Review APA writing style requirements.

Review APA writing style requirements.Required Reading:(2011) SKS 7000-Executive Concepts in Business Strategy. Pearson Learning Solutions. ISBN: 9780558870638SKS 7000-Executive Concepts in Business Strategy: Chapters 1 9 10 11 12 13AssignmentThe Chief Financial Officer (CFO) for XYZ Construction Inc. has been promoted to the newly created position as the Vice President of Overseas Operations. The CFO’s absence leaves a void in the knowledge base of the owners group regarding several key financial and accounting principles. The owners need you to create a document for them that will help explain several key concepts terms and principles associated with financial management accounting internal control cash management and Sarbanes-Oxley regulations.For this assignment the requirement is to create a document for financial management and accounting that uses generic data and examples that defines and analyzes the following terms concepts and principles in a business perspective:Balance SheetIncome StatementOperating Cash FlowsStatement of Retained EarningsNet Working CapitalEconomic Value AddedFixed Assets Turnover RatioNet Profit MarginSales ForecastBreakeven AnalysisFinancial LeverageDouble-Entry Accounting SystemLedgerLiabilitiesT AccountBalance of the AccountSarbanes-Oxley Act of 2002Cash EquivalentsPetty Cash FundVoucherLength: 5-7 pages (app. 350 words per page)This paper should include example forms and example of data analysis associated with the aforementioned items. You do not have to write in narrative format as an APA-style research paper. Instead This paper need only be a series of definitions and brief explanations. Be sure to describe discuss and analyze the terms thoroughly.The only required references for this assignment are the chapters included within the e-book which contain all the information you need to complete this assignment. You may re-create the examples from the textbooks using your own generic data. Your mentor will only grade you on the completeness and accuracy of the assignment not on APA form and style.Your writing should demonstrate thoughtful consideration of the ideas and concepts that are presented in the course and provide new thoughts and insights relating directly to this topic. Responses should reflect graduate-level writing standards and have no spelling grammar or syntax errors.
As controller for Henderson you are attempting to reconstruct and revise,As controller for Henderson you are attempting to reconstruct and revise the following balance sheet prepared by a staff accountant.HENDERSON MANUFACTURING COMPANYBalance SheetAt December 31 2016($ in 000s)Assets Current assets: Cash$1 600 Accounts receivable4 300 Allowance for uncollectible accounts(500) Finished goods inventory5 000 Prepaid expenses2 400 Total current assets12 800 Noncurrent assets: Investments2 000 Raw materials and work in process inventory3 200 Equipment18 000 Accumulated depreciation–equipment(8 000) Franchise? Total assets$?Liabilities and Shareholders’ Equity Current liabilities: Accounts payable$6 200 Note payable8 000 Interest payable–note200 Deferred revenue2 400 Total current liabilities16 800 Long-term liabilities: Bonds payable7 000 Interest payable–bonds200 Shareholders’ equity: Common stock$? Retained earnings?? Total liabilities and shareholders’ equity?Additional information ($ in 000s):1.Certain records that included the account balances for the franchise and shareholders’ equity items were lost. However a complete preliminary balance sheet prepared before the records were lost showed a debt to equity ratio of 1.5. That is total liabilities are 150% of total shareholders’ equity. Retained earnings at the beginning of the year was $4 300. Net income for 2016 was $2 500 and $800 in cash dividends were declared and paid to shareholders.2.The investments represent treasury bills purchased in December 2016 that mature in January 2017. These are considered cash equivalents.3.Interest on both the note and the bonds is payable annually.4.The note payable is due in annual installments of $800 each.5.Deferred revenue will be earned equally over the next 18 months.6.The common stock represents 500 000 shares of no par stock authorized 300 000 shares issued and outstanding.Required:Prepare a complete corrected classified balance sheet.
Complete the missing labels denoted A – F.,Complete the missing labels denoted A – F.Sole TraderLimited CompanyPublic Listed CompanyBalance SheetBalance SheetAFixed AssetsFixed AssetsBCurrent LiabilitiesCCurrent LiabilitiesLong Term LiabilitiesDESole Trader’s FundsFTotal equity and liabilities
The following balance sheet has been prepared by the accountant,The following balance sheet has been prepared by the accountant for Limestone Company as of June 3 2011 the date on which the company is to file a voluntary petition of bankruptcy:Limestone CompanyBalance SheetJune 3 2011AssetsCash $3 000Accounts receivable 65 000Inventory 88 000Land 100 000Buildings (net) 300 000Equipment (net) 180 000Total Assets $736 000Liabilities and EquitiesAccounts Payable $98 000Notes payable – current(secured by equipment) 250 000Notes payable –long term(secured by land and buildings) 190 000Common Stock 120 000Retained Earnings 78 000Total Liabilities and equities $736 000Additional Information:• If the company is liquidated administrative expense are estimates at $18 000• The accounts Payable figure includes $10 000 in wages earned by the company’s 12 employees during May. No one earned more than $2 200.• Liabilities do not include taxes of $14 000 owed to the U.S. Government• Company officials estimate that 40 percent of the accounts receivable will be collected in liquidation and that the inventory disposal will bring $80 000. The land and buildings will be sold together for approximately $310 000; the equipment should bring $130 000 at auction.Prepare a statement of financial affairs for Limestone Company as of June 3 2011.39. (Prepare a statement of financial affairs)LIMESTONE COMPANYStatement of Financial AffairsJune 3 2008AvailableforBookValues$400 000180 0003 00065 00088 000$736 000AssetsPledged with Fully Secured Creditors:Land and buildings$310 000Less: Notes payable-long-term(190 000)UnsecuredCreditorsPledged with Partially Secured Creditors:Equipment$130 000Notes payable—current(250 000)Free Assets:Cash ……………………………………………………….Accounts receivable ………………………………..Inventory …………………………………………………Total amount available to pay liabilitieswith priority and unsecured creditors……Less: Liabilities with priority(listed below)……………………………………….Available for unsecured creditors ……………..Estimated deficiency…………………………………$208 000 Unsecured—BookValuesLiabilities and Stockholders’ Equity$ 10 000Liabilities with Priority:Administrative expenses …………….$ 18 000Salaries payable …………………………. 10 000Taxes payable …………………………….. 14 000Total ………………………………………….. $ 42 000190 000Fully Secured Creditors:Notes payable – long-term …………… $190 000Less: Land and buildings …………….(310 000)250 000NonpriorityLiabilitiesPartially Secured Creditors:Notes payable current ………………… $250 000Less: Equipment…………………………. (130 000)88 000198 000$736 000Unsecured Creators:Accounts payable (other than salaries)Stockholders’ equity…………………………………$208 000
inancial statements for Hilton Company are presented below,Financial statements for Hilton Company are presented below: Hilton Company Balance Sheet December 31 2012 Assets Liabilities & Stockholders’ Equity Cash $ 40 000 Accounts payable $ 20 000 Accounts receivable 35 000 Bonds payable 50 000 Buildings and equipment 150 000 Common stock 65 000 Accumulated depreciation— Retained earnings 60 000 buildings and equipment (50 000) $195 000 Patents 20 000 $195 000 Hilton Company Statement of Cash Flows For the Year Ended December 31 2012 Cash flows from operating activities Net income $60 000 Adjustments to reconcile net income to net cash provided by operating activities: Increase in accounts receivable $(16 000) Increase in accounts payable 8 000 Depreciation—buildings and equipment 15 000 Gain on sale of equipment (6 000) Amortization of patents 2 000 3 000 Net cash provided by operating activities 63 000 Cash flows from investing activities Sale of equipment 12 000 Purchase of land (25 000) Purchase of buildings and equipment (48 000) Net cash used by investing activities (61 000) Cash flows from financing activities Payment of cash dividend (15 000) Sale of bonds 30 000 Net cash provided by financing activities 15 000 Net increase in cash 17 000 Cash January 1 2012 23 000 Cash December 31 2012 $40 000 At the beginning of 2012 Accounts Payable amounted to $12 000 and Bonds Payable was $20 000. Instructions Calculate the following for Hilton Company: Current cash debt coverage ratio: Cash Debt coverage ratio: Free cash flow:
