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Internal and External Sources of Funds The business financing can be defined as the obtaining of resources or means of payment, which are used to the acquisition of capital assets that the company needs to achieve its objectives.

 

Internal and External Sources of Funds

The business financing can be defined as the obtaining of resources or means of payment, which are used to the acquisition of capital assets that the company needs to achieve its objectives. Depending on their origin, funding or financial sources are grouped into internal and external funds. According to our text book, “On average, during the last 20 years corporations raised about 40 percent of their funds internally and 60 percent of their funds externally through the sale of new securities.” (Blocks & Danielsen, 2011).

Internal Source of Funds:  These funds are generated by the company in the course of the business. For example:

  • Contributions of the shareholders: It refers to the contributions of the members, at the time of legally establish society and through further contributions.
  • Reinvested Earnings:  This source is very common, especially in new firms, and in which the partners or shareholders decide that there will not be dividends in the early years, but these are invested in the organization.
  • Depreciation and Amortization:  These are transaction in which, and over time, companies recover the cost of investment.
  • Increments of Accrued Liabilities:  These are generated entirely in the company. Examples are the taxes that must be recognized monthly, regardless of payments, or pensions.
  • Sale of Assets:  These are the sales of the land, buildings, or disused machinery to cover financial needs.  
  • Reserves:  Reserves are an extension of the permanent capital of the company, it has generic and even specific objectives against uncertainty or potential risks, but not yet known. Reserves ensure the expansion, especially when results in great difficulty for external financing of small and medium businesses with little access to capital markets, or in other cases, where the investment risk is too great to entrust to finance others, generating a high cost. (Small business ideas).

External sources of funds:  These funds are outside the company, those funds provided by third parties such as:

  • Suppliers:  This is the most common source. This is generated by the acquisition or purchase of goods and services that the company uses for its operations in the short and long term. The credit amount is based on the demand for the good or service of the market. This funding source is necessary to analyze it carefully to determine the actual costs taking in consideration discounts for early payment, time of payment and conditions as well as the investigation of sales policies from different providers that exist in the market.
  • Factoring:  Consists of yielding to an intermediary (factor) the collection rights of the company’s customers, at a given price, taking care of their collection and taking a risk. The advantages are that it provides liquidity to the company and save it administrative recovery costs.
  • Bank Loans:  These are the major credit operation, which are offered by banks, and according to their qualifications are the short and long term.
  • Commercial Discounts:  The provider may ask us to accept bills of exchange, and discount these effects in a financial entity. In this way the provider receives an amount from the bank (which is less) and we pay when the amount specified in the letter to the bank is due. (Small business ideas).

The assistant professors of accounting at the school of business and management at Hong Kong University Chul W. Park, believes that “because of transactions costs and investor/manager information asymmetries, internally generated funds should be less costly than funds rose by issuing shares. This suggests that as firms use more internal funds relative to external equity, their costs of equity capital will fall and the rate the market uses to discount unexpected earnings of such firms will be lower.” (Park, 2000). I personally agree with this statement, however, most firms rely in external funds due the lack of internal funds, and in order to make profit, the internal funds depend on the external.

 

 

 

 

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Recession Effect

Recession Effect on Travel Agency

Introduction

The global financial crisis which starts at the end of 2007 has been a great event in the history of world economy. Rare is a crisis of such scale. It’s easily the worst financial crisis the world has ever seen since the Great Depression in 1930’s.

Under the pressure of the current global financial crisis, the worldwide tourism industry keeps a downward trend and the tourism economy makes a sharp decline. Tourism is one the industries that’s a fundamental component of the global economy and there is no doubt that it has been enormously affected by the outbreak of global economic crisis. In addition, tourism is vital for all countries, due to the income generated by the consumption of goods and services of tourists as well as for social and cultural benefits.

In this paper, we analyze the impact on the tourism industry caused by the current global financial crisis which has greatly affected several important industries including travel agencies, airline companies, cruise lines, hotels and the souvenir businesses. Even though, the global economic crisis has affected the tourism industry; it’s understood that tourism will not stop but will flow in a different way. Most of the travel and tourism involves unrestricted expenses so during economic breakdown people would want to secure themselves thus covering essentials for living. Even then, tourism will not die out, there will be change in the traveling behavior of the people, and therefore the tourism and hospitality businesses have to adopt a different strategy to survive in this situation.

