...Financial Statement Different ACC/ 561 Accounting Financial Statement Differentiation The financial statement displays the entire financial doings of a business into a single record. Currently there are four primary financial statements: balance sheet, income statement, retained earnings statement, and statement of cash flows (Kennon, n.d.). The balance sheet is made up of a company’s assets and liabilities; in other words the debt and ownership. An income statement displays the amount of money that was accumulated and disbursed over a period of time, whereas the retained earnings statement displays the exchange of money between a company and other owners. Finally, the cash flows statement determines where the money was acquired in the business and how the money was used. This paper will describe each financial statement and the significance to an investor, creditor, or management. Investors: An income statement can be used by investors to conclude if a company is worth future consideration. By studying the income statement a stockholder can determine how the company manages their expenditures. The income statement can determine how the money is managed, and along with the taxes paid offers the understanding to an investor on just how well the business is doing. The income statement can be used by Investors to do two things: first, analyze financial ratios. Secondly, it will provide a bird’s eye view on how well they are spending the money that is available...
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...Financial Statements Paper ACC/290-Principles of Accounting I Financial Statements Paper Accounting is one of the oldest professions today. “For as long as civilization has been engaging in trade, methods of record keeping, accounting, and accounting tools have been invented. Marla Matzer Rose, author of Accounting & Auditing History writes that the earliest known writing discovered by archaeologists has, when translated, been found to be records of tax accounting.” (Bellis, 2013). Accounting is a business practice that is the systematic recording, reporting, and analysis of financial transactions of a business. This financial information can be used to determine a company's financial status and help a company make sound financial decisions. This information is reported in the form of four basic financial statements: Income Statement, Balance Sheet, Retained Earnings Statement (also known as the Statement of Stockholders Equity), and Statement of Cash Flows. To fully understand the financial health of a company one has to understand the purpose of each statement and what type of information is found in each one. The first financial statement is the income statement reports the company’s financial performance with their expenses and revenues over a specific accounting period, typically over a fiscal quarter or year. It shows if a company is making profit in a period of time. The balance statement lists the company’s assets, liabilities, and shareholder’s equity...
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...important for each company to know about our financial statements here at Target. This way, my supervisor knows what to prepare for in an upcoming meeting with two companies that are willing to invest and finance with the Target Corporation. Financing and Investing Two companies are looking into working with the Target Corporation. One company is looking to invest and take part ownership over the company. The other company is willing to give out a loan for Target to expand its operations. My supervisor will soon be meeting with these companies separately and needs to know what he will need to convince the companies to make the right decision. I have looked over our financial documents and highlighted the important information needed for my supervisor in his upcoming meetings. Company #1 This company is willing to take part ownership and invest in our Corporation. The first thing the company is going to want to know is where our cash is coming from. For this, we are going to look at our statement of cash flow. If we have operating activities it is a good sign for these companies, investing activities are a bad sign, and financing activities are an okay sign. Next, they will want to know if our high sales and profits are translating into more cash. We will also look at the statement of cash flow to figure this out. The most important thing the company will look for when answering this question is seeing if cash flows are coming from our operating activities. This will...
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...od. BOYUP PTY LTD Cash flow statement for the year ended 30 June 2009 Cash flows from operating activities Cash receipts from customers $174 000 Cash paid to suppliers and employees (148 000) Net cash from operating activities $26 000 Cash flows from investing activities Proceeds from sale of property 32 000 Proceeds from sale of equipment 4 000 Payment for equipment (24 000) Net cash from investing activities 12 000 Cash flows from financing activities Proceeds from capital injection 14 000 Dividends paid (14 000) Net cash from financing activities 0 Net increase in cash and cash equivalents 38 000 Cash and cash equivalents at beginning of the period (20 000) Cash and cash equivalents at end of the period $18 000 WORKINGS: Receipts from customers Accounts Receivable Balance b/d 28 000 Cash from customers 174 000 Sales 180 000 Balance c/d 34 000 208 000 208 000 Payments to suppliers Accounts Payable Cash paid 108 000 Balance b/d 48 000 Balance c/d 52 000 Purchases 112 000 160 000 160 000 Payments to suppliers and employees = $108 000 + $40 000 = $148 000Sale and purchase of equipment Equipment Balance b/d 60 000 Cost of equipment sold 12 000 Purchase of equipment 24 000 Balance c/d 72 000 84 000 84 000 Calculating the dividend paid Equity Dividends 14 000 Balance b/d 292 000 Profit 12 000 Balance c/d 304 000 Capital injection 14 000 318 000 318 000 Profit $12 000 plus Depreciation 18 000 Losses...