Consider these three financial reporting elements of a company,After a careful review of the article write a 2-3 page summary in a Word document in response to the following questions:Consider these three financial reporting elements of a company: the income statement balance sheet and statement of cash flows. What financial reporting issues might surface in the coordination of these reports? Please present hypothetical viewpoints that could come about.Perform a vertical and horizontal analysis of the income statement in the Harvard study and report your findings as to future performance of the company.If you were the accountant for Amalgamated Hat Rack in the Harvard article what do you feel would be required disclosures in the notes based upon your review of the financial statements? Please consider the full disclosure principleUnderstanding FinancialStatements: Making MoreAuthoritative DecisionsE xc e r p t e d fro mManager’s Toolkit:The 13 Skills Managers Need to SucceedHarvard Business School PressBoston MassachusettsISBN-10: 1-4221-0523-7ISBN-13: 978-1-4221-0523-85238BCThis document is authorized for use only in Interm Financial Reporting II by Brook from March 2011 to September2020. Copyright 2006 Harvard Business School Publishing CorporationAll rights reservedPrinted in the United States of AmericaThis chapter was originally published as chapter 14 of Manager’s Toolkit copyright 2004 Harvard Business School Publishing Corporation.No part of this publication may be reproduced stored in or introduced into a retrieval system or transmitted in any form or by any means (electronic mechanical photocopying recording or otherwise) without the prior permission of the publisher. Requests forpermission should be directed to [email protected] or mailed to Permissions Harvard Business School Publishing 60 Harvard Way Boston Massachusetts 02163.You can purchase Harvard Business School Press books at booksellers worldwide.You can order Harvard Business School Press books and book chapters online atwww.HBSPress.org or by calling 888-500-1016 or outside the U.S. and Canada 617-783-7410.This document is authorized for use only in Interm Financial Reporting II by Brook from March 2011 to September2020. 14UnderstandingFinancial StatementsMaking More Authoritative DecisionsKey Topics Covered in This Chapter•••••Balance sheets•Interpreting ?nancial statementsIncome statementsCash ?ow statementsFinancial leverageThe ?nancial structure of the ?rmThis document is authorized for use only in Interm Financial Reporting II by Brook from March 2011 to September2020. Wh at d o e s your company own and what doesit owe to others? What are its sources of revenue and how has it spent its money? How much pro?thas it made? What is the state of your company’s ?nancial health?This chapter will help you answer those questions by explaining thethree essential ?nancial statements: the balance sheet the income statement and the cash ?ow statement.The chapter will also help you understand some of the managerial issues implicit in these statementsand broaden your ?nancial know-how through discussion of twoimportant concepts: ?nancial leverage and the ?nancial structure ofthe ?rm.If you’re a line manager you might be thinking “I don’t needto know about that stuff.That’s for senior management not me.” Ifyou believe this think again.The ability to read and interpret ?nancial statements has become more and more necessary as accountability and decision-making authority are pushed down to lower levels.The language of ?nancial statements is also important to managers atevery level. When the conversation turns to “current liabilities ”“pro?t margin ”“?nancial leverage ” and “working capital ” you mustknow precisely the meaning of these terms. Indeed the language ofmodern business draws heavily on the accounting terminology usedin ?nancial statements. Familiarity with the language and meaning of?nancial statements will make you a valued colleague in the highercircles of your organization. For the small business owner-manager this understanding of ?nancial statements is an absolute must.This document is authorized for use only in Interm Financial Reporting II by Brook from March 2011 to September2020. Understanding Financial Statements3Why Financial Statements?Financial statements are the essential documents of business. Managers use them to assess performance and identify areas in which intervention is required. Shareholders use them to keep tabs of howwell their capital is being managed. Outside investors use them toidentify opportunities. And lenders and suppliers routinely examine?nancial statements to determine the creditworthiness of the companies with which they deal.Publicly traded companies are required by the Securities and Exchange Commission (SEC) to produce ?nancial statements and makethem available to everyone as part of the full-disclosure requirementthe SEC places on publicly owned and traded companies.Companiesnot publicly traded are under no such requirement but their privateowners and bankers expect ?nancial statements nevertheless.Financial statements—the balance sheet income statement andcash ?ow statement—follow the same general format from companyto company.And though speci?c line items may vary with the natureof a company’s business the statements are usually similar enough toallow you to compare one business’s performance against another’s.The Balance SheetMost people go to a doctor once a year to get a checkup—a snapshot of their physical well-being at a particular time. Similarly companies prepare balance sheets as a way of summarizing their ?nancialpositions at a given point in time usually at the end of the month the quarter or the ?scal year.In effect the balance sheet describes the assets controlled by thebusiness and how those assets are ?nanced—with the funds of creditors (liabilities) with the capital of the owners or with both.A balance sheet re?ects the following basic accounting equation:Assets = Liabilities Owners’ EquityThis document is authorized for use only in Interm Financial Reporting II by Brook from March 2011 to September2020. 4Mastering the Financial ToolsAssets in this equation are the things in which a company invests sothat it can conduct business. Examples include cash and ?nancial instruments inventories of raw materials and ?nished goods land buildings and equipment. Assets also include monies owed to thecompany by customers and others—an asset category referred to asaccounts receivable.Now look at the other side of the equation starting with liabilities.To acquire its necessary assets a company often borrows moneyor promises to pay suppliers for various goods and services. Moniesowed to creditors are called liabilities. For example a computer company may acquire $1 million worth of motherboards from an electronic parts supplier with payment due in thirty days. In doing so thecomputer company increases its inventory assets by $1 million and itsliabilities—in the form of accounts payable—by an equal amount.Theequation stays in balance. Likewise if the same company were toborrow $100 000 from a bank the cash infusion would increase itsassets by $100 000 and its liabilities by the same amount.Owners’ equity also known as shareholders’ or stockholders’ equity is what is left over after total liabilities are deducted from totalassets.Thus a company that has $3 million in