 

 

 

 

 

Travel Agencies

The Great depression Vs Global Financial Crisis

During the Great Depression from 1929-1935 most democratic governments moved slowly to correct the problem. In the United States President Franklin D. Roosevelt overcame intense opposition to implement his plan for massive government intervention into the damaged US economy, and 1987 the same thing applied. In the Asian Economic Crisis of 1997 Asian governments moved cautiously to head off a regional economic crisis. The up to date global financial crisis, the whole world is enduring, has also caused abundant financial setbacks to countless businesses that were forced to close or to start economizing and cutting back on operating expenses. The current economical crisis has been the worst Financial Crisis since the Great Depression (Pendery, 2009) surely bringing horrific news to thousands of industries and corporations globally. (Articlesbase , 2009)

The tourism is one the industries that’s a fundamental component of the global economy and there is no doubt that tourism has been enormously affected by the outbreak of global economic crisis. In addition, it is vital for many countries, due to the income generated by the consumption of goods and services of tourists, the taxes levied on businesses in the tourism industry, and the opportunity for employment and economic advancement by working in the industry. Tourism has become an extremely popular, global activity. It is the act of traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes not related to the exercise of an activity remunerated from within the place visited. A more comprehensive definition would be that tourism is a service industry comprising a number of tangible and intangible components. The tangible elements include transportation systems that include air, rail, road, water; hospitality accommodation, foods and beverages, tours, souvenirs; and related services such as banking, insurance and safety & security. The intangible elements include: rest and relaxation, culture, escape, adventure, new and different experiences. There are two main types of tourism, domestic and international. Domestic tourism is also called internal tourism this consists of tourist that stay in their own country but visiting a different city in which they do not live in. International tourism is when people travel globally outside of their region and home country.

Tourism is especially vulnerable to the global financial crisis and instability for a simple reason; most travel and tourism involves discretionary expenses. During tough economic times people conserve their money to cover the essentials of life, food, and shelter in addition to family necessities and companies cut travel budgets. As a consequence, the travel industry has suffered from travelers cuts induced by the global financial crisis itself and caused by the decrease in travel demands. The sudden drop in the scale of tourist reception is a severe blow to travel agencies. A travel agency is a retail business that sells travel related products and services to customers on behalf of suppliers such as airlines, car rentals, cruise lines, hotels, railways, sightseeing tours and package holidays that combine several products. In addition to dealing with ordinary tourists most travel agencies have a separate department devoted to making travel arrangements for business travelers and some travel agencies specialize in commercial and business travel only. The smaller and medium travel agencies round the world which are now found lacking in strength and have less in risk-bearing capacity will operate into a low or even close and go bankruptcy; others had to lay-off some of their staff in order to overcome the crisis. Many of the skilled and experienced travel agents have been forced to move to other industries. Causing the tourism industry loss of professionals in the field and services to its passengers, and eventually down the line will be a major disadvantage. One should expect to see more mistakes which can cause delays in our airport, our ports ect, and more unsatisfied tourists. The unfortunate situation, according to travel agencies operators, has affected the cash flow, man power, and other relevant commercial aspects of the business. Even U.S. nationwide known agencies like Liberty Travel, a New Jersey-based travel agency, dropped sales by nearly 20 percent to 25 percent late last year. To cope with a slowdown in business and vacation travel which are the main cash earners, the firm closed offices in downtown Baltimore, Lutherville, Gaithersburg and Laurel and laid-off 18 travel agents in the area. The cuts were part of a companywide layoff of more than 100 travel agents and closure of 31 offices (Schultz, 2009).

As the recession spreads, Spain joins forces with the global financial crisis, slashing tourism figures around the globe; Spain sees its number of travel agencies minimizing in the hundreds. Over the past months/year, 980 travel agencies have closed around Spain, leaving the total number of travel agencies at 8,174, according to a report by Amadeus (a technology partner for providers, sellers and buyers of travel) which also calculated an accumulated drop in revenues of between 25-30% in the first quarter of 2009. In Catalonia a similar amount of travel agents shut down, 148 closed down, representing a 12.2 per cent reduction in this region (Schellhammer, 2009).Generally, Europe has seen its tourism industry affected more than others, with a ten percent decline, while Asia declined six percent and Africa and South America actually grew, by three and 0.3 per cent, respectively. According to the World Tourism Organization, UNWTO, the number of travel movements fell by a further eight percent between January and April of 2009 alone compared to the same period in the previous year (Buck, 2010). Tourist numbers are continuing to drop almost everywhere in the world.

