...Interpreting Financial Results FIN/571 September 29, 2014 Interpreting Financial Results Business owners and managers need to fully understand financial ratios and how useful of a tool they are to measurement management benchmarking and performance. Financial statements provide the information needed to calculate financial ratios which will consist of liquidity ratios, financial leverage, and profitability. Each ratio will provide a deeper look into the company. Financial leverage ratios will determine the company’s long term solvency. Liquidity ratios will give managers the support to monitor short term financials. Profitability ratios will inform managers how efficient and profitable the company is compared to other businesses in the industry. The sample of financial statements from Dean Foods will give a breakdown of three years’ worth of financial ratios. Current Ratio is a liquidity ratio used by managers and shareholders to the liquidity of the company. To calculate current ratio managers would divide current assets by current liabilities. More liquidity is what manger and shareholders are looking for to determine whether the company has the ability to cover the short term liabilities. In 2010 Dean Foods current ratio is 1.23, in 2011 the current ratio is 0.98, and in 2012 the current ratio is 1.07. Reviewing the numbers provided in 2010 Dean Foods was in the best situation to pay off short term debts and in 2011 Dean Foods was in the worse position out...
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...Interpreting Financial Results FIN 571 January 6,2014 Interpreting Financial Results In the analysis four major categories of ratios are calculated. The major classes of ratios are: liquidity ratios, debt/solvency/leverage ratio, activity/efficiency ratio and profitability ratio. The liquidity position of the company was not bad in any of the two years, but in 2010 the per unit current asset available for per unit current liability had decreased. The company’s cash is hand was very high in 2010. Which enhanced the company’s cash position ratio in 2010. Among the ratios calculated, profitability ratios are the simplest.Little financial knowledge is necessary for understanding the profitability ratios.As the profitability ratio; gross margin, operating margin, net margin, EPS, ROA and ROE are calculated. Only the gross margin had increased in 2010 from 2009. The other probability ratios are highly dissatisfactory, especially the ROE. Turning the focus into the activity/solvency ratio also gave a similar picture as was captured from the profitability ratio. There was an increase in the average collection period either due to lose administration of the management or the company became liberal and loosed the credit policy. The efficiency level with which sales were generated in 2009 with the assets of the company fell abruptly in 2010. This again indicated the looseness of administration in using the assets of the company efficiently. From this, we can infer that the...
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...Interpreting Financial Results FIN/571 January 25, 2016 Gurpreet Atwal Interpreting Financial Results This paper will interpret the financial statements from the past three years for Ascena Retail Group Inc (NASDAQ: ASNA). The paper will highlight four financial ratios including: the current ratio, the debt-to-equity ratio, the quick ratio, and the return on equity ratio. The financial statements that will be reviewed are from 2011 to 2014. Each ratio will be compared to the industry benchmarks to see where the company stands within the market. Current Ratio The current ratio will help us understand ASNA’s liquidity, meaning how quickly the company can turn its assets into cash in order to pay off its short-term obligations. The current ratio is calculated by taking the current assets and dividing it by the current liabilities. If the ratio is above 1 then the company has higher capabilities to pay off its short term obligations. As seen in figure 2 below, ASNA has posted a current ratio above 1 from 2011 to 2014, which means the company is in a healthy financial state. ASNA’s current ratio decreased from 2011 to 2013 but it saw an increase in 2014, which is a positive sign for investors (Parrino, Kidwell, & Bates, 2012). Debt-to-Equity Ratio The debt-to-equity ratio is used to determine how much debt a company is using to finance its assets compared to its value in shareholders’ equity. Investors want to know how much of a company’s assets are financed through...
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...Interpreting Financial Results Kashif Bhaie FIN 571 02/04/16 Christopher Nola Interpreting Financial Results The financial statements for American Airlines Abstract In week 3, we are going to discuss about the interpreting financial results, according to the assigned industry. We are discussing about the U.S Airways which is merged and now is known for American Airlines Introduction Interpreting Financial Results Business owners and managers need to fully understand financial ratios and how useful of a tool they are to measurement management benchmarking and performance. Financial statements provide the information needed to calculate financial ratios which will consist of liquidity ratios, financial leverage, and profitability. Each ratio will provide a deeper look into the company. Financial leverage ratios will determine the company’s long term solvency. Liquidity ratios will give managers the support to monitor short term financials. Profitability ratios will inform managers how efficient and profitable the company is compared to previous years, well here we have the example of American Airlines. American Airlines is one of the world’s leading airlines, with the largest fleet size, revenue, total profit and second largest number of destinations served to millions of customers every day. American Airlines has recently merged with U.S Airways to dominate most of the airline market. It was founded in 1932...