total assets and $2 million in liabilities would have owners’ equity of $1 million.Assets – Liabilities = Owners’ Equity$3 000 000 – $2 000 000 = $1 000 000If $500 000 of this same company’s uninsured assets burned up in a ?re its liabilities would remain the same but its owners’ equity—what’sleft after all claims against assets are satis?ed—would be reduced to$500 000:Assets – Liabilities = Owners’ Equity$2 500 000 – $2 000 000 = $500 000Thus the balance sheet “balances” a company’s assets and liabilities.Notice for instance how the total assets equal total liabilities plusowners’ equity in the balance sheet of Amalgamated Hat Rack ourexample company (table 14-1).The balance sheet also describes howmuch the company has invested in assets and where the money isThis document is authorized for use only in Interm Financial Reporting II by Brook from March 2011 to September2020. TA B L E 1 4 – 1Amalgamated Hat Rack Balance Sheet as of December 31 200220022001Increase(Decrease)AssetsCash and marketable securities$355 000$430 000$(75 000)Accounts receivable$555 000$512 000$43 000Inventory$835 000$755 000$80 000Prepaid expenses$123 000$98 000$25 000$1 868 000$1 795 000$73 000$2 100 000$1 900 000$200 000$333 000$234 000$(99 000)$1 767 000$1 666 000$101 000$3 635 000$3 461 000$174 000Accounts payable$450 000$430 000$20 000Accrued expenses$98 000$77 000$21 000Income tax payable$17 000$9 000$8 000$435 000$500 000$(65 000)$1 000 000$1 016 000$(16 000)$750 000$660 000$90 000Total liabilities$1 750 000$1 676 000$74 000Contributed capital$900 000$850 000$50 000Retained earnings$985 000$935 000$50 000$1 885 000$1 785 000$100 000$3 635 000$3 461 000$174 000Total current assetsGross property plant and equipmentLess: accumulated depreciationNet property plant and equipmentTotal assetsLiabilities and Owner’s EquityShort-term debtTotal current liabilitiesLong-term debtTotal owner’s equityTotal liabilities and owner’sequitySource: HMM Finance.This document is authorized for use only in Interm Financial Reporting II by Brook from March 2011 to September2020. 6Mastering the Financial Toolsinvested. Further the balance sheet indicates how much of thosemonetary investments in assets comes from creditors (liabilities) andhow much comes from the owners (equity).Analysis of the balancesheet can give you an idea of how ef?ciently a company is utilizingits assets and how well it is managing its liabilities.Balance sheet data is most helpful when compared with the sameinformation from one or more previous years. Consider the balancesheet of Amalgamated Hat Rack. First this statement represents thecompany’s ?nancial position at a moment in time: December 31 2002. A comparison of the ?gures for 2001 against those for 2002shows that Amalgamated is moving in a positive direction: It has increased its owners’ equity by nearly $100 000.AssetsYou should understand some details about this particular ?nancialstatement.The balance sheet begins by listing the assets most easilyconverted to cash: cash on hand and marketable securities receivables and inventory.These are called current assets. Generally currentassets are those that can be converted into cash within one year.Next the balance sheet tallies other assets that are tougher toconvert to cash—for example buildings and equipment. These arecalled plant assets or more commonly ?xed assets (because it is hardto change them into cash).Since most ?xed assets except land depreciate—or become lessvaluable—over time the company must reduce the stated value ofthese ?xed assets by something called accumulated depreciation.Gross property plant and equipment minus accumulated depreciation equals the current book value of property plant and equipment.Some companies list goodwill among their assets. If a company haspurchased another company for a price above the fair market valueof its assets that so-called goodwill is recorded as an asset. This is however strictly an accounting ?ction. Goodwill may also representintangible things such as brand names or the acquired company’s excellent reputation. These may have real value. So too can other intangible assets such as patents.This document is authorized for use only in Interm Financial Reporting II by Brook from March 2011 to September2020. Understanding Financial Statements7Finally we come to the last line of the balance sheet total assets.Total assets represents the sum of both current and ?xed assets.Liabilities and Owners’ EquityNow let’s consider the claims against those assets beginning with acategory called current liabilities. Current liabilities represent the claimsof creditors and others that typically must be paid within a year; theyinclude short-term IOUs accrued salaries accrued income taxes andaccounts payable.This year’s repayment obligation on a long-term loanis also listed under current liabilities.Subtracting current liabilities from current assets gives you thecompany’s net working capital. Net working capital is the amount ofmoney the company has tied up in its current (short-term) operating activities. Just how much is adequate for the company dependson the industry and the company’s plans. In its most recent balancesheet Amalgamated had $868 000 in net working capital.Long-term liabilities are typically bonds and mortgages—debtsthat the company is contractually obligated to repay with respect toboth interest and principal.According to the aforementioned accounting equation total assets must equal total liabilities plus owners’ equity.Thus subtractingtotal liabilities from total assets the balance sheet arrives at a ?gurefor the owners’ equity. Owners’ equity comprises retained earnings(net pro?ts that accumulate on a company’s balance sheet after anydividends are paid) and contributed capital (capital received in exchange for shares).Historical ValuesThe values represented in many balance sheet categories may notcorrespond to their actual market values. Except for items such ascash accounts receivable and accounts payable the measurement ofeach classi?cation will rarely be equal to the actual current value orcash value shown.This is because accountants must record most itemsat their historic cost. If for example XYZ’s balance sheet indicatedThis document is authorized for use only in Interm Financial Reporting II by Brook from March 2011 to September2020. 8Mastering the Financial Toolsland worth $700 000 that ?gure would represent what XYZ paidfor the land way back when. If the land was purchased in downtownSan Francisco in 1960 you can bet that it is now worth immenselymore than the value stated on the balance sheet. So why do accountants use historic instead of market values? The short answer isthat it represents the lesser of two evils. If market values were mandated then every public company would be required to get a professional appraisal of every one of it properties warehouse inventories and so forth—and would have to do so every year. And how manypeople would trust those appraisals? So we’re stuck with historic values on the balances sheet.Managerial IssuesThough the balance sheet is prepared by accountants it represents anumber of important issues for managers.WO RK I N G CAP ITAL –Financialmanagers give substantial attention to the level of working capital which naturally expands andcontracts with sales activities. Too little working capital can put acompany in a bad position:The company may be unable to pay itsbills or to take advantage of pro?table opportunities. Too muchworking capital on the other hand reduces pro?tability since thatcapital has a carrying cost—it must be ?nanced in some way usuallythrough interest-bearing loans.Inventory is one component of working capital that directly affects many managers who are not involved in ?nance. Like workingcapital in general inventory must be balanced between too muchand too little. Having lots of inventory on hand solves many businessproblems:The company can ?ll customer orders without delay and arobust inventory provides a buffer against potential production stoppages and strikes.The ?ip side of plentiful inventory is ?nancing costand the risk