Below find Table 1 which shows the partly actual, partly forecasted total of domestic and international USA travel in millions of domestic trips or international arrivals. It shows among others that the international arrivals in 2006 only made up for only 2.5 % (51 million / 2,052 million) of total US travel. The report further shows that the combination of rising inflation, increasing unemployment, tightening credit conditions, high levels of consumer debt, declining housing wealth, and stagnant wages are finally taking a toll on domestic USA travel since the 3rd quarter of 2008. Around 25 % of the domestic trips are for business and75 % for leisure purposes (Associates, 2008).

Table 1: Total US Travel 2006-2012 in millions of domestic trips and international arrivals.

 

(Associates, 2008)

Table 2:

The U.S. Department of Commerce recently announced that international visitors spent an estimated $10.3 billion on travel to, and tourism-related activities within, the United States during the month of January—nearly $310 million less (3 percent) than was spent in January 2009. Meanwhile, January 2010 marks the fifteenth consecutive month in which U.S. travel and tourism-related exports were lower when compared to the same period of the previous year. Indeed, this downturn in U.S. travel and tourism exports, beginning in the closing months of 2008, interrupted more than sixty consecutive months of positive growth.

(Office of Travel & Tourism Industries , 2010)

Recommendations for Travel Agency

The tourism industry is still facing a lot of uncertainties for relative far-reaching impacts of the

international financial crisis, which raises new challenges for the sustainable growth of the tourism economy. But there is always sunshine after the storm and the optimistic growth forecasts of tourism associations such as the WTTC, UNWTO and PASTA will almost certainly require some revision but tourism will survive this challenge as it has overcome a wide range of challenges since this extreme 21st century began (Beirman, 2008). The tourism industry will have a rough ride over the months ahead but those who think and act strategically and have to ability to adapt their business model quickly to the new realities will overcome this challenge. Despite the loss of 1,400 agency locations and real challenges to be faced in 2010, travel agents who provide value to suppliers by creating demand for travel and provide valued services to consumers, the future looks good. If I had to guess, it’s likely that 2010 will be identified as the year of recovery. The industry will likely be focused on ways to improve their businesses as consumer confidence returns.

 

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FINANCIAL PLANNING PROBLEMS

 

FINANCIAL PLANNING PROBLEMS

 

 

2. Calculating Balance Sheet Amounts.   Based on the following data compute the total asset, total liabilities, and net worth.

Total Asset = $4,670 + $14, 350 + $93,780 = $112,800

Total Liabilities = $2,670 + $76,230 = $78,900

Net Worth = $112,800 – 78,900 = $33,900

3. Preparing a Personal Balance Sheet. Use the following items to prepare a balance sheet and a cash flow statement. Determine the total assets, total liabilities, net worth, total cash inflows, and total cash outflows.

Total assets =$450 + 1,890 + 7,800 + 2,350 + 1,500 + 3,400 + 860 =  $18,250
Total liabilities = $235 + $2,160 = $2,395
Net worth = $18,250 – $2,395 = $15,855
Total cash inflows = $1,950
Total cash outflows = $650 + 345 + 230 + 180 + 110 + 65 + 80 + 90 + 70 + 130 = $1,950

4. For each of the following situations, compute the missing amount.

a. Assets $45,000; liabilities $11,400; net worth $33,600.

b. Assets $76,500; liabilities 62,800 net worth $13,700.

c. Assets $44,280; liabilities $12,965; net worth $31,315

d. Assets $90,999; liabilities $38,345; net worth $52,654

 

 

 

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When the finance

1. (TCO1)  When the finance director of Signature Cleaners and Tailors establishes a good working relationship with PNC Bank so that the firm is able to get an emergency loan on short notice, the finance director is successfully filling the ____ role. (Points : 2)
figurehead
leader
liaison
negotiator
entrepreneur
2. (TCO 2) For more than a century, Americans moved from rural to metropolitan areas. Then in the 1950s, Americans made a mass exit from the city to the suburbs. Now many of these suburb dwellers are moving back to the rural areas. They are developing micropolitan areas, which offer many of the advantages of the metropolitan areas, but without the population crush, the traffic jams, and the high crime rates. This trend affects the location of many businesses and is part of the ____ dimension in which they operate. (Points : 2)
internal
political-legal
task
sociocultural
economic

 

