Statements. March 19, 2010

Drucker, P. Managing in the next society 2002. retrieved

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ACC 291 Week 2 Learning Team Weekly Reflection

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www.acc291genius.comDiscuss the objectives for Weeks One and Two. Your discussion should include the topics you feel comfortable with, any topics you struggled with, and how the weekly topics relate to application in your field.

Costco Wholesale Corporation

If we look at the financial statements of the company we can find that the company is financially

strong. Its strength are:

1. It has enough amount of current asset to repay its current liability. The current ratio of

the company 8.18 indicates that the company has $8.18 liquid asset to repay its $1 of

current liability.

2. The operating cost of the company is increasing because the company is able to

reduce its expenses.

3. Cash from operating activity has increased for the company.

Apart from this strength the company also has some weakness in its financial statement:

(i) Increasing inventory indicates that the company inventory conversion period is

increasing.

(ii) The cash from investing activity shows that the company cash outflow is more in

the short term investment i.e. in non operating activity.

(iii) The overall has for the year 2008 has declined for the company.

Net Income:

If we look at the trend in net income of the company we can find that the company net income looks

fluctuating but it has improved it net income in 2008 as compared to 2007.

Debt ratio as a percentage of total assets:

If we look at the debt ratio as percent of total asset we can find that the debt ratio is declining in

2008 as compared to 2007 i.e. the company is increasing equity to finance debt.

Debt as a percentage of total equity:

As we can see that the debt as percent of total equity is declining in 2008 as compared to 2007 i.e.

the company is increasing equity in its capital structure.

As we can see that there is nothing negative in 2008 for the company and this is the reason it has

positive trend as compared to 2007. Hence there is no need to correct anything for the company.

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ACC 291 Week 2 Wileyplus Assignment P8-3A, BE9-11,

DI9-5, E9-7, E9-8, BYP9, P9-2A (New)

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www.acc291genius.com·P8-3A, BE9-11, DI9-5, E9-7, E9-8, BYP9, P9-2A.

Problem 8-3A: Bosworth Company Brief Exercise 9-11: Nike, Inc. Do It! 9-5

Week 1 DQ 1Due Tuesday, Day 2

Go to the U.S. Securities and Exchange Commission’s Web site at http://www.sec.gov and the Financial Accounting Standards Board’s Web site athttp://www.fasb.org. Identify the mission and main activities of each organization. Then, analyze the similarities and differences between the roles of each entity. Which entity has more influence over financial statement reporting? Explain your answer.

According to the SEC website their mission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. The SEC also requires public companies to disclose meaningful financial and other information to the public. This provides a common pool of knowledge for all investors to use to judge for themselves whether to buy, sell, or hold a particular security. The SEC is concerned primarily with promoting the disclosure of important market-related information, maintaining fair dealing, and protecting against fraud.

According to the FASB website the mission of the FASB is to establish and improve standards

of financial accounting and reporting that foster financial reporting by nongovernmental entities that provides decision-useful information to investors and other users of financial reports. Since 1973, the Financial Accounting Standards Board (FASB) has been the designated organization in the private sector for establishing standards of financial accounting that govern the preparation of financial reports by nongovernmental entities

The major difference in the SEC and the FASB is that the SEC deals with reporting of financial

statements for all industries while the FASB deals mainly with the private nongovernmental entities. Both are concerned with the fairness of financial reports and work in the interest of the public. I believe that the SEC has more influence over financial statement reporting because they can bring civil action against companies and individuals for violations of securities laws. Although according to the FASB website, “the Commission’s policy has been to rely on the private sector for this function to the extent that the private sector demonstrates ability to fulfill the responsibility in the public interest.

Response 2

Go to the U.S. Securities and Exchange Commission’s Web site at http://www.sec.gov and the Financial Accounting Standards Board’s Web site athttp://www.fasb.org. Identify the mission and main activities of each organization. Then, analyze the similarities and differences between the roles of each entity. Which entity has more influence over financial statement reporting? Explain your answer.

U.S. Securities and Exchange Commission (SEC)      According to the SEC’s website “The mission of the U.S. Securities and Exchange

Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation”(U.S. Securities and Exchange Commission, 2010, Para. 1).

     The main activities of the SEC are to interpret federal securities laws; issue new rules and amend existing rules; oversee the inspection of securities firms, brokers, investment advisers, and ratings agencies; oversee private regulatory organizations in the securities, accounting, and auditing fields; and coordinate U.S. securities regulation with federal, state, and foreign authorities. (U.S. Securities and Exchange Commission, 2010)

Financial Accounting Standards Board (FASB)      According to the FASB’s website “The mission of the FASB is to establish and

improve standards of financial accounting and reporting that foster financial reporting by nongovernmental entities that provides decision-useful information to investors and other users of financial reports. That mission is accomplished through a comprehensive and independent process that encourages broad participation, objectively considers all stakeholder views, and is subject to oversight by the Financial Accounting Foundation’s Board of Trustees” (Financial Accounting Standards Board, n.d., Para. 3).

     The main activities of the FASB are to identify financial reporting issues based on requests/recommendations from stakeholders or through other means. The FASB Chairman decides whether to add a project to the technical agenda, after consultation with FASB Members and others as appropriate, and subject to oversight by the Foundation's Board of Trustees. The Board deliberates at one or more public meetings the various reporting issues identified and analyzed by the staff. The Board issues an Exposure Draft to solicit broad stakeholder input. (In some projects, the Board may issue a Discussion Paper to obtain input in the early stages of a project) The Board holds a public roundtable meeting on the Exposure Draft, if necessary. The staff analyzes comment letters, public roundtable discussion, and any other information obtained through due process activities. The Board redeliberates the proposed provisions, carefully considering the stakeholder input received, at one or more public meetings. The Board issues an Accounting Standards Update describing amendments

to the Accounting Standards Codification (Financial Accounting Standards Board, n.d.).

Both the SEC and the FASB have the same goals of fairness, accuracy, and understandability of financial accounting and reporting. Both agenecys accomplish these goals in the best interest of the overall public.

The differences between the SEC and the FASB is that the FASB regulates financial reporting in the private sector of businesses (but are subject to the rules and regulations of the SEC) and the SEC deals with regulating the financial reporting of publicly held corporations.

I believe that the SEC has the greatest influence over financial statements reporting because they have the final approval on all changes of the rules and regulations. The Sec can also bring civil or administrative enforcement actions against individuals and companies in violation of the securities laws.

References Financial Accounting Standards Board. (n.d.). Facts about FASB. Retrieved July 15, 2010,

from Financial Accounting Standards Board:http://www.fasb.org/facts/index.shtml#mission

U.S. Securities and Exchange Commission. (2010, May 3). The Investors Advocate: How the SEC Protects Investors, Maintains Market Integrity, and Facilitates Capital Formation. Retrieved July 15, 2010, from U.S. Securities and Exchange Commission: http://www.sec.gov/about/whatwedo.shtml

Week 1 DQ 2

Due Thursday, Day 4

Search the Internet or the Online Library for information about the Sarbanes-Oxley Act. A useful guide to some of these provisions is located at http://www.soxlaw.com. Summarize at least two provisions of the law, and discuss your interpretation of these provisions with your classmates. Do you think this law will make financial statements more reliable? Also, discuss how Sarbanes-Oxley establishes boundaries to ensure ethical practices. What does the law allow or prohibit, and why?

The Sarbanes-Oxley act has many provisions to give companies guidelines for responsible, and ethical financial reporting.  One of those provisions is listed in Section 302 of the act.  The provision is that periodic statutory financial reports be certified that signing officers have reviewed the reports, the report does not contain any untrue, or misleading information.  The financial statements fairly present the financial condition.  The signing officers are responsible

for internal controls.  A list of all deficiencies in internal controls, and a list of fraud involving employees, and anything that could negatively affect the internal controls.

Another provision pertains to the "management assessment of internal controls".  This provision ensures that information is published in annual reports regarding the adequacy of internal controls, structure and procedures. 

The Sarbanes-Oxley act is designed to help companies promote ethical accounting procedures.  The act gives guidelines as to how financial statements are reported.  The act requires verification that officers within the company have checked the information in the reports for accuracy and true.  The act also requires that the companies have internal controls in place to ensure ethical reporting practices. The main thing that the Sarbanes-Oxley promotes is transparency in reporting. 

Response 2 Section 802 of the Sarbanes-Oxley Law defines the penalties that

may be assessed against individuals who failed to comply with the Act.  An individual could be subject to 20 years in jail for altering, destroying, mutilating, concealing, falsifying records, documents or tangible objects.  Guilt is define by the intent to impede a legal investigation.  This part of the law gets to the heart of how Arthur Anderson reacted by destroying documents important to Worldcom.  The law further defines that any accountant who knowingly violates their ethics by wilfully violates the requirements of maintenance of all audit or review papers.  These papers are subject to review up to five years.