of deterioration in the market value of the inventory itself. Every excess widget in the stockroom adds to the company’s ?nancing costs which reduces pro?ts.And every item that sits on theshelf may become obsolete or less salable as time goes by—again This document is authorized for use only in Interm Financial Reporting II by Brook from March 2011 to September2020. Understanding Financial Statements9with a negative impact on pro?tability.The personal computer business provides a clear example of how excess inventory can wreck thebottom line. Some analysts estimate that the value of ?nished-goodsinventory melts away at a rate of approximately 2 percent per day because of technical obsolescence in this fast-moving industry.F I NAN C IAL LEVE R AG E –You have probably heard someone say “It’s a highly leveraged situation.” Do you know what “leveraged”means in the ?nancial sense? Financial leverage refers to the use of borrowed money in acquiring an asset.We say that a company is highlyleveraged when the percentage of debt on its balance sheet is high relative to the capital invested by the owners. For example suppose thatyou paid $400 000 for an asset using $100 000 of your own money and$300 000 in borrowed funds.For simplicity we’ll ignore loan payments taxes and any cash ?ow you might get from the investment. Four yearsgo by and your asset has appreciated to $500 000.You decide to sell.After paying off the $300 000 loan you end up with $200 000 in yourpocket (your original $100 000 plus a $100 000 pro?t).That’s a gain of100 percent on your personal capital even though the asset increased invalue by only 25 percent.Financial leverage made this possible.In contrast if you had ?nanced the purchase entirely with your own funds($400 000) then you would have ended up with only a 25 percent gain.(Operating leverage in contrast refers to the extent to which a company’soperating costs are ?xed versus variable. For example a company thatrelies heavily on machinery and very few workers to produce its goodshas a high operating leverage.)Financial leverage creates an opportunity for a company to gaina higher return on the capital invested by its owners. In the UnitedStates and most other countries tax policy makes ?nancial leverageeven more attractive by allowing businesses to deduct the interestpaid on loans. But leverage can cut both ways. If the value of an assetdrops (or fails to produce the anticipated level of revenue) thenleverage works against its owner. Consider what would have happened in our example if the asset’s value had dropped by $100 000 that is to $300 000. The owner would have lost his or her entire$100 000 investment after repaying the initial loan of $300 000.This document is authorized for use only in Interm Financial Reporting II by Brook from March 2011 to September2020. 10Mastering the Financial ToolsF I NAN C IAL STRU CTU RE O F TH E F I RM –The negative potential of?nancial leverage is what keeps CEOs their ?nancial executives andboard members from maximizing their debt ?nancing. Instead theyseek a ?nancial structure that creates a realistic balance between debtand equity on the balance sheet.Although leverage enhances a company’s potential pro?tability as long as things go right managers knowthat every dollar of debt increases the riskiness of the business—bothbecause of the danger just cited and because high debt results in highinterest payments which must be paid in good times and bad. Manycompanies have failed when business reversals or recessions reducedtheir ability to make timely payments on their loans.When creditors and investors examine corporate balance sheets they look carefully at the debt-to-equity ratio.They factor the riskiness of the balance sheet into the interest they charge on loans andthe return they demand from a company’s bonds. Thus a highlyleveraged company may have to pay 14 percent on borrowed fundsinstead of the 10 to 12 percent paid by a less leveraged competitor.Investors also demand a higher rate of return for their stock investments in highly leveraged companies.They will not accept high riskswithout an expectation of commensurately large returns.Where Are the Human Assets?As people look to ?nancial statements to gain insights about companies many are questioning the traditional balance sheet’s ability to re?ect the value of human capital and pro?t potential.Thisis particularly true for knowledge-intensive companies for whichthe workforce know-how intellectual property brand equity andcustomer relationships are the real productive assets. Unfortunately these intangible assets are not found on the balance sheet.The growing irrelevance of balance sheets to re?ect real valueprompted Federal Reserve Board chairman Alan Greenspan tocomplain in January 2000 that accounting failed to track investments in “knowledge assets.”Former SEC chairman Arthur LevittThis document is authorized for use only in Interm Financial Reporting II by Brook from March 2011 to September2020. Understanding Financial Statements11echoed Greenspan’s concern: “As intangible assets grow in sizeand scope more and more people are questioning whether thetrue value—and the drivers of that value—are being re?ected ina timely manner in publicly available disclosure.” Indeed a studyby Baruch Lev of New York University found that 40 percent ofthe market valuation of the average company was missing fromits balance sheet. For high-tech ?rms the ?gure was more than50 percent.The implication of these ?ndings for investors and managersis that they must look beyond the bricks and mortar the equipment and even the cash that traditionally constitute balance sheetassets and focus on the undisclosed assets that produce the greatest value for shareholders. In most cases those assets are thepeople who create the bonds between the enterprise and its customers who create innovations that customers are eager to payfor and who know how to get others to work together productively.The accounting profession is beginning to debate the prosand cons of including these intangible assets in ?nancial statements.Watch for future developments.The Income StatementThe income statement indicates the results of operations over a speci?ed period.Those last two words are important. Unlike the balancesheet which is a snapshot of the enterprise’s position at a point intime the income statement indicates cumulative business resultswithin a de?ned time frame. It tells you if the company is making apro?t—that is whether it has positive or negative net income (netearnings).This is why the income statement is often referred to as thepro?t-and-loss statement or P&L. It shows a company’s pro?tability atthe end of a particular time—typically at the end of the month thequarter or the company’s ?scal year. In addition the income statement tells you how much money the company spent to make thatpro?t—from which you can determine the company’s pro?t margin.This document is authorized for use only in Interm Financial Reporting II by Brook from March 2011 to September2020. 