3. (TCO 2)  Krispy Kreme has a distribution network that allows fresh doughnuts to be transported to convenience stores, supermarkets, and Krispy Kreme outlets before dawn so that consumers can enjoy them that same day. This is an example of a(n) ____ for the Krispy Kreme organization. (Points : 2)
organizational strength
scope extension strategy
defender strategy
distinctive strategy
competitive disadvantage

 

4. (TCO3) A firm is taking a(n) ____ stance when it actively looks for ways to benefit society as well as meeting its obligations and responding to requests. (Points : 2)
reactive
obstructionist
proactive
accommodative
defensive

 

5. (TCO4) Domestic managers who become international managers face several environmental challenges.  Which of the following is NOT one of the environmental challenges that international managers face? (Points : 2)
Technological
Political
Economic
Cultural
Legal

 

6. (TCO4) The growth of multinational corporations has left little room for distinction. Any perceived competitive advantage is quickly copied. However, an area for competitive advantage remains in the level of ____ organizations attract, motivate, and retain. (Points : 2)
human resources
talent
ethnicity
demographics
pluralism

 

7. (TCO5) A(n) ____ for Quaker Oats Company could be to improve returns for its shareholders by 2% annually. (Points : 2)
tactical plan
mission statement
operational goal
operational plan
strategic goal

 

8. (TCO5) GE competes in industries ranging from medical devices to appliances to television networks. GE’s mixed strategy is an example of ____ strategy. (Points : 2)
corporate-level
long-term
business-level
functional
short-term

 

9. (TCO6) Jay wants to start a new business. With which of the following methods of starting a new business will he pay a share of the income from the business in return for the use of such things as trademarks and business formulas? (Points : 2)
Venture capitalism
Franchising
Buying an existing business whose purchase price includes goodwill
Starting a new business with loans from the SBA
Industrial revenue sharing

 

10. (TCO7) Teachers at South Elementary School are allowed to pair up and teach a class twice as large as others. This allows the teachers to specialize in the subjects they most enjoy. This is an example of (Points : 2)
work teams.
feedback.
task significance.
skill variety.
task identity.

 

11. (TCO7) Desiree is reluctant to take a promotion because it involves moving. She knows little about the area she would be living in. According to the text, the most likely reason for such employee resistance to change is (Points : 2)
uncertainty.
threatened self-interests.
different perceptions.
feelings of loss.
facilitation.

 

12. (TCO8) Ana is a police detective in a metropolitan police force. She believes that she is just as good a detective as her male counterparts. Because she is female, many of her counterparts assume that she will type up their reports as well as her own. She has been doing this typing for a while and is increasingly feeling under rewarded for her efforts. In terms of ____, she will more than likely decrease her inputs by refusing to do typing for other detectives. (Points : 2)
the expectancy theory
the hierarchy of needs
Herzberg’s theory
the equity theory
the human relations approach to motivation

 

13. (TCO8) A mid-level manager has power within an organization due to the management position she occupies. This kind of power is known as ____ power. (Points : 2)
referent
reward
coercive
legitimate
expert

 

14. (TCO9) Edward Lewis, CEO of Essence Communications, strolls around the organization and starts spontaneous conversations with employees and others involved with the company. He says it allows him to keep his finger on the pulse of the organization. Lewis engages in (Points : 2)
management by objective.
formal grapevine management.
management by exception.
management by wandering around.
participative management.

 

15. (TCO10) Marion Laboratories runs chemical analyses of materials to be used in the production process before those materials leave the receiving area of the warehouse. What kind of operations control is this? (Points : 2)
Preliminary
Feedback
Concurrent
Screening
Yes-no

 

Short Answer

1. TCO1) Henry Mintzberg identified three broad categories of roles that managers play. Briefly discuss the three broad categories. Give a workplace example of one of the roles contained in each category that a manager would perform. (Points : 10)

 

2. (TCO2) Describe how on-demand movies on cable are a threat of substitute product to Blockbuster. (Points : 10)

 

3. (TCO3)  Discuss how the Sarbanes-Oxley Act promotes ethical leadership within organizations. (Points : 10)

 

4. (TCO4)  An organization that is diverse can gain a competitive advantage over their competitors. Discuss at least three ways diversity can lead to a competitive advantage for an organization. (Points : 10)

 

5. (TCO5)  Discuss short-range plans; include a brief description of the various types of short-range plans. Give a business example of each type of plan; do not use the examples in the text. (Points : 10)

 

