Select a publicly traded, U.S. corporation with which you are familiar or one where you currently work or have worked in the past.
Research the company via the website and download the Income Statement, Statement of Shareholders' Equity, Balance Sheet, and Statement of Cash Flows.
Develop a 700-word examination of the financial statements and include the following:
- Determine the net income for the current fiscal year (FY). Is this income up or down from the prior year?
2014 $16,022,000
2015 $16,363,000
2016 $14,694,000
As of 2014, the income has gone up and looks like it's to succeed this year.
Walmart had a solid year in fiscal 2015 as each operating segment improved its performance as the year progressed. While net sales grew nearly 2 percent and operating income increased 1 percent, our underlying performance was actually stronger.
- Explain the relevance of changes in net income to investors.
Investors are interested in a company's past net income because it provides useful information for predicting future net income. Investors buy and sell stock based on their beliefs about a company's future performance. will be successful in the future and that this will result in a higher stock price, they will buy its stock. The income statement helps users determine if the company's operations are profitable.
Garrison, R., Noreen, E., & Brewer, P. (2015). Managerial accounting (15th ed.). New York, NY: McGraw-Hill.
- Determine the ending balance in shareholders' equity. Why would organizations such as Labor Unions be interested in this?
2014 $76,255,000
2015 $81,394,000
2016 $80,546,000
The balance sheet will also be used to evaluate the relationship between debt and stockholders' equity to determine whether the company has a satisfactory proportion of debt and common stock financing.
Financial statements play a significant role in a collective bargaining agreement (CBA), that is, a mechanism that allows employers and employees to reach an agreement regarding rights and duties of workers. For example, a labor union delegate may show available cash balance to top management and explain that the corporation may not experience liquidity needs if benefits were increased by a certain amount.
Garrison, R., Noreen, E., & Brewer, P. (2015). Managerial accounting (15th ed.). New York, NY: McGraw-Hill.
A labor union representative often may not focus on a company's statement of retained earnings because this statement only includes movements within owners' accounts. However, there are instances in which a labor union delegate may ask top management to reduce dividends paid to shareholders and increase employee salaries or benefits.
https://www.ehow.com/about_6626115_financial-statements-important-labor-unions_.html
- Determine the total value of assets.
2014 $61,185,000
2015 $63,278,000
2016 $60,239,000
- Discuss the relevance of the total value of assets to potential creditors and why this is important.
The balance sheet helps users determine if the company relies on debt or stockholders' equity to finance its assets.
In addition, the lack of sufficient Working Capital can be evidence of mismanagement to lenders and investors. Your lender is reviewing it regularly and basing your company's creditworthiness on it
Garrison, R., Noreen, E., & Brewer, P. (2015). Managerial accounting (15th ed.). New York, NY: McGraw-Hill.
When a bank loans money to a company, it believes that it will be repaid in the future. If it didn't think it would be repaid, it wouldn't loan the money. Therefore, prior to making the loan the bank loan officer uses the income statement as a source of information to predict whether the company will be profitable enough to repay its loan.
- Determine the total cash flow from the operation.
2014 $23,257,000
2015 $28,564,000
2016 $27,389,000
- Explain which users would find the financial statements most important.
The primary purpose of a statement of cash flows is to provide financial information about the cash receipts and cash payments of a business for a specific period of time. To help investors, creditors, and others in their analysis of a company's cash position, the statement of cash flows reports the cash effects of a company's operating, investing, and financing activities.
Kimmel, P.D., Weygandt, J.J., & Kieso, D.E. (2016). Accounting: Tools for business decision making (6th ed.). Hoboken, NJ: John Wiley & Sons.
- Discuss how the financial statements are used in your current role or a position you would like to hold. How might these aid you in managerial decision making?
https://finance.yahoo.com/quote/WMT/financials?p=WMT
https://corporatereport.com/walmart/2015/ar/walmart_us.php