12Mastering the Financial ToolsAs we did with the balance sheet we can represent the contentsof the income statement with a simple equation:Revenues – Expenses = Net Income (or Net Loss)An income statement starts with the company’s revenues: the amountof money that results from selling products or services to customers.A company may have other revenues as well. In many cases these arefrom investments or interest income from its cash holdings.Various costs and expenses—from the costs of making and storing goods to depreciation of plant and equipment to interest expense and taxes—are then deducted from revenues.The bottom line—what’s left over—is the net income or net pro?t or net earnings forthe period of the statement.Consider the meaning of various line items on the incomestatement for Amalgamated Hat Rack (table 14-2).The cost of goodssold is what it cost Amalgamated to manufacture its hat racks. This?gure includes the cost of raw materials such as lumber as well asthe cost of turning them into ?nished goods including direct laborcosts. By deducting the cost of goods sold from sales revenue we geta company’s gross pro?t—the roughest estimation of the company’spro?tability.The next major category of cost is operating expenses. Operatingexpenses include administrative employee salaries rents sales andmarketing costs as well as other costs of business not directly attributed to the cost of manufacturing a product.The lumber for makinghat racks would not be included here; the cost of the advertising andthe salaries of Amalgamated employees would.Depreciation is counted on the income statement as an expense even though it involves no out-of-pocket payments. As describedearlier depreciation is a way of estimating the “consumption” of anasset or the diminishing value of equipment over time. A computer for example loses about a third of its value each year. Thus the company would not expense the full value of a computer in the?rst year of its purchase but as it is actually used over a span of threeyears. The idea behind depreciation is to recognize the diminishedvalue of certain assets.This document is authorized for use only in Interm Financial Reporting II by Brook from March 2011 to September2020. Understanding Financial Statements13TA B L E 1 4 – 2Amalgamated Hat Rack Income Statement for the Fiscal YearEnding December 31 2002Retail Sales$2 200 000Corporate Sales$1 000 000Total Sales RevenueLess: Cost of Goods S…
Examine The Coca-Cola Company’s Consolidated Balance sheet,Examine The Coca-Cola Company’s Consolidated Balance sheet on p. B2 in Appendix B of Financial Accounting especially its Current Assets Current Liabilities and Total Assets for years 2005 and 2004.· Calculate the following for Coca-Cola and show your work:o The Current Ratio for 2005o The Current Ratio for 2004o Two measures of vertical analysis—for example compute the current assets divided by total assets for each year and express your result as a percentageo Two measures of horizontal analysis—for example compute the total change in assets by percentage by dividing current assets in 2005 by current assets in 2004. Compute a similar percentage for current liabilitiesAppendixASPECIMEN FINANCIAL STATEMENTS:PepsiCo Inc.T HE ANNUAL REPORTOnce each year a corporation communicates to its stockholders and other interestedparties by issuing a complete set of audited financial statements.The annual report asthis communication is called summarizes the financial results of the company’s operations for the year and its plans for the future. Many annual reports are attractive multicolored glossy public relations pieces containing pictures of corporate officers anddirectors as well as photos and descriptions of new products and new buildings. Yetthe basic function of every annual report is to report financial information almost allof which is a product of the corporation’s accounting system.The content and organization of corporate annual reports have become fairlystandardized. Excluding the public relations part of the report (pictures products etc.) the following are the traditional financial portions of the annual report:• Financial Highlights• Letter to the Stockholders• Management’s Discussion andAnalysis• Financial Statements• Notes to the Financial Statements• Management’s Report on InternalControl• Management Certification ofFinancial Statements• Auditor’s Report• Supplementary Financial InformationIn this appendix we illustrate current financial reporting with a comprehensiveset of corporate financial statements that are prepared in accordance with generally accepted accounting principles and audited by an international independentcertified public accounting firm. We are grateful for permission to use the actual financial statements and other accompanying financial information from the annualreport of a large publicly held company PepsiCo Inc.FINANCIAL HIGHLIGHTSCompanies usually present the financial highlights section inside the front cover ofthe annual report or on its first two pages. This section generally reports the totalor per share amounts for five to ten financial items for the current year and one ormore previous years. Financial items from the income statement and the balancesheet that typically are presented are sales income from continuing operations netincome net income per share net cash provided by operating activities dividendsper common share and the amount of capital expenditures.The financial highlightssection from PepsiCo’s Annual Report is shown on page A-2.The financial information herein is reprinted with permission from the PepsiCo Inc. 2005 AnnualReport. The complete financial statements are available through a link at the book’s companionwebsite.A1 A2Appendix A Specimen Financial Statements: PepsiCo Inc.Financial HighlightsPepsiCo Inc. and Subsidiaries($ in millions except per share amounts; all per share amounts assume dilution)Net RevenueDivision Operating ProfitTotal: $32 562Total: $6 710PepsiCo International35%5(2%PepsiCo International24%Quaker Foods North America8%Quaker Foods North America30%Frito-Lay North America38%PepsiCo Beverages North AmericaFrito-Lay North AmericaPepsiCo Beverages North America% Chg(a)20052004$32 562$29 26111Division operating profit$6 710$6 09810Total operating profit$5 922$5 25913Net income(b)$4 536$4 00413$2.66$2.3215$4 204$3 70513$5 852$5 05416Capital spending$1 736$1 38725Common share repurchases$3 012$3 028(0.5)Dividends paid$1 642$1 32924Long-term debt$2 313$2 397(3.5)Summary of OperationsTotal net revenueEarnings per share(b)Other DataManagement operating cash flow(c)Net cash provided byoperating activities(a) Percentage changes above and in text are based on unrounded amounts.(b) In 2005 excludes the impact of AJCA tax charge the 53rd week and restructuring charges.In 2004 excludes certain prior year tax benefits and restructuring and impairment charges.See page 76 for reconciliation to net income and earnings per share on a GAAP basis.(c) Includes the impact of net capital spending. Also see “Our Liquidity Capital Resourcesand Financial Position” in Management’s Discussion and Analysis.L ETTER TO THE STOCKHOLDERSNearly every annual report contains a letter to the stockholders from the chairmanof the board or the president or both. This letter typically discusses the company’saccomplishments during the past year and highlights significant events such asmergers and acquisitions new products operating achievements business philosophy changes in officers or directors financing commitments expansion plans and Financial Statements and Accompanying Notesfuture prospects. The letter to the stockholders is signed by Steve Reinemund Chairman of the Board and Chief Executive Officer of PepsiCo.Only a short summary of the letter is provided below. The full letter can beaccessed at the book’s companion website at www.wiley.com/college/weygandt.MANAGEMENT’S DISCUSSION AND ANALYSISThe management’s discussion and analysis (MD&A) section covers three financialaspects of a company: its results of operations its ability to pay near-term obligations and its ability to fund operations and expansion. Management must highlightfavorable or unfavorable trends and identity significant events and uncertaintiesthat affect these three factors. This discussion obviously involves a number of subjective estimates and opinions. In its MD&A section PepsiCo breaks its discussioninto three major headings: Our Business Our Critical Accounting Policies and OurFinancial Results. PepsiCo’s MD&A section is 22 pages long. You can access thatsection at www.wiley.com/college/weygandt.FINANCIAL STATEMENTS ANDA CCOMPANYING NOTESThe standard set of financial statements consists of: (1) a comparative incomestatement for 3 years (2) a comparative statement of cash flows for 3 years (3) acomparative balance sheet for 2 years (4) a statement of stockholders’ equity for3 years and (5) a set of accompanying notes that are considered an integral partof the financial statements. The auditor’s report unless stated otherwise coversthe financial statements and the accompanying notes. PepsiCo’s financial statements and accompanying notes plus supplementary