The second Section that I reviewed was the Section 302.  This actually is my favorite part of the law because it directly holds the officers and directors accountable for the accuracy of reporting in their financial statements.  It defines that the management must review and understand the financial statements and sign that they are true and accurate.  It also holds the management accountable for the internal controls, requiring any deficiencies to be reported.  In the past directors of companies relied heavily on the internal officers, management, to report the company performance without questioning the accuracy or taking their role on oversight committees seriously.  They could hide behind a veil of trust of the key leaders.  This Section clearly puts the responsibility for the Board to remain independent of the executives and function more effectively on the respective oversight committees they serve.  The example I would share is what happened in WorldCom.  The company leaders shared

what they wanted to with the Board, who trusted implicitly the top leaders.  Had they questioned their legal representation or auditors, they potentially could have uncovered the fraud that was committed by the creation of shell companies, with WorldCom employees as stockholders.

I would love to think this law would protect the investing community.  Financial reporting has improved to some extent.  Unfortunately the scams still continue.  Example would be Barney Madoff or what happened in the financial mortgage industry.  These unethical practices were conducted after Sarbanes Oxley was implemented.  Madoff was able to provide false financial information to investors. Financial industry was allowed to get to aggressive in underwriting and product suite.  Fines and penalties are deterrents.  Ethics still must be inherent in an individual and company.  Laws and requirements are a guide.  There will never be enough auditors, inspectors or oversight boards to catch all of the fraud in the corporate community.  

The law prohibits falsifying information, failing to notify of material changes, and destruction of records.

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ACC 291 Week 3 Assignment The Liabilities Section of

O’Brian’s Balance Sheet

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www.acc291genius.comPurpose of Assignment The purpose of this assignment is to help you

understand the balance sheet presentation for the liabilities of a company. Assignment Steps Resources: Financial Accounting: Tools

for Business Decision Making Prepare the liabilities section of O’Brian’s balance sheet using the following information: • Accounts payable $157,000 • Notes payable (due May 1, 2018) $20,000 Lucent

Technologies

Axia College of University of Phoenix

Lucent Technologies is a company based on networking for service providers, government, and enterprises worldwide (Lucent Technologies, n.d., Para 1). The products and services they work with are separated into three categories; service and maintenance, wireless mobility networking, and wire line networking. Lucent Technologies is backed by Bell Labs, which does research and development in networking technologies.

During the years of 2001 to 2003 this company has experienced a decrease in demand because of other companies’ loss or capital used toward spending. This is mainly due to a downturn in the economy. As an investor this information is necessary to know because it explains the decrease or increase in sections of the balance sheet. In order to compare the growth or decline of the company’s profit, an investor must change a balance sheet into a common-size balance sheet. First when looking at the balance sheet an investor will see that the amount of paid in capital has increased from the year of 2003 to 2004, the assets have increased, but the liabilities have decreased. When running a debt/asset ratio it is noticed that this ratio drops from 1.2 in 2003 to 1.0 in 2004. This shows the company’s risk is low when concerning financial leverage, usually when the debt ratio is less than one percent it is financed mainly by company equity, so this company is close to being debt free from creditors.

After changing the balance sheet to a common-size balance sheet there are several factors an investor will look at. The current assets have dropped to .48 from .49 in 2004. This does not show harm to the company because only the accounts receivable dropped while the rest of the current assets increased. This means the company is not in as much danger of default on money owed to it. It does have a rise in marketable securities. The one concern in the assets is the increase of prepaid cost of pensions and goodwill. Goodwill can be used for tax breaks but prepaid pensions cannot benefit the company.

When looking at the liabilities section an investor will see a drop in pension and liabilities and an increase in long term debt, both of these could be affected because of the drop in the economy. Long term liabilities are often increased to help a company control interest rate increases so as an investor cutting back on pension liabilities cuts back cost to the company and watching interest rate increase show the company is concerned with its earning and investors. This would be encouraging or an investor. The stockholders deficit shows a drop in accumulated deficits from -1.43 to -1.22 and total deficits of -.26 to -.08. This shows the company is working to control any money loss and turning it to the company’s advantage. Overall it shows the company is still earning a profit although small. With an increase of assets and a drop in liabilities the company is showing it is working in a low risk capital.

After reviewing this information, a creditor or investor must be able to compare this company to the industry totals. By comparing how this company compares to other companies similar to it, a person can see if it is competitive and worth taking a risk. Running ratios will also show if the company is capable of paying off any debts it has or if it can acquire the needed cash in case of emergencies. Overall as an investor, I would say this company would be worth investing in.

Reference

Axia College. (2007). Understanding Financial Statements. Retrieved May 10, 2010 from Axia College, Week 2 Assignment, ACC/230.

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ACC 291 Week 3 Discussion Question 1

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www.acc291genius.comWhy does a company choose to form as a corporation?

What are the steps required to become a corporation?

Preparing an Income Statement

The companies’ net income is profitable when the sales exceed the cost of goods sold. In this, the gross profit is $761k. This is beneficial to the company. Though we took the cost of goods away from the net sales there are still other areas which need to take a piece of the pie. For this company, once the SG&A and depreciation are taken out, the company still contains a profit of $290k. But the buck does not stop there. Once the interest income and interest expense are adjusted the balance before earnings and taxes is $290k. After taxes are taken out, the company is left with a net profit of $174k.

In this case I think the company has achieved success with a net profit of $174k. If the company were unable to be profitable, the company would eventually go out of business. We would be able to tell if the company was not profitable by looking at each section individually. The cost of goods sold is what stands out for me. If we pay more to make the product then we are actually selling it for, there is no profit to be made. So, I think it should all start there.

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ACC 291 Week 3 Discussion Question 2

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www.acc291genius.comWhy is preferred stock referred to as preferred?

What are some of the features added to preferred stock that make it more attractive to investors?

Would you select preferred stock or common stock as an investment? Week 3 DQ 1

Due Tuesday, Day 2

Post your answer to Problem 3.5 on p. 109 (Ch. 3). How might the information contained within the stockholder equity statement be used for management and investor decision-making? Provide specific examples of situations in which the stockholder equity information might be used.

The statement of stockholders’ equity provides the changes in the equity accounts during the

accounting period more in depth than the balance sheet. The information found on the

statement of stockholders’ equity includes retained earnings, common and preferred stock,

and additional paid in capital. Management uses the statement of stockholders’ equity to

ensure they are reaching their goal of maximizing shareholder's equity. The use of market

ratios help with the analysis of the statement of stockholders’ equity, such as earnings per

share, price-to-earnings, dividend payout, and dividend yield. These ratios will help both

management and investors in analyzing the company. For example, if I were looking to

invest in a company’s stocks I would utilize all of the financial ratios, as well as the market

ratios. The earnings per share ratio is calculated before the price to earnings ratio, P/E,

because the earnings per share ratio is used in the second. If a company pays dividends,

the dividend payout ratio will come in handy. It tells us “The percentage of earnings paid to

shareholders in dividends” (Investopedia, 2010, p. 1).

References

Investopedia. (2010). Dividend Payout Ratio. Retrieved August 3, 2010, from

Investopedia:http://www.investopedia.com/terms/d/dividendpayoutratio.asp

Response 2

Explain what can be found on a statement of stockholders’ equity.

The major elements of stockholders' equity include capital stock, paid-in capital, retained earnings, treasury stock, unrealized loss on long-term investments, and foreign currency translation gains and losses.

How might the information contained within the stockholder equity statement be used for management and investor decision-making? Provide specific examples of situations in which the stockholder equity information might be used.

Management may look at the stockholder’s equity statement retained earnings section to determine if company should borrow money for capital investments or finance it through various forms of equity. It may also be used by the stockholder to evaluate the compensation paid to the company officers. Investors may also look at the statement for cumulative net unrealized gains and losses before purchasing stock in the company. Investors are also interested in the paid in capital because they can compare it to the additional paid in capital and the difference between the two values will equal the premium paid by investors over and above the par value of the shares.

DQ 2

Week 3 DQ 2Due Thursday, Day 4

Provide an example from the text or the Internet that demonstrates a situation in which a company’s net profits appeared good in the statements, but the gross or operating profits presented a different picture. Discuss how this might have occurred. Respond to the following question, addressed in Problem 3.6 on p. 109 (Ch. 3): “Why is the bottom-line figure, net income, not necessarily a good indicator of a firm’s financial success?” Look for indicators like liquidity or solvency to answer this discussion question.

An example that demonstrates the situation is Enron. Enron’s financial statements did not show all the expenses and costs. Instead of showing them on the income statement they made entries so the cost and expenses would post in the balance sheet. The same was done with the revenues. This way it would be less expenses and the net profit appeared good. Many debts and losses were not reported in the financial statements. From the third quarter of 2000 through the third quarter of 2001, the directors fraudulently used reserve accounts within Enron Wholesale to mask the extent and volatility of its windfall trading profits, particularly its profits from theCalifornia energy markets; avoid reporting large losses in other areas of its business; and preserve the earnings for use in later quarters. By early 2001, Enron Wholesale's undisclosed reserve accounts contained over $1 billion in earnings. The head of the company improperly used hundreds of millions of dollars of these reserves to ensure that analysts' expectations were met. In addition, Skilling and others improperly used the reserves to conceal hundreds of millions of dollars in losses within Enron's EES business unit from the investing public.This would show the creditors that Enron was making profits and its position was solid.