6. TCO6)  What are the major funding options for small businesses? Which of these options is most likely to be used by the majority of start-ups? Why? (Points : 10)

 

7. (TCO7)   Briefly discuss the common bases for departmentalization. Give an example of at least two types of departmentalization at your place of work or at a local store. (Points : 10)

 

8. (TCO8)   Describe the two perceptual processes, and explain how they affect behavior in organizations. (Points : 10)

 

9. (TCO9)   As a manager, in what types of situations should you use written communication? Briefly discuss the reasons why written communication would be best in these situations. (Points : 10)

 

10. (TCO10)   Briefly discuss the three types of operations control. Give an example of each type of operations control (do not use the examples from the text). (Points : 10)

 

 

 

Essay part 1

1. (TCO2)   Organizations have both an internal and an external environment. Describe the general environment and give at least one specific example of each dimension, other than the examples given in the text and in the lectures.  (Points : 20)

 

2. (TCO3)   Discuss the notion of social responsibility. Discuss how an organization is impacted when its adopts socially responsible practices. (Points : 20)

 

3. (TCO4)    You have been recently hired as a general manager of a family owned restaurant whose owners have decided to open up a second restaurant; most of the employees at the existing restaurant are members of the extended family. The owners feel that they should have a more diverse group of employees in both restaurants and have asked your opinion as to whether or not they should divide the current employees between the two restaurants or keep all the employees at the existing restaurant and hire a diverse group of employees for the second restaurant. Discuss the advantages and disadvantages of a creating diverse workforce in both restaurants. (Points : 20)

 

4. (TCO5)   Managers must make decisions on a regular basis, and often these decisions are affected by one or more behavioral elements.  Discuss how these behavioral elements (intuition, political forces, risk propensity, ethics, and escalation of commitment) affected a recent decision that you had to make. (Points : 20)

 

 

Essay part 2

1. (TCO5)   You are the internal relations manager for Elan, an Irish biotech firm, when it is acquired by Johnson and Johnson. How will you help the top management team overcome resistance to the new ownership? (Points : 20)

 

2. (TCO8)   Phil W. supervises a group of very competent workers. These employees are involved in a routine task, and the company has written standard operating procedures to cover most of the operation. Phil is trying to decide what leadership style would be most effective in dealing with this group of employees. Discuss the path-goal theory and the substitutes for leadership approach. Which one would you recommend to Phil to use? Why? (Points : 20)

 

3. (TCO9)   You are a department manager at an outlet clothing store. Customer complaints are up significantly compared to the same period last year. You attribute this increase to a lack of cohesiveness among the members of the service staff and low performance norms. Describe a program that could help you overcome both problems and increase the cohesiveness of your service staff. (Points : 20)

 

 

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The chief executive

Our Team

      The chief executive officer for best buy is Mike Mikan. The Best Buy board of directors has appointed G. Mike Mikan to the role of interim Chief Executive Officer of Best Buy Co., Inc. (NYSE: BBY). Mike, who will remain on the board while serving as interim CEO, has been a Best Buy director since April 2008. Mike formerly served as executive vice president and chief financial officer of UnitedHealth Group Incorporated and chief executive officer of Optum, a health care services company and affiliate of UnitedHealth. He has strong financial and operational expertise, as well as public company leadership experience. Mike is a Minneapolis native and holds a B.A. from the University of St. Thomas. He is active in the Twin Cities and serves as a board member of Breck School. (Best Buy)

The Chief Financial Officer for Best Buy is Jim Muehlbauer. He was named Executive Vice President, Finance and Chief Financial Officer in 2008. In 2007, he was appointed Enterprise Chief Financial Officer (interim). From 2006 to 2007, he served as Senior Vice President and Chief Financial Officer — Best Buy U.S., and from 2003 to 2006, as Senior Vice President — Finance. Prior to joining us, Mr. Muehlbauer spent ten years with The Pillsbury Company, a consumer packaged goods company, where he held senior-level finance management positions, including vice president and worldwide controller, vice president of operations, divisional finance director, director of mergers and acquisitions and director of internal audit. A certified public accountant (inactive), Mr. Muehlbauer spent eight years with Coopers & Lybrand LLP (now PricewaterhouseCoopers) including senior manager positions in the firm’s audit and consulting practices. He serves on the board of overseers of the University Of Minnesota Carlson School Of Management. (Best Buy)

Both of these men have more than adequate experience to do the jobs for in the positions that they have been placed in. Not only are their educational backgrounds an asset to their positions but their past experiences play a huge part in how they do their jobs today.