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...ACCOUNTING IN CONTEXT POTTER I LIBBY I LIBBY I SHORT ACCOUNTING IN CONTEXT BRADLEY N. POTTER University of Melbourne ROBERT LIBBY Cornell University PATRICIA A. LIBBY Ithaca college DANIEL G. SHORT Texas Christian University Boston Burr Ridge, IL Dubuque, IA Madison, WI New York San Francisco St. Louis Bangkok Bogotá Caracas Kuala Lumpur Lisbon London Madrid Mexico City Milan Montreal New Delhi Santiago Seoul Singapore Sydney Taipei Toronto Copyright © 2009 McGraw Hill Australia Pty Limited Additional owners of copyright are acknowledged in page credits. Every effort has been made to trace and acknowledge copyrighted material. The authors and publishers tender their apologies should any infringement have occurred. Reproduction and communication for educational purposes The Australian Copyright Act 1968 (the Act) allows a maximum of one chapter or 10% of the pages of this work, whichever is the greater, to be reproduced and/or communicated by any educational institution for its educational purposes provided that the institution (or the body that administers it) has sent a Statutory Educational notice to Copyright Agency Limited (CAL) and been granted a licence. For details of statutory educational and other copyright licences contact: Copyright Agency Limited, Level 15, 233 Castlereagh Street, Sydney NSW 2000. Telephone: (02) 9394 7600. Website: www.copyright.com.au Reproduction and communication for other purposes Apart from any fair dealing for the...
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...manipulate financial data for organizations and individuals. Accounting is instrumental within organizations as a means of determining financial stability. Accountants are responsible for determining an organization’s overall wealth, profitability, and liquidity. Without accounting, organizations would have no basis or foundation upon which daily and long-term decisions could be made. The budgets for marketing activities, profit reinvestment, research and development, and company growth all stem from the work of accountants. Accounting is one of the oldest and most respected professions in the world, and accountants can be found in every industry from entertainment to medicine. The four phases of accounting are as follows: Recording Recording is the first phase of accounting in which all monetary information is recorded in order to make a record that can be used for various needs. Accounting records are used for taxes, budgeting, reporting and business plans. Without recording the monetary transactions it will be hard to determine where a business or person has spent their money. Accounting is used in personal and business situations. During the recording phase, transactions have to be classified into categories. This is for tax purposes. In taxation there are different categories that can provide savings. • The first phase of accounting is recording which can also be called bookkeeping. During this phase, any financial transactions that have taken place over the financial period...
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...NATIONAL ECONOMICS UNIVERSITY BTEC HND IN BUSINESS Assignment Front Sheet | Qualification | Unit Code / Unit number and title | Pearson BTEC Level 5 HND Diploma in Business (QCF) | F/601/0864 QCF level: 4Unit 10 Financial Accounting and Reporting | Student name NEU Student Number / BTEC Registration Number | | | | Assessor name(s) | Noel Farquharson | Le Quang Dung | Date issued | Submission deadline (for both hard copy and Turnitin) | May 7th 2015 | May 22nd 2015 | | | Assignment title | Interpreting financial statement | Student to indicate clearly on the Evidence (Page no) their answers against the following assessment criteria that can be found. | Learning Outcome | Learning outcome | Assessment Criteria | In this assessment you will have the opportunity to present evidence that shows you are able to: | Task no. | Evidence(Page no) | LO4 | Be able to interpret financial statements | 4.1 | Calculate accounting ratios to assess the performance and position of a business | 1&2 | | | | 4.2 | Prepare a report incorporating and interpreting accounting ratios, including suitable comparisons. | 3 | | Student declaration | I certify that the work submitted for this assignment is my own. I have clearly referenced any sources used in the work. I understand that false declaration is a form of malpractice.Student signature: ...