The net income is not necessarily a good indicator of a firm’s financial success because the income statement only shows the profit or loss at a period of time and does not show the whole picture of the company. The Balance Sheet, Statement of cash flow, Statement of shareholders’ equity and the Income Statement all together give the real picture of the business. Each one of them shows different aspects of the business. These statements show where the income is actually coming from; is it from sales or from loans the company is borrowing? If the company is selling a building or any other asset but that does not mean that it is selling more products and making profit. Looking at the Income Statements the company might be making profit but at the same time it is extremely leveraged.

Response 2

A company’s net income is not the whole picture, just part of it. There are lots of things that contribute to the net income that may not be significative to the company’s success. If the value of a dollar has a sudden change that can affect the bottom line if the company happens to hold the medium of exchange that can benefit by the change that might occur.

The company can falsely inflate the bottom line. A company’s net income is coupled with liabilities, cash flow, and selects financial ratios. Looking at it this way is a much better way of seeing what the company’s success is like. A company can change up many things to make it look like their income is better. These things that can be changed are single sales events, cash infusion, or false financial statements. Some things like debt that a company has, the company’s cash on hand, their capital assets conditions, or even their sales trends. To figure the success of the company, you must look at the whole picture. One thing cannot tell you all the facts of the company’s affairs. You cannot tell the net income of the company just from the bottom line. Look at all the financial records.

Response 3

Provide an example from the text or the Internet that demonstrates a situation in which a company’s net profits appeared good in the statements, but the gross or operating profits presented a different picture. Discuss how this might have occurred. Respond to the following question, addressed in Problem 3.6 on p. 109 (Ch. 3): “Why is the bottom-line figure, net income, not necessarily a good indicator of a firm’s financial success?” Look for indicators like liquidity or solvency to answer this discussion question.

Net income is not necessarily a good indicator of a firm’s financial success because they have ways to manipulate it by increasing their revenues or hiding some of their expenses. For investors trying to decide where to invest their money, they need to look more into assessing how the company came up with the numbers they presented.

An example of this situation is when Laribee Wire Manufacturing Co. exaggerated in recording their inventory value which allowed them in acquiring loans from six banks totaling to about $130 million using it as collateral. At the same time, they reported $3 million in net income for the period, but in actuality they lost $6.5 million.

This company showed a higher net income by reporting fake inventory in which its value was overstated and transferred over to their income statement. When the banks assessed their financial statements, it was enough to sway them into lending the loans they needed.

Reference:

Investopedia. (2010). Spotting Creative Accounting On The Balance

Sheet. Retrieved fromhttp://www.investopedia.com/search/searchresults.aspx?q=Spotting+Creative+Accounting+On+The+Balance+Sheet&submit=Search

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ACC 291 Week 3 Individual WileyPLUS Assignment

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STOCK DIVIDEND

University of Phoenix

Stock Dividend

In the present time, the stock dividend has become important concept. When dividend is given in form of stock, it is called stock dividend. In this form of dividend, the cash does not use. It is important, when the corporation declares stock dividend, the market value of the share decreases because the number of stock increases. The many companies prefer stock dividend due to the tax benefit. If the individual gets stock dividend, he does not pay any tax on stock dividend. Thus the stock dividend reduces tax burden. On the other hand, the ownership of investors also spurs up in the company because the number of holding share increases. There is also disadvantage of stock dividend. The market value of the share decreases, so the market value of holding also decreases (Kennon, 2009).

The ABC Company is leading company in its industry. The number of outstanding share of the company is one million. On the other hand, the number of investors is five millions. The value of market capitalization is $100 million. The management declares 20% stock dividend. Thus the 200000 shares will be distributed as a stock dividend. The number of outstanding share will be increased by 200000 and the new total number of outstanding stock will be 1.2 million. On the other hand, the new value per share in the market will be $83.33 (100 million/1.2 million). This example is taken from below mentioned link:

Stock Split

The stock split is also an important concept. When the management wants to increases number of shares, the management follows this method. In this method, the face value of the share is split and number of share gets increased. Due to increment in number of outstanding share, the market value of per share also gets affected but the total market capitalization of the company does not affect. Both stock split and stock dividend increase number of outstanding shares but both are different due to the accounting treatment. In the stock split, the investors do not get any real benefit. It is also known as non-cash distribution of dividend. The motto behind stock split is to increase trading of the shares in the market (Baker, 2009)

For example, the face value of per share is $100 and the total outstanding shares are 100 million. If the management of the company announces stock split in ratio of 1:2, the total outstanding shares will be increased by 100 million, thus the new total number of the share will be 200 million. On the other hand, the face value of the share will reduce by 50%. So the new face value of the share will be $50. Due to effect of stock split, the holding share of the investor will also increase in the prorate basis. If the investor has 10 shares, now he will have 20 shares. It is important thing that the total issued capital will not be changed. The illustration of stock split has been got from following link:

Reverse Stock Split

The reverse stock split is just opposite of stock split. In this process, the management reduces the number of outstanding shares. The company increase face value of the share. In this method corporation decides a ratio such as 2:1. Thus the company accumulates two shares in one share. In this method, the total market value of company does not change. Due to reverse stock split, the earning per share and face value of per share rises. Thus the reverse stock split provides just opposite result from stock split. It is important question, why company selects this method. When the management seems that the face value of the share is less as compared to competitors then the company goes for this method to make its share value to equal to competitor’s share’s face value. It is also a sound strategy to increase treading of shares. If the face value of share is too cheap in comparison to competitors, the investors will be discouraged for investment. For increasing the confidence of investors, the management uses this method (Mladjenovic, 2009).

For example, an investor holds 100 shares of XYZ Company and the face value per share is $50. If the management go for reverse stock split option and declares one share for 10 shares then the holding of the individual will reduce 9 shares for every 10 shares. Thus the new holding of the investor will be 10 (100/10) shares but the face value per share will be $500. It is also important that the total market capitalization will remain as same as before reverse split. The example of the reverse split is take form below mentioned link: http://www.sec.gov/answers/reversesplit.htm.

References

Baker, H. K. (2009). Dividends and Dividend Policy. John Wiley and Sons.

Kennon, J. (2009). All About Dividends. Retrieved May 31, 2010, from http://beginnersinvest.about.com/od/dividendsdrips1/a/aa040904_2.htm

Mladjenovic, P. (2009). Stock Investing for Dummies. Dummies.

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ACC 291 Week 3 Individual WileyPLUS Practice Quiz Ch.

11,12

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Analyzing an Income Statement

The net income of Kodak has decreased a bit; it appears that the company is more profitable. By conducting a side by side analysis from 2004 to 2003 the company has increased in current assets and decreased in total assets. It appears that the company went down in property, plant and equipment net as well as discontinued operations. So, despite the decrease in total assets it looks like the company has made a good decision.

The company has also decreased its total liabilities by about 4%. I believe this to be good because the short term borrowings and long term debt has decreased. To me, this means that the company is tightening their belt and paying off old debt.

Total shareholders’ equity has down a little bit in dollars, but on the percentage level the company’s percentage has gone up. I believe this is because the company issued $104k more shares in 2004 than in 2003. The company has the same amount of shares outstanding in 2004 that it did in 2003 as well. Retained earnings on the stock have gone up in 2004 as well. I believe this is contributed by the more shares that have been issued.

I believe the profitability of the company is under good standings. They appear to be making the necessary adjustments in the company to stay with in a profitable income.

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ACC 291 Week 3 Learning Team Weekly Reflection

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www.acc291genius.comDiscuss the objectives for Week Three. Your discussion should include the topics you feel comfortable with, any topics you struggled with, and how the weekly topics relate to application in your field.

Cash Flow Statement Analysis

Cash Flow Statement Analysis

The cash flow statement is important financial statement of the corporation. The cash flow statement states from where cash has come and where cash has been gone. Thus the cash flow statement makes a relationship between beginning balance and ending balance of cash. The cash flow statement is prepaid on the basis of income statement and balance sheet of the company. The Little Bit Inc’s beginning cash balance including marketable securities was $24000. On the other hand, the ending cash balance including marketable securities of the company was $40000 (Weygandt, Kimmel & Kieso, 2009).

The net income of the company was $5500 during 2009. The company generated cash inflow from operating activity is less as

compared cash out flow from operating activities. The company generated $9000 negative cash balance in operating activity section of the cash flow statement. On the other hand, in the investment section, the firm has also negative cash balance. The firm has $7000 negative balance in investment section of the cash flow statement. The Little Bit Inc made investment during the year instead of selling of assets. Last section of the cash flow statement is financing activity section. In which, all finance related activities come. The corporation sold some shares and borrowed some money from outside lenders therefore the company has positive case balance by $32000 in financing activity section.

Reference

Weygandt, J.J.,Kimmel, P.D. & Kieso, D.E. (2009). Managerial Accounting: Tools for Business Decision Making. John Wiley and Sons.