data and analyses follow.A3 A4Appendix A Specimen Financial Statements: PepsiCo Inc.Consolidated Statement of IncomePepsiCo Inc. and SubsidiariesFiscal years ended December 31 2005 December 25 2004 and December 27 2003(in millions except per share amounts)200520042003Net Revenue……………………………………………………………………………………………………………$32 562$29 261$26 971Cost of sales……………………………………………………………………………………………………………Selling general and administrative expenses ………………………………………………………………Amortization of intangible assets……………………………………………………………………………….Restructuring and impairment charges……………………………………………………………………….Merger-related costs…………………………………………………………………………………………………14 17612 314150––12 67411 031147150–11 69110 14814514759Operating Profit ………………………………………………………………………………………………………5 9225 2594 781Bottling equity income………………………………………………………………………………………………Interest expense……………………………………………………………………………………………………….Interest income………………………………………………………………………………………………………..557(256)159380(167)74323(163)51Income from Continuing Operations before Income Taxes ………………………………………….6 3825 5464 992Provision for Income Taxes………………………………………………………………………………………2 3041 3721 424Income from Continuing Operations ………………………………………………………………………….4 0784 1743 568Tax Benefit from Discontinued Operations …………………………………………………………………–38–Net Income …………………………………………………………………………………………………………….$ 4 078$ 4 212$ 3 568Net Income per Common Share — BasicContinuing operations ………………………………………………………………………………………….Discontinued operations……………………………………………………………………………………….$2.43–$2.450.02$2.07–Total ………………………………………………………………………………………………………………….$2.43$2.47$2.07Net Income per Common Share — DilutedContinuing operations ………………………………………………………………………………………….Discontinued operations……………………………………………………………………………………….$2.39–$2.410.02$2.05–Total ………………………………………………………………………………………………………………….$2.39$2.44*$2.05* Based on unrounded amounts.See accompanying notes to consolidated financial statements.Net RevenueOperating Profit$5 922$32 562$26 9712003$29 2612004$5 259$4 7812005200320042005Net Income per Common Share — Continuing OperationsIncome from Continuing Operations$2.41$4 174$4 078200420052003$2.3920042005$2.05$3 5682003 Financial Statements and Accompanying NotesConsolidated Statement of Cash FlowsPepsiCo Inc. and SubsidiariesFiscal years ended December 31 2005 December 25 2004 and December 27 2003(in millions)Operating ActivitiesNet income…………………………………………………………………………………………………………………Adjustments to reconcile net income to net cash provided by operating activitiesDepreciation and amortization …………………………………………………………………………………Stock-based compensation expense………………………………………………………………………….Restructuring and impairment charges …………………………………………………………………….Cash payments for merger-related costs and restructuring charges ……………………………..Tax benefit from discontinued operations…………………………………………………………………..Pension and retiree medical plan contributions ………………………………………………………….Pension and retiree medical plan expenses………………………………………………………………..Bottling equity income net of dividends ……………………………………………………………………Deferred income taxes and other tax charges and credits ……………………………………………Merger-related costs……………………………………………………………………………………………….Other non-cash charges and credits net …………………………………………………………………..Changes in operating working capital excluding effects of acquisitions and divestituresAccounts and notes receivable…………………………………………………………………………….Inventories ……………………………………………………………………………………………………….Prepaid expenses and other current assets …………………………………………………………..Accounts payable and other current liabilities……………………………………………………….Income taxes payable…………………………………………………………………………………………200520042003$ 4 078$ 4 212$ 3 5681 308311–(22)–(877)464(411)440–1451 264368150(92)(38)(534)395(297)(203)–1661 221407147(109)–(605)277(276)(286)59101(272)(132)(56)188609(130)(100)(31)216(268)(220)(49)23(11)182Net change in operating working capital……………………………………………………………………Other…………………………………………………………………………………………………………………….33779(313)(24)(75)(101)Net Cash Provided by Operating Activities ……………………………………………………………………5 8525 0544 328(750)(1 736)88(345)2143–(1 387)38(64)–52–(1 345)49(71)–46(83)84(992)(44)38(963)(38)28(940)(3 517)(2 330)(2 271)Investing ActivitiesSnack Ventures Europe (SVE) minority interest acquisition ……………………………………………….Capital spending ………………………………………………………………………………………………………..Sales of property plant and equipment………………………………………………………………………….Other acquisitions and investments in noncontrolled affiliates …………………………………………Cash proceeds from sale of PBG stock …………………………………………………………………………..Divestitures………………………………………………………………………………………………………………..Short-term investments by original maturityMore than three months — purchases ……………………………………………………………………..More than three months — maturities ……………………………………………………………………..Three months or less net ………………………………………………………………………………………..Net Cash Used for Investing Activities ………………………………………………………………………….Financing ActivitiesProceeds from issuances of long-term debt ……………………………………………………………………Payments of long-term debt …………………………………………………………………………………………Short-term borrowings by original maturityMore than three months — proceeds………………………………………………………………………..More than three months — payments ………………………………………………………………………Three months or less net ………………………………………………………………………………………..Cash dividends paid ……………………………………………………………………………………………………Share repurchases — common …………………………………………………………………………………….Share repurchases — preferred ……………………………………………………………………………………Proceeds from exercises of stock options………………………………………………………………………..25(177)504(512)52(641)332(85)1 601(1 642)(3 012)(19)1 099153(160)1 119(1 329)(3 028)(27)96588(115)40(1 070)(1 929)(16)689Net Cash Used for Financing Activities …………………………………………………………………………(1 878)(2 315)(2 902)Effect of exchange rate changes on cash and cash equivalents ………………………………………..(21)5127Net Increase/(Decrease) in Cash and Cash Equivalents …………………………………………………Cash and Cash Equivalents Beginning of Year ……………………………………………………………..4361 280460820(818)1 638Cash and Cash Equivalents End of Year ………………………………………………………………………$ 1 716$ 1 280$ 820See accompanying notes to consolidated financial statements.A5 A6Appendix A Specimen Financial Statements: PepsiCo Inc.Consolidated Balance SheetPepsiCo Inc. and SubsidiariesDecember 31 2005 and December 25 2004(in millions except per share amounts)20052004Cash and cash equivalents…………………………………………………………………………………………………………………..$ 1 716$ 1 280Short-term investments ……………………………………………………………………………………………………………………….3 1662 165Accounts and notes receivable net………………………………………………………………………………………………………..4 8823 2613 4452 999Inventories………………………………………………………………………………………………………………………………………….1 6931 541Prepaid expenses and other current assets……………………………………………………………………………………………..618654Total Current Assets ………………………………………………………………………………………………………………………10 4548 639Property Plant and Equipment net ……………………………………………………………………………………………………..8 6818 149Amortizable Intangible Assets net ……………………………………………………………………………………………………….530598Goodwill……………………………………………………………………………………………………………………………………………..4 0883 909Other nonamortizable intangible assets………………………………………………………………………………………………….1 086933ASSETSCurrent AssetsNonamortizable Intangible Assets……………………………………………………………………………………………………5 1744 842Investments in Noncontrolled Affiliates ………………………………………………………………………………………………..3 4853 284Other Assets ………………………………………………………………………………………………………………………………………3 4032 475Total Assets………………………………………………………………………………………………………………………………$31 727$27 987LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent LiabilitiesShort-term obligations …………………………………………………………………………………………………………………………$ 2 889$ 1 054Accounts payable and other current liabilities…………………………………………………………………………………………5 9715 599Income taxes payable…………………………………………………………………………………………………………………………..54699Total Current Liabilities ………………………………………………………………………………………………………………….9 4066 752Long-Term Debt Obligations…………………………………………………………………………………………………………………2 3132 397Other Liabilities ………………………………………………………………………………………………………………………………….4 3234 099Deferred Income Taxes ……………………………………………………………………………………………………………………….1 4341 216Total Liabilities ………………………………………………………………………………………………………………………………Commitments and Contingencies17 47614 464Preferred Stock no par value ……………………………………………………………………………………………………………..4141Repurchased Preferred Stock ……………………………………………………………………………………………………………..