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...Interpreting Financial Results Lisa Edwin FIN/571 March 9, 2015 Arnold Harvey Interpreting Financial Results Businesses in the United States creates financial documents in order to explore how each part of the company is doing and in return make changes to any department that’s not doing well financially. For instance if accounts payable is high compared to previous years then it will determine that the company isn’t paying their debts. The comparison shows the failure and the success of the company. It also helps with improvements as well. Best Buy is one the world’s largest company in home improvement. Best Buy is heavily traded on the stock market along with its competitors such as Amazon. The question is has Best Buy maintained financial throughout the years? Let’s take a look at the various ratios and compare the last three years. A ratio is the method of finding the value of a company by comparing the book value of a firm to its market value (Investopedia.com, 2014). Market Value Ratios tells the equity of the business. The greater the ratio the greater the capital (Investopedia.com, 2014). ROE = Net Income + Net Sales + Total Assets Net Sales Total Assets Total Equity 2012 1,277M + 49,747M + 17,849M 0.03 + 2.79 + 2.45 = 5.27% 49,747M + 17,849M + 7,292M 2013 (1,231M) +50,705M + 16,005M 0.02 + 3.17 + 3.67 = 6.86% 50,705M + 16,005M + 4,366M 2014 (441M) + 39,827M + 16,787M .011 + 2.37 + 4.52 = 6.90% ...
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...Although the FASB Disclosure Framework provides various advantages, there may be other relevant challenges placed on the financial reporting preparers. As stated in proposed ASUs on Topics 235 and 740, reporting entities need not disclose immaterial item. This adjustment to omit immaterial disclosure may result in a lower entity’s total reporting cost and it is beneficial to the public to see those relevant data. Additional costs, however, may also incur during the information materiality assessment process. That is, a reporting entity should consider and examine both qualitative and quantitative information when deciding information materiality (FASB 2015 and FASB 2016). Therefore, this assessment cost is unavoidable when identifying whether...
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...Interpreting Financial Results Cesar L. Lebron Rodriguez University of Phoenix FIN/571 3/11/2015 Prof. Eric Ramos Interpreting Financial Report “The purpose of this review is to analyze the financial results of a multinational corporation. The analysis compared financial statements for the past three years (2014 thru 2011). The multinational corporation selected was Haemonetics Corporation. Haemonetics Corporation is a global provider of blood and plasma supplies and services. The company was founded in Braintree, Massachusetts by Dr. Jack Latham in the 1970s. Today, the company has expanded and has offices located in 16 countries.” “For company financial statement analysis , Google Finance website was used to gather 2011thru 2014 financial data. The financial metrics evaluated were the following: Liquidity Ratio, Capital Structure Ratio, Asset Management Efficiency Ratio, Profitability Ratios and Market Value Ratio. Not all financial ratios was calculated or considered. At least one (1) ratio was used within each financial metrics to understand and compared Haemonetic Corporation financial performance.” Table 1, showed the results per different financial ratios Liquidity Ratio “Current ratio is the comparison of organizations current assets to its current liabilities. The current ratio indicated...
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...Interpreting Financial Results FIN/571 – Foundations of Corporate finance February 4, 2016 Abstract This summary examines Marathon Oil Corporation’s financial statements from the past three years. Financial ratios such as liquidity ratios, leverage ratios, and solvency ratios are discussed and interpreted against the company’s historical data and compared to industry benchmarks. The financial ratios will be used to determine the company’s current financial position how they rank compared to other industry companies. Interpreting Financial Results A financial ratio is an effective instrument that is used in conducting company analysis. These ratios are also useful in important business decision making (Hoskin, Fizzell & Cherry, 2014). There are a number of financial ratios that can be used to conduct analysis. The aspect of the financial comparisons that are under question, determines which financial ratios are best to use. Marathon Oil Corporation is an independent international company and was originally called Ohio Oil Corporation. The organization was originally established in 1887 (Marathon Oil, 2015). As of today, Marathon Oil continues to pull in profits despite the tremendous drop in oil prices. Marathon Oil functions as an energy company and operates in three segments. The company supplies products and services to both large and small organizations. Marathon Oil’s financial data, for years 2014, 2013, and 2012 shown below, provides a clear...