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ACC 291 Week 3 Wileyplus Assignment P9-7A, E10-5, E10-

8, E10-13, E10-22, E10-24, BYP10, P10-9A, P10-13A,

IFRS10-4 (New)

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·P9-7A, E10-5, E10-8, E10-13, E10-22, E10-24, BYP10, P10-9A, P10-13A, IFRS10-4.

Exercise 10-5: Olinger Company Exercise 10-8: Ortega Company Exercise 10-13: Romine Company Exercise 10-22: Cole Corporation

Week 5 DQ 1Due Tuesday, Day 2

 

In what ways does the statement of cash flows relate to the balance sheet and income statement?

It is important to understand what we are doing with the numbers and the results these numbers give us because the result is the information that will be available to us from financial statements. Although some want to see the income statement and ignore the other statements we need to use them together to see the total picture of what is happening to our business. The relationship between the numbers on the financial statements shows us everything we need to know about the business.

The income statement shows income and expenses for a period of time and if we are making or loosing money. The balance sheet compares the assets to liabilities and shows how much money the business would have if everything is sold today.

The statement of cash flow might be the most critical statement because there is plenty of information we can gain form it. This statement relates with the income statement on operating activities to see if they are generating cash or not. It is related to the balance sheet on how much cash is used in investing activities. In relationship with the balance sheet the cash flow statement shows what cash is provided or used by financing activities. It will tell us how much debt has been paid and will indicated if we are using more debt or have paid down the credit line.

When the business makes a sale or receives payment for a sale on credit that is an inflow. A sale shows up as income on the profit and loss statement and as an inflow on the cash flow statement. It also shows up either as cash or accounts receivable on the balance sheet. Also, how quickly we can collect on accounts receivable will play a big role in the cash flow. When the business spends money, it shows up as an expense in the profit and loss statement and as an outflow on the cash flow statement. It also shows up on the balance sheet as a decrease in cash, or an increase or decrease in liabilities, depending on what the expense represents.

Response 2 In what ways does the statement of cash flows relate to the balance sheet and income

statement? The cash flow statement relates to the income statement and balance sheet. The net income

from the income statement is listed on the statement of cash flows. Operating activities are analyzed on the statement of cash flows; this section of the statement reconciles the net income to the actual cash the company received from or used during operations. The second section of the statement of cash Flows is the cash flow from investing activities which include purchase or sale of assets. The last section in the Statement of Cash Flows is the cash flows from financing activities that includes raising cash by selling stocks/bonds or borrowing from backs; or cash out flows from paying back loans. The balance sheet shows the different account balances at the end of the accounting period. The statement of cash flows reflects changes in the accounts listed on the balance sheet between accounting periods. The net cash from operating, financing, and investing activities are added up to calculate the net change in cash.

Week 5 DQ 2Due Thursday, Day 4

Discuss how the statement of cash flows is utilized by investors. If you were an investor reviewing a statement of cash flows, what section might interest you most? Why? Discuss the circumstances in which other sections of the statement might be important to an investor.

Prior to making an investment in a company, one would want to

understand the decisions the owners are making to fund the operations of the company daily.  Maintaining sufficient cash to acquire new product, pay overhead, and satisfy generated sales would be the predominant need of the company.  Second need would be for the company to have sufficient cash to remain competitive.  This may require cash to invest in research and development, increase inventory as new product introduction, improve efficiency in plant and equipment, or cash to satisfy prior borrowing obligations.  By reviewing the statement of cash flow, the investor can determine if the company is generating sufficient cash internally to fund operations or are they requiring outside injection of cash to finance the short fall in cash needed to operate the company.  Last, the investor can review the statement of cash flow to better understand the leverage of the company and the requirement for repayment of debt, or dividends to reward prior investments.

Response 2 Discuss how the statement of cash flows is utilized by investors. If you were an investor

reviewing a statement of cash flows, what section might interest you most? Why? Discuss the circumstances in which other sections of the statement might be important to an investor.

The statement of cash flow is utilized by investors because it has all information integrated

from the balance sheet and the income statement. The statement of cash flow is used by an investor to see if the operating activities are greater than the net income to have earnings that are called “high quality”. If operating activities are less, then a red flag will be raised as to why the net income is not becoming cash. Another reason would be investors believe cash is the best. The statement shows all cash coming and going from the business. If the company generates additional cash than what is being used, then the company can reduce their debt, acquire another business, or buy some of the stock back. The last reason why would be that financial models are based upon the statement of cash flow.

If I was an investor reviewing a statement of cash flows the section that might interest me the most would be the operating activities. I would like to know how the company was doing and what areas need to be improved to have more cash generated in the business. All the sections are important to an investor so they can see the complete big picture of their investment.

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ACC 291 Week 4 Discussion Question 1

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www.acc291genius.comWhy are companies required to prepare a statement of cash flows?

Why is the statement of cash flows divided into three sections?

Differentiating Depreciation Methods

There is one main difference between straight line depreciation and accelerated depreciation. Straight line is decided by taking the cost of the assets, figuring out the salvage cost when the use of the asset is finished and how many years of use the asset has. A person then takes the cost minus salvage and divides the remainder by the number of

years of use. This amount is the depreciation expense subtracted each year from the cost. The accelerated depreciation does not have the same amount of deprecation subtracted each year. It does have the cost minus salvage value to figure out the amount to use but is then divided out differently. A person takes the sum of the years of a product’s useful life, such as three years is 3 + 2 + 1 = 6, then a person would divide the depreciation amount by 3/6 the first year, 2/6 the second and finally 1/6 for the final year. So the amount of depreciation expense is larger to smaller with accelerated and equal amounts for straight line.

The advantages of straight line method are it is easier and faster to figure. The advantage of accelerated method is it is more accurate when figuring depreciation expense. The accelerated method has an advantage and disadvantage concerning taxes. A company can use the accelerated method to take advantage of bigger tax breaks at the beginning of an assets life, but since this amount drops during the lifespan if the company needs added tax breaks it will not receive them from these assets in the future. With the straight line method the amount of tax breaks are even through the life of the product. Most companies choose this form of depreciation for reporting purpose on taxes but will use the accelerated method to figure taxable income.

As mentioned before the advantage of straight line depreciation is it is easier to figure and uses the same total each year for deduction of depreciation expense but the disadvantage is that if use for taxable income and reporting a company does not get a bigger tax break at the beginning of the assets life when they have just put out the cost for the item and may need a bigger tax break.

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ACC 291 Week 4 Discussion Question 2

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www.acc291genius.comWhat are some common ratios used to analyze financial information? Which are the most important?

Candela Corporation

Axia College of University of Phoenix

Candela Corporation

Candela Corporation and Subsidiaries have been working for over 34 years developing and commercialize aesthetic laser systems that allow physicians and personal care providers to treat a variety of cosmetic and medical conditions such as removal of spider veins, scars, stretch marks, warts, as well as hair removal and age spots, freckles and tattoos. Other skin treatments such as psoriasis and acne and acne scars are also treated. (Axia College, 2007)

Going from top to bottom on The Candela Corporation and Subsidiaries Consolidated Statement of Cash Flows; for the operating activities, 2002 shows an alarming loss in the net income while 2003 and 2004 for the company are showing a significant and steady climb in the net income. In 2004 there was a new category added called Provision for the disposal of discontinued operations and the category has caused an increased the account for 2004. Loss from discontinued operations grew from 2002 to 2003 but had a significant decline for 2004. Depreciation has increased over the last 3 years as well. Provision for bad debts increased significantly too, but an increase in bad dept is expected as revenue increases. The provision for deferred taxes shows the company went from a loss in 2002 and 2003 to show there was no tax loss in 2004. The tax benefit from exercised stock options has practically doubled sense 2003. The changes in assets and liabilities for the last 3 years have been up and down. Receivables have increased, notes receivable decreased, and inventories have increased. Other current assets, other assets have also increased. Accounts payable has made a significant decrease in the last 3 years as well as accrued payroll expenses. The accrued payroll decreasing could mean that the amount of employees over the years has decreased as well. The accrued warranty costs have increased as well; this could mean that the company renewed equipment warranties. The net cash provided by operating activities looks to have gone from a loss in 2002 to a large profit in 2003 and then a decrease, yet still a profit for 2004. It appears on the

operations level that management needs to do more to regulate the company’s finances so there is not an up and down variance each year.

The cash flow from investing activities shows me that in the last three years they had large amount of investments in 2002 and 2003 but now they are letting them decrease.

The cash flow from financing activities states that the proceeds from issuance of common stock have increased significantly from 2002 to 2003 and rose a little more in 2004. The repurchases of stock has not happened sense 2002 and the principle payment of long-term debt grew in 2003 from 2002 and shows no activity for 2004. Same goes for the net borrowing on line of credit; it appears that Candela Corporation is current on payments to line of credit. So, the net cash from financial activities looks great for 2004. The cash and cash equivalents for each year have increased steadily.

After reviewing the consolidated statement of cash flows for Candela Corporation, I believe the company is making a profit, but perhaps need some control over their operating activities.

Reference

Axia College. (2007). Statement of Cash Flows. Retrieved June 14, 2010 from Axia

College, Week Six, ACC 230.