(110)(90)Common stock par value 1 2/3¢ per share (issued 1 782 shares)……………………………………………………………..3030Capital in excess of par value……………………………………………………………………………………………………………….Retained earnings ……………………………………………………………………………………………………………………………….Accumulated other comprehensive loss ………………………………………………………………………………………………….61421 116(1 053)61818 730(886)20 70718 492Common Shareholders’ EquityLess: repurchased common stock at cost (126 and 103 shares respectively) ……………………………………………(6 387)(4 920)Total Common Shareholders’ Equity ………………………………………………………………………………………………..14 32013 572Total Liabilities and Shareholders’ Equity ……………………………………………………………………………………$31 727$27 987See accompanying notes to consolidated financial statements. Financial Statements and Accompanying NotesConsolidated Statement of Common Shareholders’ EquityPepsiCo Inc. and SubsidiariesFiscal years ended December 31 2005 December 25 2004 and December 27 2003(in millions)Common Stock2005Shares1 7822004Amount$30Shares1 7822003Amount$30Shares1 782Amount$30Capital in Excess of Par ValueBalance beginning of year…………………………………….Stock-based compensation expense………………………..Stock option exercises(a) ………………………………………..618311(315)548368(298)207407(66)Balance end of year……………………………………………..614618548Retained EarningsBalance beginning of year…………………………………….Net income ………………………………………………………….Cash dividends declared — common ……………………..Cash dividends declared — preferred …………………….Cash dividends declared — RSUs ………………………….Other ………………………………………………………………….18 7304 078(1 684)(3)(5)–15 9614 212(1 438)(3)(2)–13 4893 568(1 082)(3)–(11)Balance end of year……………………………………………..21 11618 73015 961(886)(251)(1 267)401(1 672)41054(8)(16)9(11)(1)1624(2)(19)6–71(1)(1 053)(886)(1 267)Accumulated Other Comprehensive LossBalance beginning of year ……………………………………Currency translation adjustment…………………………….Cash flow hedges net of tax:Net derivative gains/(losses) …………………………….Reclassification of (gains)/losses to net income ….Minimum pension liability adjustment net of tax ………………………………………………………Unrealized gain on securities net of tax ………………….Other ………………………………………………………………….Balance end of year……………………………………………..Repurchased Common StockBalance beginning of year…………………………………….Share repurchases………………………………………………..Stock option exercises …………………………………………..Other ………………………………………………………………….(103)(54)31–(4 920)(2 995)1 5235(77)(58)32–(3 376)(2 994)1 43416
Broadening Your Perspective 8-2 The financial statements,Broadening Your Perspective 8-2The financial statements of The Hershey Company and Tootsie Roll are presented below.THE HERSHEY COMPANYCONSOLIDATED STATEMENTS OF INCOMEFor the years ended December 31 201120102009In thousands of dollars except per share amountsNet Sales$6 080 788$5 671 009$5 298 668Costs and Expenses: Cost of sales3 548 8963 255 8013 245 531 Selling marketing and administrative1 477 7501 426 4771 208 672 Business realignment and impairment (credits) charges net(886)83 43382 875 Total costs and expenses5 025 7604 765 7114 537 078Income before Interest and Income Taxes1 055 028905 298761 590 Interest expense net92 18396 43490 459Income before Income Taxes962 845808 864671 131 Provision for income taxes333 883299 065235 137Net Income$628 962$509 799$435 994Net Income Per Share—Basic—Class B Common Stock$2.58$2.08$1.77Net Income Per Share—Diluted—Class B Common Stock$2.56$2.07$1.77Net Income Per Share—Basic—Common Stock$2.85$2.29$1.97Net Income Per Share—Diluted—Common Stock$2.74$2.21$1.90Cash Dividends Paid Per Share: Common Stock$1.3800$1.2800$1.1900 Class B Common Stock1.25001.16001.0712The notes to consolidated financial statements are an integral part of these statements and are included in the Hershey’s 2011 Annual Report available at www.thehersheycompany.com.THE HERSHEY COMPANYCONSOLIDATED BALANCE SHEETSDecember 31 20112010In thousands of dollarsASSETSCurrent Assets: Cash and cash equivalents$693 686$884 642 Accounts receivable—trade399 499390 061 Inventories648 953533 622 Deferred income taxes136 86155 760 Prepaid expenses and other167 559141 132 Total current assets2 046 5582 005 217Property Plant and Equipment Net1 559 7171 437 702Goodwill516 745524 134Other Intangibles111 913123 080Deferred Income Taxes38 54421 387Other Assets138 722161 212 Total assets$4 412 199$4 272 732LIABILITIES AND STOCKHOLDERS’ EQUITYCurrent Liabilities: Accounts payable$420 017$410 655 Accrued liabilities612 186593 308 Accrued income taxes1 8999 402 Short-term debt42 08024 088 Current portion of long-term debt97 593261 392 Total current liabilities1 173 7751 298 845Long-term Debt1 748 5001 541 825Other Long-term Liabilities617 276494 461 Total liabilities3 539 5513 335 131Commitments and Contingencies——Stockholders’ Equity: The Hershey Company Stockholders’ Equity Preferred Stock shares issued: none in 2011 and 2010—— Common Stock shares issued: 299 269 702 in 2011 and 299 195 325 in 2010299 269299 195 Class B Common Stock shares issued: 60 632 042 in 2011 and 60 706 419 in 201060 63260 706 Additional paid-in capital490 817434 865 Retained earnings4 699 5974 374 718 Treasury—Common Stock shares at cost: 134 695 826 in 2011 and 132 871 512 in 2010(4 258 962)(4 052 101) Accumulated other comprehensive loss(442 331)(215 067) The Hershey Company stockholders’ equity849 022902 316 Noncontrolling interests in subsidiaries23 62635 285 Total stockholders’ equity872 648937 601 Total liabilities and stockholders’equity$4 412 199$4 272 732THE HERSHEY COMPANYCONSOLIDATED STATEMENTS OF CASH FLOWSFor the years ended December 31 201120102009In thousands of dollarsCash Flows Provided from (Used by) Operating ActivitiesNet income$628 962$509 799$435 994Adjustments to reconcile net income to net cash provided from operations:Depreciation and amortization215 763197 116182 411Stock-based compensation expense net of tax of $15 127 $17 413 and $19 223 respectively28 34132 05534 927Excess tax benefits from stock-based compensation(13 997)(1 385)(4 455)Deferred income taxes33 611(18 654)(40 578)Gain on sale of trademark licensing rights net of tax of $5 962(11 072)——Business realignment and impairment charges net of tax of $18 333 $20 635 and $38 308 respectively30 83877 93560 823Contributions to pension plans(8 861)(6 073)(54 457)Changes in assets and liabilities net of effects from business acquisitions and divestitures:Accounts receivable—trade(9 438)20 32946 584Inventories(115 331)(13 910)74 000Accounts payable7 86090 43437 228Other assets and liabilities(205 809)13 777293 272Net Cash Provided from Operating Activities580 867901 4231 065 749Cash Flows Provided from (Used by) Investing ActivitiesCapital additions(323 961)(179 538)(126 324)Capitalized software additions(23 606)(21 949)(19 146)Proceeds from sales of property plant and equipment3122 20110 364Proceeds from sales of trademark licensing rights20 000——Business acquisitions(5 750)—(15 220)Net Cash (Used by) Investing Activities(333 005)(199 286)(150 326)Cash Flows Provided from (Used by) Financing ActivitiesNet change in short-term borrowings10 8341 156(458 047)Long-term borrowings249 126348 208—Repayment of long-term debt(256 189)(71 548)(8 252)Proceeds from lease financing agreement47 601——Cash dividends paid(304 083)(283 434)(263 403)Exercise of stock options184 41192 03328 318Excess tax benefits from stock-based compensation13 9971 3854 455Contributions from noncontrolling interests in subsidiaries—10 1997 322Repurchase of Common Stock(384 515)(169 099)(9 314)Net Cash (Used by) Financing Activities(438 818)(71 100)(698 921)(Decrease) Increase in Cash and Cash Equivalents(190 956)631 037216 502Cash and Cash Equivalents as of January 1884 642253 60537 103Cash and Cash Equivalents as of December 31$693 686$884 642$253 605Interest Paid$97 892$97 932$91 623Income Taxes Paid292 315350 948252 230TOOTSIE ROLL INDUSTRIES INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OFEarnings Comprehensive Earnings and Retained Earnings (in thousands except per share data)For the year ended December 31 201120102009Net product sales$528 369$517 149$495 592Rental and royalty revenue4 1364 2993 739Total revenue532 505521 448499 331Product cost of goods sold365 225349 334319 775Rental and royalty cost1 0381 088852Total costs366 263350 422320 627Product gross margin163 144167 815175 817Rental and royalty gross margin3 0983 2112 887Total gross margin166 242171 026178 704Selling marketing and administrative expenses108 276106 316103 755Impairment charges——14 000Earnings from operations57 96664 71060 949Other income (expense) net2 9468 3582 100Earnings before income taxes60 91273 06863 049Provision for income taxes16 97420 0059 892Net earnings$43 938$53 063$53 157Net earnings$43 938$53 063$53 157Other comprehensive earnings (loss)(8 740)1 1832 845Comprehensive earnings$35 198$54 246$56 002Retained earnings at beginning of year.