For the first two quarters of fiscal 2012, the quarterly cash dividend was $0.15 per share. As of April 26, 2012, there were 3,100 holders of record of Best Buy’s common stock. Overall, during this fiscal year, the company has seen profits and losses. The company has acquired new services throughout the past few years that has helped influence the progress of the company. Some of these services include the addition of Geek Squad in 2003. Geek Squad provides several additional services to customer such as repair, technical support, and installation services. It is available in all US Best Buy stores. Also they acquired Magnolia Hi-Fi INC. Magnolia is a high end retailer of audio and video products. This allows Best Buy to have access a more upscale customer segment. (Best Buy, 2012)

Here at Best Buy, our mission statements is, “Our formula is simple: we’re a growth company focused on better solving the unmet needs of our customers—and we rely on our employees to solve those puzzles. Thanks for stopping. ”

Business Risk

     We provide a variety of products from movies to televisions and washers to vacuums. We carry most electronics that are available today. We offer the latest in gaming systems, home appliances, and entertainment devices.

We have done amazing in our latest year. The financial performance for this year’s fiscal year is, as follows:

 

 Fiscal First Quarter Financial Summary Three Months Ended
(U.S. dollars in millions, except per share amounts) May 28, 2011 May 29, 2010 Change YOY
Revenue $10,940 $10,787 1%
Gross profit $2,768 $2,793 (1%)
SG&A $2,484 $2,480 0%
Operating income $282 $313 (10%)
Diluted EPS $0.35 $0.36 (3%)
Key Metrics:
Comparable store sales % change(1) (1.7%) 2.8%
Gross profit as % of revenue 25.3% 25.9%
SG&A as % of revenue 22.7% 23.0%
Operating income as % of revenue 2.6%
 

Revenue Three Months ended May 28, 2011

Prior-Year Period  
($millions) Revenue Change YOY Comp. Store Sales Comp. Store Sales  
Domestic $7,859 (0.8%) (2.4%) 1.9%  
International 3,081 7.6% 0.4% 6.3%  
Total $10,940 1.4% (1.7%) 2.8%  
 

Gross Profit Three Months ended May 28, 2011

 
($millions) Gross Profit Change YOY % of Revenue  
Domestic $1,970 (3%) 25.1%  
International 798 6% 25.9%  
Total $2,768 (1%) 25.3%  
Selling, General and Administrative expenses (“SG&A”) Three Months ended May 28, 2011  
($millions) SG&A Change YOY % of Revenue  
Domestic $1,736 (0%) 22.1%  
International 748 1% 24.3%  
Total $2,484 0% 22.7%  

 

BEST BUY CO., INC.
CONSOLIDATED STATEMENTS OF EARNINGS
($ in millions, except per share amounts)
(Unaudited and subject to reclassification)
Three Months Ended Six Months Ended
Aug. 27 Aug. 28 Aug. 27 Aug. 28
2011 2010 2011 2010
Revenue $11,347 $11,339 $22,287 $22,126
Cost of goods sold 8,475 8,421 16,647 16,415
Gross profit 2,872 2,918 5,640 5,711
Gross profit % 25.3% 25.7% 25.3% 25.8%
Selling, general and administrative expenses 2,583 2,507 5,067 4,987
SG&A % 22.8% 22.1% 22.7% 22.5%
Restructuring charges 2 4
Operating income 287 411 569 724
Operating income % 2.5% 3.6% 2.6% 3.3%
Other income (expense):
Investment income and other 6 13 18 25
Interest expense (34) (21) (65) (44)
Earnings before income tax expense and 259 403 522 705
equity in loss of affiliates
Income tax expense 99 146 198 267
Effective tax rate 38.0% 36.1% 37.8% 37.9%
Equity in loss of affiliates (1)
Net earnings including no controlling interests 160 257 323 438
Net loss (earnings) attributable to no controlling interests 17 (3) (10) (29)
Net earnings attributable to Best Buy Co., Inc. $ 177 $ 254 $ 313 $ 409
Earnings per share attributable to Best Buy Co., Inc.
Basic 0.48 0.61 0.82 0.98
Diluted(1) 0.47 0.60 0.81 0.96
Dividends declared per Best Buy Co., Inc. common share 0.15 0.14 0.30 0.28
Weighted average Best Buy Co., Inc. common shares outstanding (in millions)
Basic 371.9 413.5 379.8 416.9
Diluted 381.4 423.6 389.5 427.7
 

