Abstract This paper discusses the strengths and weaknesses of published financialstatements and of accounting ratios as a means of interpreting the position and performance of a business. It compares the strengths and weaknesses of an absorption costing approach compared with a marginal costing approach in decision making. The paper explains how the use of activity based costing might improve a firm's decision making.
From the Paper "Published financial statements including audited financials statements have a number of weaknesses. Some of the limitations of financial statements and financial statement analysis include Past financial performance good or bad is not ..."
Tags: accounting, auditedfinancialstatements, unaudited stateents, weaknesses, traditional cost accounting, absorption costing, marginal costing, activity based costing
Abstract This paper claims that according to the United States Securities and Exchange Commission, financialstatements can be produced in a variety of forms to serve a wide range of purposes in determining the economic viability of an organization. Firstly the paper reviews reviews the use of the balance sheet demonstrates the assets, liabilities and shareholders equity. Secondly, income statements demonstrate income and loss of the organization over a period of time. Third, cash flow statements provide information as to the historical flow of money through the organization, as well as determine if there is a sufficient monetary amount to satisfy debts in the course of business. Finally, a shareholder's equity statement is explored.
From the Paper "According the United States Securities and Exchange Commission financial statements can be produced in a variety of forms, to serve a wide range of purposes in determining the economic viability of an organization. First, a balance sheet demonstrates a company's " assets, liabilities and shareholders' equity" ("Beginners", 2004, sec. 3). These are the items that a company may have on hand that are of value, the debts of the company, and the monetary worth of the company, after debts, if it were sold ("Beginners", 2004, sec. 3). Secondly, income statements demonstrate income and loss of the organization over a period of time ("Beginners", 2004, sec. 4). Third, cash flow statements provide information as to the historical flow of money through the organization, as well as determine if there is a sufficient monetary amount to satisfy debts in the course of business ("Beginners", 2004, sec. 5). Finally, a shareholder's equity statement ..."
Abstract This paper summarizes the ASB exposure draft on Consideration of Fraud in a FinancialStatementAudit. This draft, which supercedes SAS 82, introduces new concepts and requirements to assist the auditor in detecting fraud. It discusses the definition of fraud, identifying risk of fraud, and general assessment of fraud risk. The summary outlines the appropriate response to each fraud risk identified through the analytical process, including evaluation of implications.
From the Paper "As the need for new standards and ways to look for this fraud got stronger, the AICPA auditing standards board (ASB) responded by issuing an exposure draft on Consideration of Fraud in a Financial Statement Audit. This exposure draft would supersede SAS 82, which is the current standard for detecting fraud in an audit. The exposure draft was not meant to change any of the auditor's responsibilities in a financial statement audit but rather introduces new concepts and requirements to assist the auditor in detecting fraud. Some of the major areas that the exposure draft discusses are the description and characteristics of fraud, discussion of fraud and professional skepticism, a wider range of inquiries, identifying and assessing risks that can result in fraud, evaluating programs and controls and responding to the results of the assessment. "
Abstract This paper compares the financialstatement analysis of the Walt Disney Company. It compares information on the company to the industry medians/averages and calculates ratios. The author interprets how the company's ratios compare to those of the industry median.
From the Paper "The Walt Disney Company together with its subsidiaries is a diversified worldwide entertainment company with operations in four business segments Media Networks Parks and Resorts Studio Entertainment and Consumer Products. The Walt Disney Company is the second ..."
Tags:Financialstatement, financial analysis, current ratio, quick ratio, debt to equity. ratio analysis Disney company.
Abstract This paper discusses generally accepted auditing standards and explains that they are guidelines, which auditors must follow while conducting an audit of a company's or government entity's financialstatements. Specifically, the paper defines general, fieldwork and reporting standards as established by the American Institute of Certified Public Accountants (AICPA). The paper then applies these standards to financial operational and compliance audits especially under the requirements of the Sarbanes-Oxley Act and the Public Company Accounting Oversight Board (PCAOB).
Table of Contents:
Nature and Functions of Auditing General Standards
Fieldwork Standards
Reporting Standards
How These Standards Apply to Financial, Operational, and Compliance Audits Audit Effects and Requirements of Auditors by the Sarbanes-Oxley Act and PCAOB
From the Paper "Reporting Standards are concerned with whether the financial statements are presented in accordance with GAAP, consistency, informative disclosures, and an expression of opinion on the financial statements that have been audited. The audit report must state whether the financial statements have been prepared in conformity with GAAP and whether or not there is consistency from one year to the next."
