Assignment 1: Understanding Financial Statements
In this assignment, you will learn to read and interpret financial statements. Understanding the four financial statements provided in the lectures and reading for this week and dealing with a company's financial performance is critical to making decisions about its management and its relation to the global economy and financial markets.
Tasks:
o Put the following income statement and balance sheet terms (general ledger accounts) in the proper order for properly prepared financial statements:
Taxes, interest, gross profit, selling, general and administrative expenses, sales, depreciation, net income, cost of goods sold, EBITDA.
o Put the following balance sheet terms (general ledger accounts) in the appropriate category as either short-term assets, long-term assets, short-term liabilities, long-term liabilities, and/or owner's equity for properly prepared financial statements:
o Cash, accounts payable, accruals, property, plant and equipment, inventory, accounts receivables, paid in capital, retained earnings, notes payable, mortgage, accounts payable.
o In terms of McGladrey and Pullen's Reading & understanding financial statements: A guide to financial reporting, explain the balance sheet equation in 300 words or less. Incorporate this explanation into your complete initial post.
o Submission Details:
o By the due date assigned, post your responses to this Discussion Area. Support your assumptions by citing reputable source material used for this discussion in APA format.
o Through the end of the module, respond to at least two of your classmates' posts on two different days. While responding, share any real-world experiences involving what these concepts mean to you as far as their role in decision making is concerned. Provide substantive comments by contributing new, relevant information or quotes from course readings, Web sites, or other sources; building on the remarks or questions of others; or sharing practical examples of key concepts from your experiences-professional or personal.
o Write your initial response in 300-500 words. Your response should be thorough and address all components of the discussion question in detail, include APA citations of all sources, and demonstrate accurate spelling, grammar, and punctuation.
Do the following when responding to your peers:
Read your peers' answers .
Provide substantive comments to at least two peerson a minimum of two different days by
- contributing new, relevant information from course readings, Web sites, or other sources;
- building on the remarks or questions of others; or
- sharing practical examples of key concepts from your professional or personal experiences
o Respond to feedback on your posting and provide feedback to other students on their ideas.
o Make sure your writing
- is clear, concise, and organized;
- demonstrates ethical scholarship in accurate representation and attribution of sources; and
- displays accurate spelling, grammar, and punctuation.
Assignment 2
It is the management's responsibility to maximize shareholder wealth as it is based on the organization's future cash flows. To accomplish this, managers have to understand how to use financial statements for analysis.
In this assignment, you will explain the importance of the statements to the financial reporting process and management decisions.
Tasks:
o Locate the financial statements of a U.S. publicly-traded company of your choice (the company must have inventory and accounts receivable) by visiting the organization's Web site to locate the investor section. Or you may use one of the following Websites:
- U.S. Securities and Exchange Commission
- Yahoo Finance
- Google Finance
o Review the information presented in the financial statements of the company you selected.
o Using the company you selected, calculate one ratio from each ratio category located at this Financial Ratios resource. Complete a trend analysis of each ratio for a three-year period.
- Describe what the trends you see for your company based on your ratio analysis. What does this mean for the company?
- Compare your company's ratios with those of the industry it is in.
o Analyze the financial reporting information and the financial health of the company with the help of the calculated ratios.
Submission Details:
o Write a 2-3-page research paper explaining each selected ratio, the ratio category, and your individual analysis of the company as compared to the industry and the time sensitive analysis.
o Include a Microsoft Excel Spreadsheet with your relevant calculations.