2. I utilized an “Acid Test Ratio” which shows us whether the entity could pay all its current liabilities if they became due now or sooner than expected. In 2011, the acid test ratio was 0.64. By 2012, it decreased to 0.43. Even though the acid-test ratio is less than 1 which rates in the lower third quartile in the industry of 1.6, 0.9 to 0.6, it indicates a concern with repaying current liabilities.
I will recommend other alternatives to the PCAOB. Lastly, prepare a sample timeline for PCAOB reporting. On August 3, 2010 the Public Company Accounting Oversight Board (“PCAOB”) proposed a new standard designed to strengthen requirements for audit confirmation; that is direct auditor communication with third parties about particular items affecting the audit client’s financial statements. Recognizing that audit evidence from third parties often is more reliable than evidence generated internally or provided by a client, the PCAOB proposed the new standard to reduce the risk of material misstatement due to fraud or error and resulting in improper revenue recognition. Subject to public comment and Securities and Exchange Commission approval, the new standard would replace existing confirmation requirements for audits for fiscal years ending on or after Dec. 15, 2011.
Financial ratios have more impact when compared over several years to help identify trends. To illustrate the use of financial ratios we will compare the 2007 financial ratios of Tootsie Roll Industries and Hershey Company. These companies are engaged in the manufacturing and sale of confectionery products. The performance ratios will be based on liquidity, solvency and profitability. These ratios will be calculated from the income statement, balance sheet and statement of cash flows Liquidity Liquidity Ratios measure a company’s ability to meet its short-term debt obligations without disrupting normal operation.
Regarding operating gains and losses, in 2005 Tiffany realized gains of 33.8 million versus 150.7 million in losses in 2004. However, more importantly, Tiffany & Co. decreased inventories in fiscal 2005 from 175.4 million to 43.6 million. This significant reduction in inventory expense within its cash flow operations aided in Tiffany’s substantial increase in cash reserves for fiscal 2005. Increased Inventories and Operating Losses in 2006 In comparison, Tiffany’s net cash reserves in 2006 decreased to 176.5 million from 393.6 in the prior year. The company’s net cash from operations also decreased from 262.69 million to 233.58 million in 2005, a difference of 29.1 million.
In case of Ryanair it could see that it is usually more than 21 days from 2008 to 2010 which is approximately 3 weeks. In 2009 there was quite difference when payment of obligation was 17 days. The production phase According to net property, plant and equipment turnover the sales and their value generated by this assets was highest in 2009 where 0.81 EUR was generated by each 1 EUR of investment in property, plant and equipment. The demand and collection phase Trade-receivable days provide us with information about receiving of money from customers. In this case it is from 4.6 days in 2008 to 5.41 days in 2010.
It is evident that Target Corporation was capable of meeting its current liabilities since the current assets exceeded the current liabilities. The financial crisis causes the increase of the working capital between 2004 and 2005 but a substantial decline of the same between 2005 and 2006. Current ratio 2002 – 2004: Current ratio = Current assets/Current liabilities 2006 Current ratio = $14,405./$9,508. =1.52:1 2005 Current ratio = $13,922./$8,220 =1.69:1 2004 Current ratio = $12,952./$8,314. =1.56:1 Just like the working capital Target Corporation current ratio slightly increased between 2004 and 2005 reaching 1.69:1 but declined between 2005 and 2006 to stand at 1.52:1.
Accounting 493 Case Study Memorandum To: Professor Siyi Li From: Date: September 4, 2013 Subject: Analysis of the transition from GAAP to IFRS in the U.S. This memo’s purpose is to determine the costs and benefits of the transition from Generally Accepted Accounting Principles (GAAP) to International Financial Reporting Standards (IFRS) in the United States. This memo targets the costs and benefits of the transition in three disciplines of accounting: Investors, U.S. public companies, and Auditors. The transition could benefit investors since they would have less trouble comparing companies based in different countries. “Adopting IFRS would influence the growth of banks' stocks as it would lead to reduction in the barriers to trade and flow of capital due to greater transparency from more disclosures (Chima, 2012).” This suggests that banks converting to IFRS will be able to expand the pool of potential investors since the investors will be better able to understand the financial statements of banks outside their home countries, and also, this will lead to easier comparability of U.S. banks with foreign banks.
POLITECNICO DI MILANO Master of Science in Management, Economics and Industrial Engineering Management Control Systems Prof. Paolo Maccarrone Second Assignment: Superior Manufacturing Company Analysis Group Ferrario Andrea 709407 Rognoni Susanna 720851 Taiana Marco 672497 Trifonov Angel 720619 A.Y. 2007/2008 Contents Q1.Do you agree with Water’s decision to keep product 103? 3 Analysis of the P&L statement of 31 December 2004 3 Sensitivity analysis 5 Strategic scenarios 9 Q2. Should Superior lower as of January 1, 2006 its price of product 101? To what price?
As these technical advances may be an asset to an organization, it is also a liability to an organization's accountant. There is no implication that the impacts of technology are positive nor negative. Technology is only changes that assist with improving the functioning of accounting practices and the demand for the conformity of those changes. Computers and accounting software have changed the accounting industry. As Microsoft Excel provided an electronic spreadsheet for an accountant, the work became less tedious for there was no longer a need for calculators, manual ledgers, and pencils.
As a result of the increase of cost of goods sold, income before taxes declines and Walgreen’s pays less income tax than if they were to use the first-in, first-out method. Traditionally, companies using LIFO are valued more highly than those who use FIFO during periods of rising prices. Walgreen’s also offers analysts the LIFO Reserve, which is the difference between what the inventory is using LIFO as opposed to if FIFO was used. As of 2007 and 2008, Walgreen’s inventories would have been greater by $1,067 million $969 million respectively using a FIFO accounting method. Walgreen’s primary competitor, CVS, uses a combination of three inventory methods for each of their different business segments.