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...Annual Report of TNT Express N.V. for the financial year 2013, was issued on 18 February 2014. Unless otherwise specified or the context so requires, ‘TNT’, the ‘company’, ‘it’ and ‘its’ refer to TNT Express N.V. and all its Group companies as defined in article 24b of Book 2 of the Dutch Civil Code. TNT is domiciled in the Netherlands, which is one of the Member States of the European Union (EU) that has adopted the euro as its currency. Accordingly, TNT has adopted the euro as its reporting currency. In this annual report the euro is also referred to as ‘€’. As required by EU regulation, the consolidated financial statements of TNT have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU. PricewaterhouseCoopers Accountants N.V. has been appointed as the external independent auditor of the financial statements of TNT, and has been engaged to provide reasonable assurance on certain metrics and limited assurance on other metrics of CR. Enquiries related to this annual report may be addressed to Investor Relations and Corporate Communications to the attention of Mr Gerard Wichers (gerard.wichers@tnt.com). At a glance AT A GLANCE Financial 1 Corporate responsibility Revenue 2013 2014 Lost-time accidents per 100 FTEs 6,904 6,680 Operating income 2013 2014 2014 (86) 2014 209 2014 (190) 2014 15 2014 23 2013 3.4% 2014 3.6% 2013 37 2014 40 ...
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...1) After spending years of effort to integrate Warner Lambert and Pharmacia into Pfizer, should its management have avoided another huge acquisition like Wyeth? Should Pfizer have gone after smaller bio tech firms in a series of small acquisitions in 2008 and 2009? A number of these bio tech firms could have been acquired for the $68 billion price of the huge Wyeth acquisition. Present arguments for and against buying several small firms versus one large firm. In my opinion, when it comes to the option of bigger or smaller firm acquisition, Pfizer should have invested in a large acquisition like wryeth. This is because Pfizer’s focus is not really on how many firms it can acquire but proceeds and profit margins these acquisitions can bring in. Basing on the case, its previous large acquisitions such as Warner Lambert and Pharmacia. In 2000 and 2003 where quiet good investments bringing in large profit margin of up to 90% from the Warner. A large problem of staffing is also worsened by over acquisition. According to the case overtime acquired firms have brought in excess staff for Pfizer and this has become a problem as managers for each line have increased and thus larger costs in terms of salaries as well. Larger firm acquisitions have also evidently brought stronger products than Pfizer itself can produce. Drugs such as Lipitor from an acquired firm brought in sales of about 12 billion annually while Pfizer produced drugs have failed i.e. T-pill Furthermore larger...
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...is weak net cash flow; too much cash tied-up in inventory and debt obligations, which is reflected in liquidity, asset and debt management metrics. II: Cash flows from operations should exceed, be sufficient, to cover reinvestment in equipment and building. Specifically, expenditures for investment in Plant should exceed the annual depreciation charge. As well, funds from operations should not only be sufficient to invest, but funds should be available to meet obligations to long-term creditors. The Current Ratio, Current Assets divided by current liabilities, should be greater than 1. One step further, the Quick Ratio is a better measure to assess liquidity by removing inventory from the Current Ratio. Day’s in Accounts Receivable Ratio: receivables numerator divided by annual sales, which is divided by 365 days to form the denominator and the Inventory Turnover Ratio: sales divided by inventory are both good measures of how management is managing their assets. Debt Management, in Times-Interest-Earned Ratio: EBIT divided by Interest Charges and Debt Ratio: total debt divided by total assets, provides information on how leveraged the company may be and the corresponding risk associated with its debt position; thus, debt management is relevant to the analysis of all companies. III Butler Lumber cash flows from operations are only $17K. Operations will cover the $17K additional Property in the Investing Cash Flow section. And the $17K Operations Cash Flow meets the...