Abstract This paper explores the four basic financialstatements used by companies to analyze company performance- the balance sheet, statement of cash flows, statement of retained earnings and the income statement. Furthermore, the paper examines the uses of these financialstatements to both internal and external stakeholders of the corporation. Finally, the inter-relationships between the four financialstatements is discussed.
From the Paper "Investors: The most important stakeholder in a corporation is an investor. Investors look at financial statements in detail to find out if their investment would give good returns. If a company's balance sheet shows negative worth, investors would be reluctant to invest in the company. Furthermore, investors also look at other statements to make an informed decision. For example, a potential small investor would want to look at the company's income statement to determine whether an investment would be worthwhile."
Abstract This paper examines the purpose and users of financialstatements which can include present and future shareholders, creditors, employees, the government and the public at large. It looks at how the statement of principles focuses the attention of both regulatory authorities and the reporting entities on what it considers to be the main users of financialstatements and current and future investors. It also discusses how there is clearly a limit to the amount of information that can be disclosed in a set of financialstatements, as too much information would overwhelm users, who would not then be able to find the information relevant to them.
From the Paper "According to the Accounting Standards Board, the Statement of Principles contains the philosophy of what the Accounting Standards Board is trying to achieve through the process of issuing accounting standards, and can be used to some extent as the mission statement of the Accounting Standards Board. In the Statement of Principles, several users of financial statements are identified (Accounting Standards Board 1999). These include present and future shareholders, creditors, employees, the Government, and the public at large. With such a diverse set of users for a company?'s financial statements, it would be very difficult for a set of accounts to successfully satisfy the informational needs of all users fully. This is why the Statement of Principles focused the attention of, both regulatory authorities and the reporting entities, on what it considers to be the main users of financial statements, current and future investors."
Abstract This paper describes the balance sheet, the income statement and the statement of cash flows. It examines three companies, Exxon Mobil, Ford Motor Company and Microsoft, and asks and answers questions about their financial condition and future prospects
From the Paper "A Balance Statement is a financial statement showing assets, liabilities and net worth at a specific time. Under generally accepted accounting principles (GAAP) the following rules apply to the creation of balance sheets: assets are to be defined as items of value both tangible and intangible that a company owns or controls; liabilities are debt sowed by an organization; equity is a residual account; equity equals assets minus liabilities; current assets are assets that will become cash in the ordinary course of business within one year..."
Tags: balance sheet income statement, cash flow statement, GAAP, FASB, SEC, Ford Motor Company, Exxon Mobil, Microsoft, financial highlights
Abstract This paper explains if accounts and financialstatements are not maintained, then a check on the company's profit and loss or simple money expenditures cannot be analyzed. The author points out that, even though a check on an organization's financialstatement is kept by the accounts department, it is important that the managers understand and keep a check on these reports. The paper relates that members of a health care organization can make use of the guidelines put forward by the AICPA to evaluate the financialstatements.
From the Paper "Healthcare organizations deal with a huge mass of people every day. The cash flow statements, the profit and loss account and the balance sheet unveil the potency and feebleness of such organizations. Budgeting can be easily accomplished with the help of financial statements. Budgeting allows healthcare organizations to plan and utilize people's resources, productive aptitude and finance to the fullest."
Abstract This paper explains that the four basic financialstatements are the balance sheet, the income statement, the cash flow statement, and the statement of stockholders' equity. This paper refers to each, in part, and then emphasizes the interrelations between them.
From the Paper "Resuming what I have argued for previously, there are two major arguments that demonstrate the interrelationship between the four basic financial statements. First of all, many of the values that are reflected in one statement generally find themselves in another. Even more so, there is a flow of information from one financial statement to another. As we have seen in the examples above, data from the cash flow statement is recorded on the statement of stockholders' equity or on the balance sheet."
Abstract This paper is an analysis of the Boston Beer Company and shows how by examination of its financialstatement that the company has been able to sustain costs instead of increasing profit. This enables it to raise the profit margins otherwise not possible.
