Professional Documents
Culture Documents
Candela Corporation
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.
Reference
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ACC 290 Final Exam Guide (New)
Appendix B
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the numbers
ACC 290 Week One - DQ #1 What are the four basic financial
statements? What is the primary purpose of each of the four basic
financial statements? 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:
http://www.investopedia.com/terms/r/retainedearnings.asphttp://finan
cial- Retrieved 2/18/2010
statements.suite101.com/article.cfm/financial_statements_the_p_l.
Retrieved 2/18/2010
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Another response
DQ2
Another response
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By
Kamilah Crooms
When fixed costs decrease, what does this do for sales? Illustrate
your explanation with an example from a fictitious company.
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.
Reference
statements.suite101.com/article.cfm/cost_volume_profits*the_p_l.
Retrieved 2/28/2010
--------------------------------------------------------
--------------------------------------------------------
Appendix C
Budgets Matrix
Directions: Using the matrix, define each of the budgets listed and
briefly describe its uses.
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Another response
DQ2
Another response
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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c) Find out what the fixed cost and determine the budgeted
amount for each unit
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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.
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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Discuss the objectives for ACC 290 Week Two. What do you think
will be the most important of the skills learned when you are in an
accounting position? 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
DestinyWear Products
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.
Conclusion
REFERENCES
Discuss the objectives for ACC 290 Week One. How do they relate to
the practice of accounting and its uses in business? Costco Wholesale
Corporation
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.
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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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 Commissions 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
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
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?
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.
--------------------------------------------------------
Reference
--------------------------------------------------------
ACC 290 Week One - DQ #1 What are the four basic financial
statements? Differentiating Depreciation Methods
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What are the steps in completing the accounting cycle? How do the
different steps affect the financial statements? 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.
References
DQ 2
Week 3 DQ 2
Due Thursday, Day 4
A companys 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 companys 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
companys 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 companys 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
companys 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
companys affairs. You cannot tell the net income of the company just
from the bottom line. Look at all the financial records.
Response 3
Reference:
--------------------------------------
What are the pros and cons of using reversing entries? Why are
reversing entries optional?
STOCK DIVIDEND
Stock Split
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).
Stock Split
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:
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
competitors shares 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
--------------------------------------
Discuss the objectives for ACC 290 Week Two. What do you think
will be the most important of the skills learned when you are in an
accounting position?
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 companys 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.
--------------------------------------
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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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 2
Due Thursday, Day 4
Response 2
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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.
--------------------------------------
(b) Create a second table for each company comparing this same
information for each of the three years presented in that companys
statement of cash flows. Include an additional column that looks at
the combined cash flows for all three years.
STARBUCK HARELY
S DAVIDSON RITE AID
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 companys
statement of cash flows. Include an additional column that looks at
the combined cash flows for all three years.
STARBUCKS
-
1086.6 -
Cash from Investing Activities 0 1201.95 -841.04
Cash from Financing
Activities -184.50 -171.89 -155.33
HARLEY
DAVIDSON
Net
Income/Starting 1043.1
Line 0 933.84 5
Cash from
Operating -
Activities 684.65 798.15 761.78
Cash from -
Investing Activities 393.25 391.21 -35.26
Cash from -
Financing 1293.3 1037.8 -
Activities 9 0 637.02
Net Change in
Cash 190.70 164.46 97.42
Net Cash -
Beginning Balance 402.85 238.40 140.98
RITE AID
2008 2007 2006
-
Net Income/Starting 1078.9 1273.0
Line 9 26.83 1
- -
Cash from Investing 2933.7 312.7 -
Activities 4 8 231.08
Net Cash -
Beginning Balance 106.15 76.07 162.82
Starbucks operating cash flow has gone up in 2007 and decreased a little in 200
previously was doing well. The net loss in cash at end of year is decreasing fro
Harley Davidson's operating cash flow has significantly decreased from 2007.
cash from operating activities is probable from the lack of information supplied
buying at this point could have an effect on why the net income is decreasing.
gain.
Rite Aid's operating cash flow has taken a significant decrease as well from pre
financing, the net change in cash is better than it has been in previous years. R
supplies. This also could reflect the expansion of the company.
--------------------------------------
ACC 230
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.
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.
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
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.
--------------------------------------
Presenting to Stakeholders
Reference
--------------------------------------
Industry
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.
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.
e) The fixed assets turnover and the return on assets have also
degraded; this also indicates decrease in the net income of the
company.
--------------------------------------
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 Stockholders 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.
--------------------------------------
Managements 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.
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.
References
http://www.electronista.com/articles/10/06/04/isuppli.sees.apple.at.34
pc.world.market.share/
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
http://onlyhardwareblog.com/?p=2107
--------------------------------------
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 WalMart 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 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-Marts 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).
Wal-Marts 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).
References
Wal-Mart Stores Inc. (WMT) (2010). Retrieved May 31, 2010, from
http://finance.yahoo.com/q/co?s=WMT+Competitors
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I didn't know that Accounting career actually paid this much. I might
think about changing my careers.
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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?
Discussion Question 2:
Wow where should I start? First of all the when dealing with
accounting there must be consistent clear communication between
the business and the accounting department. Honesty is always the
best policy. Good ethnics keeps the business running at its top
level. The company's personal information, employee
information could be given to the wrong hands and it can destroy the
company. A good accounting department has way too much to lose
and they will not want to risk a horrible reputation in the field.
Another response
Another response
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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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