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ACC 291 Week 4 Individual WileyPLUS Assignment

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Analyzing Statements of Cash Flows

4.8. Research Problem

Choose five companies from different industries and locate their statements of cash flows

for the most recent year.

(a) Create a table to compare the dollars provided or used by operating, investing, and financing activities, as well as the overall increase or decrease in cash.

(b) Create a second table for each company comparing this same information for each of the three years presented in that company’s statement of cash flows. Include an additional column that looks at the combined cash flows for all three years.

(c) Write a short analysis of the information gathered. Your discussion should address, among other things, whether cash flow from operating activities is large enough to cover investing and financing activities, and if not, how the company is financing its activities. Discuss differences and similarities between the companies you have chosen.

(a) Create a table to compare the dollars provided or used by operating, investing, and financing activities, as well as the overall increase or decrease in cash.

STATEMENT OF CASH FLOW ANALYSIS

STARBUCKS HARELY DAVIDSON RITE AID

2008 2008 2008

NET INCOME / STARTING LINE $ 315.5 $ - $ (1,079.0)

OPERATING ACTIVITIES $ 1,258.7 $ (684.7) $ 79.4

INVESTING ACTIVITES $ (1,086.6) $ (393.3) $ (2,933.7)

FINANCING ACTIVITIES $ (184.5) $ 1,293.4 $ 2,904.0

CASH $ (11.5) $ 190.7 $ 49.9

(b) Create a second table for each company comparing this same information for each of the three years presented in that company’s statement of cash flows. Include an additional column that looks at the combined cash flows for all three years.

STARBUCKS

2008 2007 2006

Net Income/Starting Line 315.5 672.64 564.26

Cash from Operating Activities 1258.70 1331.22 1131.63

Cash from Investing Activities -1086.60 -1201.95 -841.04

Cash from Financing Activities -184.50 -171.89 -155.33

Net Change in Cash -11.50 -31.35 138.80

Net Cash - Beginning Balance 281.30 312.61 173.81

Net Cash - Ending Balance 269.80 281.26 312.61

HARLEY DAVIDSON

2008 2007 2006

Net Income/Starting Line 0 933.84 1043.15

Cash from Operating Activities -684.65 798.15 761.78

Cash from Investing Activities -393.25 391.21 -35.26

Cash from Financing Activities 1293.39 -1037.80 -637.02

Net Change in Cash 190.70 164.46 97.42

Net Cash - Beginning Balance 402.85 238.40 140.98

Net Cash - Ending Balance 593.56 402.85 238.4

RITE AID

2008 2007 2006

Net Income/Starting Line -1078.99 26.83 1273.01

Cash from Operating Activities 79.37 309.15 417.17

Cash from Investing Activities -2933.74 -312.78 -231.08

Cash from Financing Activities 2903.99 33.72 -272.84

Net Change in Cash 49.61 30.08 -86.75

Net Cash - Beginning Balance 106.15 76.07 162.82

Net Cash - Ending Balance 155.76 106.15 76.07

(c) Write a short analysis of the information gathered. Your discussion should address, among other things, whether cash flow from operating activities is large enough to cover investing and financing activities, and if not, how the company is financing its activities. Discuss differences and similarities between the companies you have chosen.

Starbucks operating cash flow has gone up in 2007 and decreased a little in 2008. The net change in cash for Starbucks looks a on the

down side but previously was doing well. The net loss in cash at end of year is decreasing from the previous year. This could mean that this year there can be a gain.

Harley Davidson's operating cash flow has significantly decreased from 2007. It appears the company was on an upward cycle from 2006. The decrease in cash from operating activities is probable from the lack of information supplied for net income. With the economy the way it is and not many people buying at this point could have an effect on why the net income is decreasing. With a bounced back economy in the coming year could reflect a positive gain.

Rite Aid's operating cash flow has taken a significant decrease as well from previous years. Although, after taking in cash from investing and cash from financing, the net change in cash is better than it has been in previous years. Rite Aid’s net gain in cash could be from the ever growing needs in medical supplies. This also could reflect the expansion of the company

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ACC 291 Week 4 IndividualWileyPLUS Practice

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Findwhat.com Case - CheckPoint

ACC 230

Findwhat.com has recorded the 135 percent increase in the revenue which is mainly due to the business acquired of Espotting during the year. The different accounting policies are present for the acquiring firm and the acquired firm. The company has recorded certain premature revenues for the amount which advertisers had made only the advance deposit. As result, the company is recognizing the vendor financing as revenue. In some places, the gross revenue has been recognized while in another, the net revenue has been recognized. The network click revenue is recognized at gross level while the private level revenue is taken at net level. Some of the revenue expenditures have been recognized as the capital expenditures.

Revenue for set up network fee is treated as deferred revenue and is recognized over a period of time. The company is very inconsistent with regards to its accounting policies in terms of recognition of revenue. The provision and treatment of amount for doubtful debt is also not satisfactory. When a customer clicks on a sponsored advertisement, the whole of the revenue due to him is

recognized. The company is having a very high amount of doubtful debt balance at the end of the year ending December 31, 2004.

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ACC 291 Week 4 Learning Team Weekly Reflection

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Discuss the objectives for Week Four. Your discussion should include the topics you feel comfortable with, any topics you struggled with, and how the weekly topics relate to application in your field.

Week 7 DQ 1

Due Tuesday, Day 2

Post your answer to Study Question 5.2 on p. 180 (Ch. 5). As you read your classmates’ responses, consider the following scenario: If you compared two different companies that utilized two different valuation methods, how might the quality of the results differ? Also, comment on the difficulty of making comparisons between two firms that use different valuation methods.

Understanding the different inventory methods is crucial. First the person that establishes the inventory needs to determine which method to use. LIFO, or FIFO. LIFO means Last in First Out. This

means that when a purchase is made, and sales are recorded the newest product is used first. So if I bought 10 combs at $2 on December 1st, and then I buy 5 combs at $2.50 on December 10th. When sales are made I am going to record sales using the $2.50 until I sell through the 5 combs that were purchased on the 10th, and then the cost will go to the previous purchase price of $2 until those 10 combs are sold through. FIFO is just the opposite. Meaning that goods are used in the order that they are received. The first items ordered, are the first items sold. Either method will pass an audit. It is important to note though that managers can't switch back and forth between the two methods. Profit will vary depending on which method is being used. Say you sold only 6 combs at $3 each. Using the LIFO method this would equal $3.50 profit. If you used the FIFO method, this would result in a $6.00 profit.

Response 2

Post your answer to Study Question 5.2 on p. 180 (Ch. 5). As you read your classmates’ responses, consider the following scenario: If you compared two different companies that utilized two different valuation methods, how might the quality of the results differ? Also, comment on the difficulty of making comparisons between two firms that use different valuation methods.

It is very important to understand which inventory valuation method is being used to determine the profit numbers quality. The balance sheet, statement of cash flow and income statement can be directly impacted by the valuation method that used to determine the costs of inventory. The three methods that are used are FIFO, LIFO and Average Cost. The valuation ratios can be dramatically

affected depending on the inventory valuation that is being used over a long-term period; especially because prices are likely to rise. When using FIFO you can increase net income, but then at the same time raise the amount taxes that business is obligated to pay. When using LIFO the inventory can be obsolete because they are old this will result in lower net revenue because the products pricing is higher. The Average Cost results usually fall between LIFO and FIFO. The bottom line can be affected mainly by the inventory analysis and the ratio results that are formed from that analysis. It is easier to compare companies that are in the same line of business, so I believe that quality of results would differ tremendously if different valuation methods were used. If you use LIFO that company may seem unattractive but they are performing well, as for FIFO it may look good as for profit, but may not be performing well.

DQ 2

Week 7 DQ 2

Due Thursday, Day 4

Post your answer to Study Question 5.6 on p. 180 (Ch. 5). Discuss the consequences of poor quality reporting. What has the U.S. government done to improve the quality of reporting after recent financial scandals such as Enron?

I think that the significance is that the analysts only see this one HUGE transaction. The events that actually led up to this large transaction actually took place over a 2 year period. These items should have been written off as they occurred. Wall Street would not have known that the executives refused to write off these accounts when they should have. Wall Street only see's the one large transaction. If the company would have been more honest in their reporting they would have seen (more than likely) that there were many accounts over a two year period that should have been written off at different periods. So the analysts would not have seen a pattern of recurring write-offs. If the analysts only see the one transaction they are less likely to be able to paint an accurate picture of the financial standing of the business for investors, or potential investors. If the investors could see that there were many accounts that had to be written off maybe their investing decisions would have been different. The regulation of the accounting field has grown by leaps and bounds since the Enron scandal. The government has implemented several agencies and regulations to ensure honesty in accounting practices. SOX is one example of an agency that has been put into place to ensure honesty in accounting. SOX implements things like internal controls, and accountability for CEO's and CFO's.