From the Paper "The company maintains a 10 percent operating margins, 4 to 5 percent growth margin and 14 percent on return on capital. It also mandates half of the capital be cash. The company holds a strong stand among industry leaders but there are some pitfalls to its operation. The year 2001 proved a mixture of growth and decline for Boston Beer. Readers must note the industry has become stagnant over the last 2 years [Crouch, 2001]. The valuation of the growth rate has decreased each year. Boston Beer too has decreased in profit rate due to the decline in demand. The plus points that could be awarded to Boston Beer are its brand Samuel Adams and distribution network. For this reason the company is able to sustain its operations for quite a long time with constant injection of investment. However, investment is limited for outsiders because the company members hold most of the stock. For example Koch holds about 4.1 million B shares in the company. Outsiders like Miller Beer have tried to buy out the company through agency stock but have been unsuccessful in its attempt [Marcial, 1999]. This shows the resistant characteristics of the company against outside aggressive competitors."
Abstract CVS is a retail corporation that sells prescription drugs and general merchandise products. This paper presents an overview of the company, including its corporate structure and history. The paper then discusses CVS's strategic goals and objectives, including its impressive community involvement plan. Finally, the paper concludes with overall highlights of the company's operations before providing financialstatements for both CVS and its prime competitor, Walgreen's.
From the Paper "CVS has also improved its company strength from all areas of the business. Most notable is the operating income increased from $700 million in 2001 to $1.2 billion in 2002, return on equity increased from nine percent in 2001 to 13 percent in 2002, and return on assets increased from five percent in 2001 to almost eight percent in 2002. This reflects the strong growth from the company, improving their inventory controls, expanding into new markets, opening new stores in existing market areas and marketing to the baby boomers, which is the largest user group in the U.S."
Abstract This paper compares the financialstatements of Lockheed Martin and Raytheon corporations. It maintains that although the two companies had similar transactions and accounts in their equity activities, there are major differences. The author expands on the differences.
From the Paper "Lockheed Martin and Raytheon had very similar transactions and accounts in their equity activities. Raytheon's major difference lay in the adjustment for exchange rate changes and the effects on some asset valuations to which Lockheed Martin is not materially ..."
Tags: Lockheed Martin, Raytheon, financialstatements equity lease analysis debt ratio
Abstract This paper analyzes the effect the new risk assessment standards (SAS 104-111) will have on upcoming audits. The paper explains that the standards were put in place by the AICPA Auditing board to enhance audit quality and are to take place for all audits for a period that begins after December 15, 2006. The paper also points out that these standards will affect the way audits are conducted and will place a larger focus on areas considered riskiest and most susceptible to financialstatement misstatement. The paper then evaluates why these changes were made, what these changes are, the impact these changes will have on audit firms, audit clients, and all the way audits will change including fees, scheduling and test works. In conclusion, the paper establishes that these standards have a large impact on how audits are conducted and how these standards will try to make audits more efficient and financial misstatements less common.
Table of Contents:
Introduction
Literature Review
Why What and How of SAS 104-111
How to Manage Effects of New Standards
Discussion
Final Comments
From the Paper "The fall season has often been the slow part of the year for auditors and audit clients with financial statements and tax returns out of the way, but this year has been different mainly due to the implementation of the Risk Assessment Standards SAS 104-111. The main change due to these standards is that companies no longer have to simply gain an understanding of internal controls of significant transaction classes, but now have to evaluate internal controls and create custom programs based on these evaluations to test these significant areas. This has resulted in firms calling clients and telling them that their fees may increase by 30 percent compared to years previous. This has also resulted in more preliminary work on audits being done during the planning phase of the audit. The way audits are completed will likely never be the same because of these standards."
Abstract This paper discusses the view that it is impossible to satisfy the needs of different users with a single set of published accounts. The paper contends that without standards, users of financialstatements would need to learn the accounting rules of each company and comparisons between companies would be difficult.
From the Paper "The Accounting Standards Board was working for some time to produce a definite Statement of Principles for financial reporting. The statement of Principles is a description of the fundamental approach that the ABS believes, should, in principle, underpin the financial statements of profit orientated entities. The Statement is intended to be a comprehensive and reasonably detailed description of that approach, and the approach itself is intended to be internally consistent, up to date and in line with the approached adopted elsewhere in the world. (ABS 1999)"