$135 866$147 687$144 949Net earnings43 93853 06353 157Cash dividends(18 360)(18 078)(17 790)Stock dividends(47 175)(46 806)(32 629)Retained earnings at end of year$114 269$135 866$147 687Earnings per share$0.76$0.90$0.89Average Common and Class B Common shares outstanding57 89258 68559 425(The accompanying notes are an integral part of these statements.)CONSOLIDATED STATEMENTS OFFinancial PositionTOOTSIE ROLL INDUSTRIES INC. AND SUBSIDIARIES (in thousands except per share data)AssetsDecember 31 20112010CURRENT ASSETS:Cash and cash equivalents$78 612$115 976Investments10 8957 996Accounts receivable trade less allowances of $1 731 and $1 53141 89537 394Other receivables3 3919 961Inventories:Finished goods and work-in-process42 67635 416Raw materials and supplies29 08421 236Prepaid expenses5 0706 499Deferred income taxes578689Total current assets212 201235 167PROPERTY PLANT AND EQUIPMENT at cost:Land21 93921 696Buildings107 567102 934Machinery and equipment322 993307 178Construction in progress2 5989 243455 097440 974Less—Accumulated depreciation242 935225 482Net property plant and equipment212 162215 492OTHER ASSETS:Goodwill73 23773 237Trademarks175 024175 024Investments96 16164 461Split dollar officer life insurance74 20974 441Prepaid expenses3 2126 680Equity method investment3 9354 254Deferred income taxes7 7159 203Total other assets433 493407 300Total assets$857 856$857 959Liabilities and Shareholders’ EquityDecember 31 20112010CURRENT LIABILITIES:Accounts payable$10 683$9 791Dividends payable4 6034 529Accrued liabilities43 06944 185Total current liabilities58 35558 505NONCURRENT LIABILITES:Deferred income taxes43 52147 865Postretirement health care and life insurance benefits26 10820 689Industrial development bonds7 5007 500Liability for uncertain tax positions8 3459 835Deferred compensation and other liabilities48 09246 157Total noncurrent liabilities133 566132 046SHAREHOLDERS’ EQUITY:Common stock $.69-4/9 par value—120 000 shares authorized—36 479 and 36 057 respectively issued25 33325 040Class B common stock $.69-4/9 par value—40 000 shares authorized—21 025 and 20 466 respectively issued14 60114 212Capital in excess of par value533 677505 495Retained earnings per accompanying statement114 269135 866Accumulated other comprehensive loss(19 953)(11 213)Treasury stock (at cost)—71 shares and 69 shares respectively(1 992)(1 992)Total shareholders’ equity665 935667 408Total liabilities and shareholders’ equity$857 856$857 959TOOTSIE ROLL INDUSTRIES INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OFCash Flows (in thousands)For the year ended December 31 201120102009CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings$43 938$53 063$53 157 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation19 22918 27917 862 Impairment charges——14 000 Impairment of equity method investment——4 400 Loss from equity method investment194342233 Amortization of marketable security premiums1 267522320 Changes in operating assets and liabilities: Accounts receivable(5 448)717(5 899) Other receivables3 963(2 373)(2 088) Inventories(15 631)(1 447)455 Prepaid expenses and other assets5 1064 9365 203 Accounts payable and accrued liabilities842 180(2 755) Income taxes payable and deferred(5 772)2 322(12 543) Postretirement health care and life insurance benefits2 0221 4291 384 Deferred compensation and other liabilities2 1462 5252 960 Others(708)310305 Net cash provided by operating activities50 39082 80576 994CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures(16 351)(12 813)(20 831) Net purchase of trading securities(3 234)(2 902)(1 713) Purchase of available for sale securities(39 252)(9 301)(11 331) Sale and maturity of available for sale securities7 6808 20817 511 Net cash used in investing activities(51 157)(16 808)(16 364) CASH FLOWS FROM FINANCING ACTIVITIES: Shares repurchased and retired(18 190)(22 881)(20 723) Dividends paid in cash(18 407)(18 130)(17 825) Net cash used in financing activities(36 597)(41 011)(38 548)Increase (decrease) in cash and cash equivalents(37 364)24 98622 082Cash and cash equivalents at beginning of year115 97690 99068 908Cash and cash equivalents at end of year$78 612$115 976$90 990Supplemental cash flow information Income taxes paid$16 906$20 586$22 364 Interest paid$38$49$182 Stock dividend issued$47 053$46 683$32 538(The accompanying notes are an integral part of these statements.)Based on the information contained in these financial statements compute the following 2011 values for each company.(Round answers to 1 decimal place e.g. 15.2.)(1)Accounts receivable turnover. (For Tootsie Roll use “Net product sales.” Assume all sales were credit sales.)(2)Average collection period for accounts receivable.Tootsie RollHershey CompanyAccounts receivable turnovertimestimesAverage collection perioddaysdaysQuestion
Review APA writing style requirements. Required Reading,Review APA writing style requirements.Required Reading:(2011) SKS 7000-Executive Concepts in Business Strategy. Pearson Learning Solutions. ISBN: 9780558870638SKS 7000-Executive Concepts in Business Strategy: Chapters 1 9 10 11 12 13AssignmentThe Chief Financial Officer (CFO) for XYZ Construction Inc. has been promoted to the newly created position as the Vice President of Overseas Operations. The CFO’s absence leaves a void in the knowledge base of the owners group regarding several key financial and accounting principles. The owners need you to create a document for them that will help explain several key concepts terms and principles associated with financial management accounting internal control cash management and Sarbanes-Oxley regulations.For this assignment the requirement is to create a document for financial management and accounting that uses generic data and examples that defines and analyzes the following terms concepts and principles in a business perspective:Balance SheetIncome StatementOperating Cash FlowsStatement of Retained EarningsNet Working CapitalEconomic Value AddedFixed Assets Turnover RatioNet Profit MarginSales ForecastBreakeven AnalysisFinancial LeverageDouble-Entry Accounting SystemLedgerLiabilitiesT AccountBalance of the AccountSarbanes-Oxley Act of 2002Cash EquivalentsPetty Cash FundVoucherLength: 5-7 pages (app. 350 words per page)This paper should include example forms and example of data analysis associated with the aforementioned items. You do not have to write in narrative format as an APA-style research paper. Instead This paper need only be a series of definitions and brief explanations. Be sure to describe discuss and analyze the terms thoroughly.The only required references for this assignment are the chapters included within the e-book which contain all the information you need to complete this assignment. You may re-create the examples from the textbooks using your own generic data. Your mentor will only grade you on the completeness and accuracy of the assignment not on APA form and style.Your writing should demonstrate thoughtful consideration of the ideas and concepts that are presented in the course and provide new thoughts and insights relating directly to this topic. Responses should reflect graduate-level writing standards and have no spelling grammar or syntax errors.