Response 2

I believe the impact and importance of this write-off event is a very big matter. It is obvious how they handled it that it was a scandal

from the start. I think that everyone involved had a big role in how things played out. To me I think of the investors as a really big hit to this but also feel that audit committees have to be held responsible as well. It has been shown over many examples that adit oversights are happening to financial reporting. Although I do feel they are getting better and tighter due to conforming tightly with the GAAP requests. I feel over time the accounts receivable should have been written off in smaller increments and not all taken by $405 million at once. Maybe that isn't correct but it would have been easier I would think to take the receivables over time.

Response 3

Wall Street should have read the footnotes and seen that the write off was for accounts receivables and should have been reported in the allowance for doubtful accounts. Every company that allow sales on credit face doubtful accounts; therefore, the write off may reoccur. The significance of this transaction is that WorldCom want to cover up the $405 million dollars that it was unable to collect from its customers, but WorldCom wrote off a large sum of money rather recording the write-off as needed and the analyst over looked it. Depending on how the company policy is for writing off accounts, from 1998 to the 3rd quarter in 2000 is 11 quarters. If the company wrote off bad accounts quarterly it should have wrote off 36,818,181.82 per quarter. Investors would not want to continue to invest into a company that has poor collection skills, or poor management. Unusual items are simply for those items that are not recurring operating expenses. Bad debts do not fall under this category. Since the Enron and WorldCom scandals many rules and

regulations have been put in place by the government such as SOX. More people are being held accountable for their actions and consequences follow poor quality reporting such as fudging the books.

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ACC 291 WEEK 4 Stockholders’ Equity Section of the

Balance Sheet (Lachlin Corporation Balance Sheet)

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Presenting to Stakeholders

Axia College of University of Phoenix

Presenting to Stakeholders

“Financial statements provide insight into the company’s current status and lead to the development of policies and strategies for the future” (Axia, 2007). Financial statements and notes to the financial statements should be used to analyze the company. For instance, what do the financial statements reveal about why the company has requested a loan or purchased items on credit? What is the firm’s capital structure and what does the firm have outstanding? How well can the company pay back debt? What recourses are used to pay debt? What is the company’s performance record and are there any future expansions? What are the expected returns and how successful is the company compared to industry averages? Which areas of operations contributed to the company’s success, and what are the strengths and weaknesses of the company? What changes can be made to improve the future performance of the company?

Key financial ratios will assist in determining the information requested. Liquid ratios measure a firm’s ability to meet cash needs as they arise. The current ratio is a good tool to use because it measures the ability the firm has to pay debts when due. The current ratio for REC is at 2.4 times for 2007, although it is down from 2006 the company is still able to pay current debt when due. Cash flow

ratio considers cash flow from operating activities has increased from 2006, and this indicates an improvement in short-run solvency. Average collection period has gone down 5 days within the last year. The cash conversion cycle gives in-site on why the cash flow has improved or decreased, in this case the conversion period for REC has improved by 26 days.

Activity ratios measure the liquidity of specific assets and the efficiency of managing assets. Accounts payable turnover is up seven times from the prior year and inventory turnover is also up .25 from last year. Accounts payable turnover is down 9.05 from 12.10 in 2006. This means that the company is taking longer to repay payables. The fixed asset turnover and total asset turnover ratios are used to assess management’s skills in generating sales from investments in assets. The fixed asset turnover has dropped slightly, but the total asset turnover has risen slightly. The increase in total asset turnover comes from improvements in inventory and accounts receivable turnover.

Leverage ratios measure the extent of a firm’s financings with debt relative to equity and its ability to cover interest and other fixed charges (Axia, 2007). Debt ratio, long-term debt to total capitalization and dept to equity have all raised slightly implying a slightly riskier capital structure. The times interest earned and the cash interest coverage have increased since 2006. The interest payments can be covered 7.4 times this year. The cash interest has improved due to the operating profits and cash from operations. The

fixed coverage ratio is also important in cases where companies use operating leases. In this case, the fixed charges have increased slightly.

Profitability ratios are used to measure the overall performance of a firm and its efficiency in managing assets, liabilities, and equity. The ratios used are the gross profit margin, operating profit margin and net profit margin. All of which have improved for REC. As well as the cash flow margin, return on total assets, return on equity and cash return on assets. Over all the company seems to be in well financial standings and looking toward a profitable year.

Reference

Axia College. (2007). The Analysis of Financial Statements. Retrieved June 28, 2010,

from Axia College, Week Eight, ACC 230.

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ACC 291 Week 4 Wileyplus Assignment Do It! 11-1, E11-5,

E11-7, BYP11-1, BYP11-2, P11-5A, P11-8A (New)

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www.acc291genius.com·Do It! 11-1, E11-5, E11-7, BYP11-1, BYP11-2, P11-5A, P11-8A.

Do It! 11-1 Exercise 11-5 Garcia Corporation Exercise 11-7 Pele Company Broadening Your Perspective 11-1 Tootsie Roll

Analysis of Scenarios:

Debt Scenario would increase the debt ratios from to 50%. Equity Scenario would reduce the debt ratio to 40%. With Debt option, earnings per share would be higher. Interest declines to 2.86 times with the Debt option while times interest earned increases to 3.75 times with the Equity option. Either option exhibits a good use of financial leverage because for both, the financial leverage index being greater than 1. However, it is higher using the Debt option.

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ACC 291 Week 5 Discussion Question 1

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www.acc291genius.comWhy do corporations buy back their own stock?

What does it tell you about the corporation?

Interpreting Financial Ratios

Luna Lighting, a retail firm, has experienced modest sales growth over the past three years

but has had difficulty translating the expansion of sales into improved profitability. Using

three years’ financial statements, you have developed the following ratio calculations and

industry comparisons. Based on this information, suggest possible reasons for Luna’s profitability problems.

Industry

2009 2008 2007 2009

Current 2.3X 2.3X 2.2X 2.1X

Average collection period 45 days 46 days 47 days 50 days

Inventory turnover 8.3X 8.2X 8.1X 8.3X

Fixed asset turnover 2.7X 3.0X 3.3X 3.5X

Total asset turnover 1.1X 1.2X 1.3X 1.5X

Debt ratio 50% 50% 50% 54%

Times interest earned 8.1X 8.2X 8.1X 7.2X

Fixed charge coverage 4.0X 4.5X 5.5X 5.1X

Gross profit margin 43% 43% 43% 40%

Operating profit margin 6.3% 7.2% 8.0% 7.5%

Net profit margin 3.5% 4.0% 4.3% 4.2%

Return on assets 3.7% 5.0% 5.7% 6.4%

Return on equity 7.4% 9.9% 11.4% 11.8%

Based on this information, some possible reasons for Luna’s profitability problems are suggested as under:

a) Net Profit margin of the company has degraded and this might be due to decrease in the net income of the company due to increase in expenses. This needs to be improved upon by cost control and cost reduction.

b) Return on equity of the company has degraded further and this also indicates that there is a decrease in the net income of the company due to increase in expenses. This needs to be improved upon by cost control and cost reduction.

c) Fixed charge coverage has fallen, which means that the debt payment along with interest might have increased and this will also lead to decrease in the net income of the company and thus degrading the profitability position of the company.

d) Operating profit margin has dropped even though gross profit margin has remained constant. It means that the operating expenses are higher and need to e controlled to improve the profitability of the company.

e) The fixed assets turnover and the return on assets have also degraded; this also indicates decrease in the net income of the company.

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ACC 291 Week 5 Individual Effect of Unethical Behavior

Article Analysis

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www.acc291genius.comWrite a 350- to 700-word article analysis in which you identify situations that might lead to unethical practices and behavior in accounting.

Capstone Discussion Question

Due Tuesday, Day 2

• What have you learned in this course about the process of analyzing financial statements?

I have learned that there is a lot more to analyzing financial statements than I thought. This class has made me question my decision to go into the accounting field. I feel inadequate after taking this class. I am not an articulate, or analytical person. I tend to get confused easily and do better at putting the information

together than I am at figuring out what it all means. This is my last block of classes before my Bachelor program starts, and I don't know if I am ready, or if I even want to continue. Analyzing financial statements takes a very detail oriented mind, and one that is great at problem solving. It is critical to understand the financial statements, and how they relate to one another. There is a lot of information that is not as obvious as it would seem. Looking at the bottom line will not give a good picture of how a company is doing financially. It is important to know the how and why the bottom line looks the way that it does.

Response 2

I have learned that it takes someone that has the patience, tenacity, and motivation to truly analyze the statements. If you go about it not wanting to do the work you wont give a good analysis. I found that you have to be willing to dig deeper than most would to get a full picture of the company. I found that it is not an easy task to complete. For me the process is a tedious one. I don't think I would want to go into that type of accounting where I have to analyze the statements of a company. I think for me I would be better in specialized accounting like A/P or A/R. I am better at figuring out problems and figuring out ways to make them better. I am better at specific tasks so for me I wouldn't want to analyze the statements. I am glad to have learned how, because at some point I am sure it will come in handy.

Response 3

All financial statements are essential documents because they tell what has happened to a business over a period of time but most users of financial statement are more concerned about what will happen in the future. Stockholders and creditors are concerned with future earnings and dividends and company's future ability to repay its debts. Management is concerned with the company's ability to finance future expansion.