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...Netflix Netflix is a retailer of movie rental services. The company offers an internet subscription service for enjoying TV shows and movies, where subscribers can instantly watch unlimited TV shows and movies streamed over the internet to their TV, computers and mobile devices. It offers more than 10,000 DVDs and Blu-ray titles to its subscribers. Netflix also operates a separate library of over 12,000 titles of movies that can be watched instantly on subscriber’s TV through a Netflix ready device or on their computers. The company markets and promotes its service through various marketing programs, including television, radio advertising, online promotions, package inserts, direct mail and other promotions with third parties. The company sells its merchandise through website and mail order. It principally operates in the US. Netflix is headquartered in Los Gatos, California, the US. Netflix, Inc. operates an online movie rental service servicing approximately 7.5 million subscribers in the United States. Through various plans, Netflix subscribers select DVDs online, receive the selected DVDs in the mail, and then return them using provided prepaid mailers. Netflix does not provide deadlines or charge late fees. After a DVD has been returned, Netflix sends the next available DVD in a subscriber's wish list. Netflix operates a fast-growing DVD rental and video streaming service available in the United States, Canada, and eventually Central and South America. Netflix was founded...
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...In financial accounting, a cash flow statement, also known as statement of cash flows or funds flow statement,[1] is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities. Essentially, the cash flow statement is concerned with the flow of cash in and cash out of the business. The statement captures both the current operating results and the accompanying changes in the balance sheet.[1] As an analytical tool, the statement of cash flows is useful in determining the short-term viability of a company, particularly its ability to pay bills. International Accounting Standard 7 (IAS 7), is the International Accounting Standard that deals with cash flow statements. People and groups interested in cash flow statements include: * Accounting personnel, who need to know whether the organization will be able to cover payroll and other immediate expenses * Potential lenders or creditors, who want a clear picture of a company's ability to repay * Potential investors, who need to judge whether the company is financially sound * Potential employees or contractors, who need to know whether the company will be able to afford compensation * Shareholders of the business. Contents [hide] * 1 Purpose * 2 History & variations * 3 Cash flow activities o 3.1 Operating activities o 3.2 Investing...
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...Statement of Cash Flows Paper ”What is the purpose of the statement of cash flows? What information does it provide”(Kieso, Weygandt, & Warfield, p. 1253)? Companies provide four statements to abide by the Generally Accepted Accounting Principles (GAAP). These financial statements are the income statement, equity statement, the balance statement, and the statement of cash flows. Each statement provides different types of information necessary to make a knowledgeable decision about a investing in company. The statement of cash flows is useful because it ” provides information on a cash basis about an organization operating, investing, and financing activities” (Kieso, Weygandt, & Warfield, p. 1213). Each of these methods is important to users and provides different information. It also provides information on the inflow and outflow of cash during an accounting period. The statement of cash flows presents this information in either the indirect method or the direct method. The statement of cash flows uses is to provide information about its ability to generate cash in the future. This information may come from three sources the income statement, the balance sheet, and select cash transaction data. The income statement provides the operating activities cash flow. The balance sheet provides the changes in assets, liabilities, and equities. It also shows how the company pays dividends and meets it financial obligations to creditors and investors. Select cash transactions have...
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...Case 11-1: Polluter Corp. Page 1 Suggested Solution -- Case 01 Objectives of the Case This case gives students an opportunity to apply cash flow principles to determine the appropriate classification of various transactions in the statement of cash flows. Applicable Professional Pronouncements ASC 230, Statement of Cash Flows (ASC 230) IAS 7, Statement of Cash Flows (IAS 7) Discussion 1 — Purchase of 2012 Emission Allowances What is the appropriate classification in the statement of cash flows in Polluter Corp.’s (the ―Company’s‖) December 31, 2010, financial statements for its purchase of 2012 emission allowances (―EAs‖) from Clean Air Corp.? Accounting Alternatives — Purchase of 2012 Emission Allowances Alternative 1 — The Company should classify the purchase of the 2012 EAs from Clean Air Corp. as an investing cash outflow in its December 31, 2010, statement of cash flows. Proponents of Alternative 1 believe the Company should classify the purchase of EAs as investing activities in the statement of cash flows given the Company’s election to classify the EAs as intangible assets on its balance sheet. Although EAs are not specifically mentioned in ASC 230, proponents of Alternative 1 believe, given the Company’s accounting policy, the EAs represent ―productive assets.‖ ASC 230-10-20 defines investing activities as follows: Investing activities include making and collecting loans and acquiring and disposing of debt or equity instruments and property, plant, and equipment...
