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Acc 290 - Week 5 Essay

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Financial Reporting Problem - Part II

This week’s essay is a continuation of last week’s topic:   Financial Reporting of Wal-Mart Corporation.   The topics covered will analyze the information contained in Wal-Mart’s balance sheet and income statement and discuss Wal-Mart’s assets listed under the company’s current assets list and whether or not they them in the proper order.   Also covered is how these assets get classified.   Breaking down these documents into the cash equivalents, the company’s total current liabilities at the end of its most recent annual reporting period compared to their total current liabilities at the end of the previous annual reporting period.   By placing further consideration on the information within these documents, we can show how to make good use of this information and how important it is to potential creditors, current investors, and prospective employees.

Financial Reporting Problem - Part II
The assets listed in Wal-Mart’s balance sheet show four main categories listed in the proper order of liquidity.   Therefore, Wal-Mart listed their assets correctly, in the following order:   Current assets, Property and equipment, Property under capital lease, and last, Goodwill and other.   The individual assets listed within the current assets, also in order of liquidity; Cash and cash equivalents, Receivables, Inventories, Prepaid expenses, and Current assets of discontinued operations.   The liquidity order is important to people like potential investors, current lenders, and present management.   Investors use the information to figure out if the company can change and adapt to the market quickly if needed.   When the company is applying for a loan or line of credit the lender can use the assets as a way of deciding if the company could repay.   A lender knows that increased liquid assets can mean an increased chance of repayment.   Assets tied up may take a while longer to sell and are less...

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