Working as a bookkeeper I do all the steps in monthly cycles consisting of entering transactions into the journals, working with A/R, A/P, payroll and preparing the reports, but I have not been able to analyze the reports the way I learned in this class. I learned how important is to monitor and interpret the results. I learned how to compare financial statements of a company with a company from the same industry and point out the differences and similarities. This class taught me the importance of analyzing the Income Statement, Balance Sheet, Cash Flow Statement and Stockholder’s Equity each one individually. I learned how essential is the quality reporting and how useful this quality is in business decision making. I learned about key financial ratios: liquidity ratios, activity ratios, leverage ratios, and profitability ratios. All these ratios are valuable as analytical tools and will help me indicate the areas of strength and weakness in a business. Even though I learned the information step by step in this class I tent to go over every single chapter all over again to better absorb the material. This class taught us the potential of some management manipulations of financial statements, thus following the general accounting rules, being honest, ethical and professional are the ways on leading to safe and profitable decisions.

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ACC 291 Week 5 Individual WileyPLUSAssignment

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www.acc291genius.comwe have another New set of week 5 Willyplus assignment which could be found on this link ACC 291 Week 5 Wileyplus Assignment E7-3, E12-1, E12-8, P12-9A, P12-10A, E13-3, E13-4, IFRS13-1, P13-2A (New) Resource:WileyPLUSComplete the following Week Five WileyPLUSExercises and Problems: 

Evaluating Financial Health 1

Evaluating Financial Health Apple Inc. (AAPL) Axia College of University of Phoenix

Evaluating Financial Health 2 Apple Inc. (AAPL) Apple is one of the strong market participants of computer

industry. It also involve in manufacturing of telecom devices, software and other peripherals. It enjoys full advantage of USA as home country, as it has a strong retail network of 273 physical stores whose majority is in USA, beside the E-retail outlet around the globe. The diversified product portfolio empowers the apple to strive in tough competition against Dell, HP & Compaq (Electronista, 2010). Amongst its competitor Apple’s outclass profitability is witnessed of its effective diversification efficient reach of product to customer and state of an art Research and Development.

Management‘s Strategy It is clear from the financial and the strategic analysis of the

Apple Inc. that the management of the company believes in continued research, innovation and product development. It may be the sole reason that why the firm avoids the cash dividend and rely over the stock options. Besides the hardware business of computer the apple is also focus on developing application software operating system, and all such software application which added the value of its product. The management is of the view that R&D, integrated marketing channels and its product diversification is the source of competitive edge against rivals of its industry. Management is

aware of the need of the investment in the promotion and advertisement activities; it increases the brand equity, brand loyalty and awareness about the products. Management also considers focusing on the retail store as it is the source to remain in contact with customer and a way to market the product directly; it is also a way to cross sell the market to customer.

Evaluating Financial Health 3 Financial returns in Comparison to Industry An investor is always keen to know about the profitability.

Hence we start with the assessment of profitability. Apple Inc. has shown a tremendous improvement in net sales and profitability since 2005 to 2009. In 2008 the net income increases 75.07% and in 2009 increases 34.58% shown that Apple cop. is continuously enhancing its profit. Company earning P\S is also at increasing trend. In 2009 basic EPS is 9.22 from 6.94 last year, and it was 4.04 in 2007. It should be noted that no cash dividend is announced since 2005, although stock base benefit and compensation is given. An increase in return on asset has been observed in 2009 i.e.26.96% against 19.33% last year while industries average is 19.8. Hence Apple is leading the Industry from this angle. Return on equity is 18.92% into 2009 lower than 33.40% of industry benchmark, meaning apple is at lower leverage with a roe increase of 4.03% this year (Hardware Marketplace, 2010).

Financial Risk and Industry At this stage of our analysis we extend our findings to

assessment of risk associated with the investment opportunities in APPLE Inc. Analyzing the liquidity we observed that Apple has a sound ability to meet its short term obligation. It is revealed by the healthy current ratio of 2.74 for the year 2009; it is improved from 2.46 of the last year 2008. If we had a glace on the industry it reflects a standard of 2.5. In the computer equipment industry a very low inventory has been observed.

That is why the acid test ratio fall lightly below the current ratio i.e. acid test ratio is 2.70 for the year 209 in comparison to 2008, which were 2.43. If we compare the acid test of 2009 i.e. 2.70 with industry average, which is 2.5 (msn.com, 2010). On the liquidity

Evaluating Financial Health 4

situation it is stated that the risk avoider will be glad to look at the satisfactory liquidity position.

As far as the solvency risk is concern in the long run the debt equity ratio is 0.11 for the year 2009, which is increased from 0.08 of 2008. Here it is important to refer to the industry average of 0.07 (OnlyHardwareBlog, 2010). Hence it is apparent that though the APPLE Inc. is more risky in the long run, but it does not sound like the alarm.

Cash Flow Analysis Due to the increase in sale the operation of the firm

expanded, and hence besides other assets, the requirement of the cash also increases in 2009. $1.11 billion is generated from operations, which is 5.87% higher than the last year. The deferred tax expense in 2009 is v1040 million this noon cash expense last year it was 39 million and 78 million in 2007 (Electronista, 2010).

The company actively invests in marketable securities that not only improve its liquidity, but rather give a room to meet hazardous need of raw inventory at any point of time. Investing activities gives negative balance $ 17.434 billion. It is also clear from the cash flow that firm does not announce any dividend in cash, rather it takes a tax benefit form stock base benefit; secondly, firm keeps healthy cash in hand.

Apple and its Main Competitor When comparing the Apple with its major competitor like

Dell & HP, Apple marks higher price earning ratio of 19.10 times that is greater than Dell and HP, which is 16 times and

Evaluating Financial Health 5

18.3 times respectively. We analyze the share price to book value it is 5.71 times; again higher than 4.1 times of Dell and 1.38 times of HP. Cause of higher market price is the retention of profit and stock base benefits. Apple also has high capitalization; the date is $ 250.0 billion (Electronista, 2010).

Apple’s Performance and Economy Global economic recession is on the way to recovery, although

Europe and America needs some more time to normalize. However, reasonable growth is observed in emerging market like Brazil, Malaysia, India and China. Triad block recorded a poor growth. What is going to be with the world economic outlook is the global economy is going to revive with the “V” shape pattern or its recovery would be like expanded “U” as some economist say growth will be slow. I am of the view that Apple Inc. should more focus on the emerging market like India, China, South Pacific region countries. So Apple needs to exploit more and more opportunities outside the USA. I am optimistic that the idea of direct marketing will work out side the USA as well. Hence Apple needs to introduce maximum retail store outside the USA.

It is important to look at trend analysis and industry comparisons as a means of determining if it is the best time to expand or stay put and to see how its future products will be accepted by the public.

  Evaluating Financial Health 6

References Electronista. (2010). Apple only US computer builder to outgrow

industry average. Retrieved July 2, 2010, from

http://www.electronista.com/articles/10/06/04/isuppli.sees.apple.at.34pc.world.market.share/

Hardware Marketplace. (2010). Computer Hardware. Retrieved July 2, 2010 from

http://www.hardwaremarketplace.com/computer-hardware/

msn.com. (2010). Apple Inc: Key Ratios. Retrieved July 2, 2010 from

http://moneycentral.msn.com/investor/invsub/results/compare.asp?Page=PriceRatios&Sy

mbol=AAPL OnlyHarwareBlog. (2010). Highest debt to equity ratio in the

computer hardware industry detected in shares of international business machines.

Retrieved July 2, 2010 from http://onlyhardwareblog.com/?p=2107 ------------------------------------------------------------------

ACC 291 Week 5 Learning Team Ratio Analysis Memo

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www.acc291genius.comResource:Virtual Organizations

Click the Virtual Organization link on the student website to access the Virtual Organizations.

Select one of the Virtual Organizations as the basis for the assignment.

Financial Analysis

Wal-Mart Stores Incorporated operates chain of retail stores in USA as well as outside the USA. The first Wal-Mart store was opened by Sam Walton in Arkansas in USA in 1962. Within a span of five years; he opened more stores and he number increased to 24 stores across Arkansas. The incorporation of Wal-Mart Stores Incorporated was done in 1969. Wal-Mart grew in the United States of America by opening of more stores in to the country. The company not only opened the stores across Arkansas but also across the United States of America (Wal-Mart Corporate, 2010).

Wal-Mart was opposed by the unorganized retail business holders in the USA as their business was affected by opening Wal-Mart stores. The company also opened its first store outside the USA in South America in 1995. Wal-Mart wanted to spread itself not only to the USA, but in other countries as well. In 2006, the company was having 3800 stores in USA and more than 2980 stores outside USA making it one of the largest retail chains in the world. This corporation was also having a vision to establish itself in to a global entity. Wal-Mart was one of the first companies to operate in the organized retail sector (Fishman, 2006). The modes of entry used by the company were different for different countries. Wal-Mart used the mode of entry in to various countries according to the rules and regulations prevailing in to that country (Wal-Mart Stores Inc: Financial Statement, 2010).