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...Reflection xxxxxxx Acc/291 xxxx xxx Week Four Reflection This week’s consensus is overwhelmingly a feeling of clarity as compared to last week. Our team feels much more comfortable with statements of cash flows and financial statement analysis than with dividends, bonds, etc. The following are individual reflections on what we learned during week four. I think this week was easier for me than others because of the simplicity behind the terms. The statements of cash flows include operating activities, investing activities and financing activities. Operating activities include cash flow from business operations, things like sales. Investing activities includes assets, and financing activities include stockholders equity. We learned about direct and indirect cash flows this week. Indirect cash flows are the most commonly used by business and consist of three major steps: (1) determine net cash, (2) figure changes in asset and liability accounts, and (3) compare the figures on the statement of cash flows to the balance sheet. The second topic of this week was in regards to financial statement analysis. What this means is using financial statements in three different ways of comparison. The three ways are intracompany, industry and intercompany. The analysis of financial statements can be viewed horizontally, vertically or with ratios. Horizontally refers to over course of time, vertically refers to the change in figures, the difference between current and base amounts. The...
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...obtaining a $12 million sodium chlorate plant to supply to paper producers in the Southeast. However, the plant had begun a new laminate technology to increase efficiency and profitability, and that accounted for an additional $2.25 million. The main question of this case is not whether it was the correct decision for American to acquire Universal; it’s whether it’s a smart decision for Dixon to acquire the Alabama sodium chlorate plant from American Chemical. Dixon must determine the research for a CF Analysis with and without the acquisition of the plant and decide which produces a better NPV. In order to account for all possibilities, a cash flow analysis must be based with and without laminate technology. Attached is our decision and our reasoning: 2. Estimate the cost of equity appropriate for the evaluation of the incremental cash flows associated with the Collinsville investment. Estimate the weighted average cost of capital appropriate for discounting the Collinsville plant’s...
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...I, For each of the years on the Statement of Cash Flows 1. What were the firm’s major sources of cash? Its major uses of cash? Sources of Cash alpha a) Gain on sale of investment and other assets. b) Proceeds from disposal of depreciable and other assets. c) Proceeds from the sale of discontinued operations. d) Proceeds from long term debt beta a) Cash received from customers. b) Interest received. c) Proceeds from issuance of common stock. gamma a) Proceeds from issuance of debt. b) Issuance of treasury shares Uses of Cash Alpha a) Investment in depreciable assets b) Investment in capitalized software c) Other investments d) Payment of long term debts e) Purchase of treasury stock f) Payment of dividends beta a) Payment to suppliers and employees. b) Payment of interest c) Payment of Income Taxes d) Capital expenditures e) Purchase of marketable securities f) Payment of working capital line of credit g) Principal payments under capital lease obligations h) Payment of subordinated debts gamma a) Payment of A/P b) Payment of taxes c) Purchase of PPE d) Purchase of Kienzle business e) Payment of retired debts. f) Purchase of treasury shares. | 2. Was cash flow from operations1 greater than or less than net income?2 Explain in detail the major reasons for the difference between these two figures. The cash flow from operation as provided, in the case of Alpha, Beta and Gamma Co...
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...concerned with the firm's ability to generate cash to make interest .Vendors who supply the firm on credit look for its ability to pay its bills in the short term. Management uses financial information to pinpoint problem areas for improvement in operations. 2. Financial information about companies comes mainly from the companies themselves. The primary source is the annual report. The numerical information is usually correct, especially with respect to prospects for the future. 3. The whole idea behind financial analysis is to be investigative and critical. The analyst is always looking for potential problems that may make the future less attractive than the past. 4. Cash in the bank is an asset that had to be put there. Putting it there uses cash that then can't be used anywhere else until it's withdrawn. Thus, increasing the cash balance uses cash. 5. The Changes in the equity accounts come from three sources, net income, dividends and the sale of new stock. Net income is included in operating activities, while dividends and new stock sales are part of financing activities. The change in the cash balance is treated as a reconciling item in the cash flow format. 6. Free cash flow is a firm's gross cash flow less necessary reinvestments. It's essentially cash available for distribution as dividends. When one company acquires another, the acquirer is interested in the future free cash flow of the acquiree as an indication of...
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