13 Jan A member of the board

Module 1 discussion

What year did the FASB take on the responsibility of developing generally accepted accounting principles (GAAP)? Which body accepted the primary responsibility for the development of GAAP prior to the FASB? Do you believe the FASB should continue to be the organization primarily responsible for the development of GAAP? Why or why not?

Module 2 discussion

The balance sheet, also known as the statement of position, shows a company’s financial position at a point in time. Included on the balance sheet are various assets that are reported at an estimated value. Discuss the importance of the balance sheet to stakeholders, including, but not limited to, investors, creditors, and governmental entities. With the core value of integrity in mind, explain why it is important that management ensure the reliability of the estimates used by accountants and the information provided on the balance sheet.

Module 3 discussion

An income statement is a summary of revenues and expenses and gains and losses, ending with net income for a specific period of time. Indicate the two traditional formats for presenting the income statement. Which of these formats is preferable for analysis? Why?

Module 4 discussion

Ratio analysis is quantitative analysis of information contained in a company’s financial statements. Common-size analysis converts each line of financial statement data to an easily comparable amount measured as a percent. Both ratio analysis and common size analysis are important tools used to analyze the financial results of corporations. Explain the importance of both types of analysis. In your explanation, it is imperative you provide examples of ratios with their measurement. Do you believe ratio analysis is better than common size analysis or vice versa? Why or why not?

Module 5 discussion

Companies carry various types of long-term assets on their books. These may include property, plant and equipment, investments in bonds, investments in stocks, patents, and goodwill, to name a few.

Is it feasible for managers to get a precise measurement of the funds that could be available from long-term assets to pay long-term debts?

Locate the annual report (10K) of a publicly traded company. Discuss the types of long-term assets on the books that could potentially be used to pay off the long-term debts. Is this company in a position to pay off all their long-term debts with their long-term assets?

Module 6 discussion

Profits might be compared with assets, sales, and stockholders’ equity. Why might all three bases be used? Will trends in these ratios always move in the same direction? Why?

Compute the ratios for an actual company. Did the ratios move in the same direction from one year to the next?

Module 7 discussion

A member of the board of directors is puzzled by the fact that the firm has had a very profitable year but does not have enough cash to pay its bills on time. Explain to the director how a firm can be profitable, yet not have enough cash to pay its bills and dividends.

Module 8 discussion

Financial ratios are used extensively to analyze, interpret, and explain the information provided in financial statements.

Why do you believe this is so?

Who are some of the stakeholders interested in financial ratios and analyses?

Calculate 3 or 4 financial ratios of an actual company. Show how you calculated these ratios, describe the meaning of the ratios you selected, and discuss why you chose to calculate these ratios.