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Company Has Obtained the Following Data for the First Year of Operations

In: Business and Management

Submitted By tinanana
Words 637
Pages 3
Refer to P&G's financial statements and the accompanying notes to answer the following questions. (a) What alternative formats could P&G have adopted for its balance sheet? Which format did it adopt? (b) Identify the various techniques of disclosure P&G might have used to disclose additional pertinent financial information. Which technique does it use in its financials? (c) In what classifications are P&G's investments reported? What valuation basis does P&G use to report its investments? How much working capital did P&G have on June 30, 2007? On June 30, 2006? (d) What were P&G's cash flows from its operating, investing, and financing activities for 2007? What were its trends in net cash provided by operating activities over the period 2005 to 2007? Explain why the change in accounts payable and in accrued and other liabilities is added to net income to arrive at net cash provided by operating activities. (e) Compute P&G's (1) current cash debt coverage ratio, (2) cash debt coverage ratio, and (3) free cash flow for 2007. What do these ratios indicate about P&G's financial condition?

(a) P&G could use the account form or report form. P&G uses the account form.

(b) The techniques of disclosing pertinent information include (1) parenthetical explanations, (2) notes, (3) cross-reference and contra items, and (4) supporting schedules. P&G uses parenthetical explanations and notes (see notes to financial statements section) and supporting schedules.

(c) Investments are reported on P&G’s balance sheet as current assets. Note 1 (Significant Accounting Policies) states that Investments are readily available marketable debt and equity securities. These securities are reported at fair value. Unrealized gains and losses on trading securities are recognized in income. Unrealized gains and losses relating to investments classified as available-for-sale are recorded as...

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