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...Company and Others like cooperative, non-profit making etc. * Such organizations need to take different decisions for their business activities. * Financial information is needed for decision making purpose. * Book keeping and Accounting will provide such information. * Meaning of Financial Accounting * Process of identifying, measuring, classifying, recording, summarizing and interpretation of the transactions of a business in terms of money to ascertain the result and financial position of business activities of particular period. * Accounting is the art of recording, classifying and summarizing, in a significant manner and in terms of money, transactions and events which are in the part at least, of a financial character and interpreting the results there of.- AICPA * Its features are- * Financial language * Financial information * Systematic process * Functions * Information system * The Purposes of Financial Accounting The objectives of accounting are- * To maintain records- * To generate accurate and authentic information, all the financial activities needs to be remembered which will not be possible without keeping records. As accounting helps to memorize all the transactions with records, it is the objective of accounting. * To ascertain operating results- * Accounting ascertains whether the business has earned a profit or suffered a loss by preparing profit and loss statements,...
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...Variance Analysis A manager of a variable hospital department has many responsibilities. The manager is accountable for budgeting and to protect profits. The financial manager is responsible for guarding overspending and generating profits. They are active in the budgeting process throughout the fiscal year. The budget department manager communicates with other managers, and accounting departments concerning budget issues, financing, and concerns in the organizations departments. Sometimes situations occur whereas payroll salaries are high and supplies are lower than planned and budgeted. The budget manager is responsible for providing feedback about finances, revenue, and any potential variances in the budgeted costs. This essay will be based on a scenario of salaries that were higher and supplies lower than initially budgeted. This paper will explore variances in the scenario mentioned earlier, and explain the relationship between variance reporting, interpreting variance reporting results, and the results of performance within a health care organization. The hospital variable department has experience a case in which employee salaries are higher than budgeted, while the supplies are lower than initially budgeted. This is the result of an epidemic of asthma patients who were admitted to the hospital over the last three months. The hospital approved overtime to assist in the growing number of patients and to accommodate their needs. In the process of caring for patients more...
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...simultaneously or serially, depending on the size of your organization and the complexity of your process improvement effort. Process Improvement Champions, Sponsors, and Groups Process improvement efforts generally require the following individuals and groups: PI Sponsor—The person from the organization responsible for overseeing the entire PI effort. This person generally has the power to allocate funds and personnel. This person is usually at the directorate level or above. PI Champion—This is the public relations person for the PI effort. This personmay or may not also serve as the EPG Lead. This person markets the idea, approach, and results of PI. Engineering Process Group (EPG) Lead—This person leads the group thatreviews processes. This person assigns tasks to the EPG members, monitors their efforts, and plans the daily duties of the EPG. Interpreting the CMMI. A process Improvement Approach. Second Edition. Margaret K.Kulpa, Kent A.Johnson Página 1 EPG Members—these individuals serve on the EPG as committee members. They are responsible for ensuring that process improvement documentation is written and followed. They are also responsible for generating metrics totrack the process improvement process. They lead the PATs. Process Action Teams (PATs)—These teams generate the process improvement documentation—policies, processes, procedures, charters, and Action Plans. Transition Partner—Usually one or two individuals who are outside consultants brought in to help set up, plan...
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...Interpreting Financial Results: Walmart vs. Target FIN/571 July 27, 2014 John Kushner Abstract Walmart and Target both are discount retail one stop monster shops, but they each cater to different customers. Walmart, which according to CBS News Money Watch in a November 2012 episode says its customers' average household income ranges from $30,000 to $60,000, hammers its low-price message and focuses on stocking basics like tee shirts and underwear along with household goods. But Target, whose customers have a median household income of $64,000 a year, is known for carrying discounted designer clothes and home decor under the same roof as detergent and dishwashing liquid. Of the two discounters, I prefer Target, I personally name this, my one hundred dollar store. No matter the trip, the minimum I spend per visit is $100 dollars. The purpose of this paper is to perform a horizontal analysis and review Walmart’s financial statements from the past three years and then interpret those results against company historical data as well as industry benchmarks as compared to its biggest competitor, Target. This paper will be interpreting financial results: Walmart vs. Target over the last three (3) years looking at Balance Sheet, Cash Flow and Income Statements. Interpreting Financial Results: Walmart vs. Target For the first part of this assignment and review of Walmart’s finances, I will highlight the...
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