The sales of the company for the financial year ending in January 2010 are 413.8 billion dollars and income for the same period is 14.7 billion dollars. The quarterly sales growth for the company has been 5.90%, while the industry average is 6.80 %. The five-year annual growth in the sales of the company has been recorded at 7.50 % while five year annual growth of income is 6.58 %. By analyzing the financial statements of Wal–Mart Incorporated, we find that debt equity ratio of Wal-Mart is 0.71 on 31st January 2010, which is 0.68 for the industry. It means the proportion of debt of the company in its capital structure is lesser than the equity. The company is less leveraged so the interest burden on the company is minimal. Wal-Mart has capacity to borrow from the market for its CAPEX in the future. The interest coverage ratio is 13 times in January 2010, which is 21.9 for the industry. Wal-Mart needs to improve profitability to improve interest coverage ratio for the reduction of risk of the lenders of the company (Wal-Mart Stores Inc: Financial Statement, 2010).

The total revenues received by the organization in the year ending January 2010 were $408.2 billion whereas revenues in the year ending January 2009 were $404.3 billion dollars. The revenues in the year ending January 2008 stood at $377 billion dollars. Thus, it can be easily analyzed that the total revenues of the organization has grown over the years steadily. This has also impacted the net income of the organization and thus, increments could also be seen in the net income of the organization. Net Income, which stood in the year ending 2008 at $12.7 billion, increased to $13.4 billion for the year ending 2009 and again increased to $14.3 billion in the year ending 2010 (Wal-Mart Stores Inc: Financial Statement, 2010).

Again if cash flow statement of the organization is analyzed it can easily be viewed that the cash flow from operating activities have

always increased from the last three years. The cash flow from operating activities stood at $20.6 billion in the year ending 2008 has increased to $23.1 billion for the year ending 2009 and too further increased to $26.2 billion for the year ending 2010. But the cash flow from investing and financing activities has seen positive and negative fluctuations both. Here where net cash outflow from investing activities has decreased first and increased later again. For the year ending 2008, it stood at $15.6 billion which decreased to $10.7 billion but again increased to $11.6 billion. Again the net cash outflow from financing activities increased constantly since at the end of year 2008, it stood at $7.4 billion which further for the year ending 2009 increased to $9.9 billion and further increased to $14.1 billion for the year ending 2010 (Wal-Mart Stores Inc: Financial Statement, 2010).

Wal-Mart’s return on equity has improved in the last three years, which is a good sign for the shareholders of the company. It was 19.9% in January 2008, which increased to 20.3 % in 2009 and then again marginally increased to 20.4 % in 2010. The return on asset has also shown the same trends in the last three years. In 2008 the return on asset was 7.9 %. It increased to 8.1 % in 2009 and then further increased to 8.4 % in 2010. It shows the increase in the efficiency in the utilization of the assets of the company. The net profit margins have been almost the same in the last three years in the company. It was 3.4 % in 2008, 3.3 % in 2009 and 3.5 % in 2010 (Wal-Mart Stores Inc: Financial Statement, 2010).

The price to sales ratio and price to book value ratio have shown negative trends in the last three years, which shows that the stock of the company is available at cheap price as compare to the price it was carrying three years back. The price to sales ratio, which was 0.55 in 2008, was decreased to 0.46 in 2009 and then improved to

0.51 in 2010. Similarly, price to book value ratio reduced from 3.12 in 2008 to 2.83 in 2009 and then improved marginally to 2.86 in 2010. This represents the better opportunity available for the shareholders to invest in to the stock of the company. The book value per share of the company has also increased in the last three years. It was 16.26 dollars per share in 2008, which increased to 16.63 dollars per share in 2009 and further improved to 18.69 dollars per share in 2010. This represents the increase in the retained earnings of the shareholders in the company (Shim & Siegel, 2007).

Wal-Mart’s current assets level has shown stability in the last three years for the company, which shows the lesser investment in current assets for the company even with the increased sales. In 2008 the cash and marketable securities available with the company was 48020 million dollars, which increased to 48949 million dollars in 2009 and then decreased to 48331 million dollars in 2010.

Quantitative Analysis holds huge significance while evaluating the financial health of the organization. Three types of techniques are used for quantitative analysis. The three techniques are trend analysis, common-size analysis and ratio analysis. Trend analysis is one of the significant quantitative analysis tools that assist in analyzing the financial health of the company as compared to its previous years. The year on year trends in the financial statements are studied to analyze whether organization is improving upon its past performance or it is further going down (Brigham & Houston, 2007).

Common-Size analysis is another quantitive analysis tool again one of another tool that helps in making evaluation of the financial

health of the company as against its competitors. The financial statements of the company and its industry competitors are compared by taking a common base and then performance is analyzed as against the competitors. It helps in knowing whether the organization is performing better than its competitors or not. Ratio analysis is also used to evaluate the financial statements of an organization. This analysis is used to interpret the performance shown in the financial statements of the organization. The ratio analysis helps the organization compare performance over the years or in the same year (Brigham & Houston, 2007).

Quantitative Analysis is used by the company and its stakeholders to analyze the financial performance of the organization. Trend analysis is used by the company, the shareholders and the investors to analyze the performance of the company over the years. Common-Size analysis is used by the competitors, management, and investors to evaluate the organization that is performing better whereas ratio analysis is used specifically by all the stakeholders to interpret clear and well defined results shown in the financial statements of the company (Brigham & Houston, 2007).

These techniques help to evaluate the liquidity or short-term solvency. By using current ratio, one can analyze the effectiveness of the liquidity position of the organization. Profitability of the organization is also analyzed through profitability ratios, common-size analysis, as it helps to know the organization’s profits earned by the company as compared to others. Trend analysis and ratio analysis with the help of different asset turnover ratios and trends could easily analyze that assets are effectively used or not (Brigham & Houston, 2007).

Wal-Mart’s current stock price is 50.56 dollars. The stock has gone up as high as 56.27 dollars, and as low as 47.35 dollars in the last year. The earnings per share of the company which was 3.16 dollars per share in 2008, was increased to 3.35 dollars in 2009. Earnings per share further increased to 3.76 dollars in 2010. The analysis shows the improvement in the earnings of the company in the last three year. The current price earnings ratio of the company is 13.2 which is less than the industry average of P/E ratio of 15 times (Wal-Mart Stores Inc (WMT), 2010).

Analyzing the stock of the company from the investment point of view, we can estimates that the fundamentals of the company are very strong. The stock has return on equity, return on assets better than the industry average of 22.9 % and 9.1 % respectively. The company has given a better annual average return on asset and return on equity in the last five years as compared to the industry. The company has a debt equity ratio and net profit margin, which is less than the industry. However, Wal-Mart is improving on the efficiency front. As a result, Wal-Mart stock is recommended for investment.

References

Brigham, E.F. & Houston, J.F. (2007). Fundamentals of Financial Management. (11th ed.). Cengage Learning.

Fishman, C. (2006). The Wal-Mart Effect: How the World Most Powerful Company Really Works-- and How it's Transforming the American Economy. Penguin Group

Shim, J.K. & Siegel, J.G. (2007). Schaum's Outline of Financial Management. (3rd ed.). McGraw-Hill Professional.

Wal-Mart Corporate. (2010). History. Retrieved July 25, 2010 from http://walmartstores.com/AboutUs/297.aspx

Wal-Mart Stores Inc: Financial Statement (2010). Retrieved May 31, 2010, from http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=WMT

Wal-Mart Stores Inc. (WMT) (2010). Retrieved May 31, 2010, from http://finance.yahoo.com/q/co?s=WMT+Competitors

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ACC 291 Week 5 Learning Team Weekly Reflection

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www.acc291genius.comDiscuss the objectives for Week Five. Your discussion should include the topics you feel comfortable with, any topics you struggled with, and how the weekly topics relate to application in your field.

For this week's checkpoint we had to look up three job postings in the field of accounting. I'm glad that I got this opportunity because it actually opened my eyes and expanded my knowledge in the accounting field. The three job positions are listed below. The first job title was Senior Internal Auditor. A Senior Internal Auditor responsibilities is to plan and perform financial, operational audits,

and identify business process risk. This job position only specified that the pay was well over 100k a year!!!! Qualifications BA/BS, and minimum of 3-4 years public accounting. The second job posting was a Tax Manager. Tax Manager is responsible for conducting basic tax research, maintain tax records and ensure proper tax accounting. This position requires a BA in Accounting, and a minimum of 7-8 years of expereience.The job pay is listed as 120k!!! The third job posting was Assistant Corporate Controller- SR Management. Assistant Corporate Controller- SR Management position Inventory Accounting for North America, Credit management for North America and Corporate accounting for Latin America, responsible for assuring accuracy of inventory and sales and works closely with external auditors on receivable audits. The requirements for this position is as follows, BA/BS, public accounting experience preferred, Strong verbal and written communication. For the Assistant Corporate Controller- SR Management the salary pay starts at 110k-130k with bonus and benefits.

I didn't know that Accounting career actually paid this much. I might think about changing my careers.