 

 

BEST BUY CO., INC.
CONSOLIDATED STATEMENTS OF EARNINGS
($ in millions, except per share amounts)
(Unaudited and subject to reclassification)
Three Months Ended Nine Months Ended
Nov. 26, Nov. 27, Nov. 26, Nov. 27,
2011 2010 2011 2010
Revenue $12,099 $11,890 $34,386 $34,016
Cost of goods sold 9,155 8,907 25,802 25,322
Restructuring charges – cost of goods sold 13 13
Gross profit 2,931 2,983 8,571 8,694
Gross profit % 24.2% 25.1% 24.9% 25.6%
Selling, general and administrative expenses 2,616 2,598 7,683 7,585
SG&A % 21.6% 21.8% 22.3% 22.3%
Restructuring charges 137 141
Operating income 178 385 747 1,109
Operating income % 1.5% 3.2% 2.2% 3.3%
Other income (expense):
Gain on sale of investments 55 55
Investment income and other 8 8 26 33
Interest expense (37) (20) (102) (64)
Earnings before income tax expense and 204 373 726 1,078
equity in loss of affiliates
Income tax expense 72 133 270 400
Effective tax rate 35.5% 35.7% 37.2% 37.1%
Equity in loss of affiliates (1) (2)
Net earnings including no controlling interests 131 240 454 678
Net loss (earnings) attributable to no controlling interests 23 (23) 13 (52)
Net earnings attributable to Best Buy Co., Inc. $ 154 $ 217 $ 467 $ 626
Earnings per share attributable to Best Buy Co., Inc.
Basic $ 0.43 $ 0.55 $ 1.25 $ 1.53
Diluted(1) $ 0.42 $ 0.54 $ 1.23 $ 1.50
Dividends declared per Best Buy Co., Inc. common share $ 0.16 $ 0.15 $ 0.46 $ 0.43
Weighted average Best Buy Co., Inc. common shares outstanding (in millions)
Basic 359.7 397.1 373.1 410.3
Diluted 368.8 407.8 382.4 420.7

 

BEST BUY CO., INC.
CONSOLIDATED STATEMENTS OF EARNINGS
($ in millions, except per share amounts)
(Unaudited and subject to reclassification)
Three Months Ended Twelve Months Ended
Mar. 3, Feb. 26, Mar. 3, Feb. 26,
2012 2011 2012 2011
Revenue $16,630 $16,083 $ 50,705 $49,747
Cost of goods sold 12,554 12,145 38,113 37,197
Restructuring charges – cost of goods sold 19 9 19 9
Gross profit 4,057 3,929 12,573 12,541
Gross profit % 24.4% 24.4% 24.8% 25.2%
Selling, general and administrative expenses 2,765 2,654 10,242 10,029
SG&A % 16.6% 16.5% 20.2% 20.2%
Goodwill impairment 1,207 1,207
Restructuring charges 16 138 39 138
Operating income 69 1,137 1,085 2,374
Operating income % 0.4% 7.1% 2.1% 4.8%
Other income (expense):
Gain on sale of investments 55
Investment income and other 11 17 37 43
Interest expense (32) (23) (134) (86)
Earnings from continuing operations before income tax 48 1,131 1,043 2,331
expense and equity in (loss) earnings of affiliates
Income tax expense 370 341 709 779
Effective tax rate 774.1% 30.1% 68.0% 33.4%
Equity in (loss) earnings of affiliates (2) 2 (4) 2
Net (loss) earnings from continuing operations (324) 792 330 1,554
Loss from discontinued operations, net of tax (108) (104) (308) (188)
Net (loss) earnings including noncontrolling interest (432) 688 22 1,366
Net earnings from continuing operations attributable to

noncontrolling interests

(1,319) (50) (1,387) (127)
Net loss from discontinued operations attributable to

noncontrolling interests

53 13 134 38
Net (loss) earnings attributable to Best Buy Co., Inc. $(1,698) $ 651 $(1,231) $ 1,277
Basic (loss) earnings per share attributable to Best Buy Co., Inc.
Continuing operations $ (4.73) $ 1.88 $ (2.89) $ 3.51
Discontinued operations $ (0.16) $ (0.23) $ (0.47) $ (0.37)
Basic (loss) earnings per share $ (4.89) $ 1.65 $ (3.36) $ 3.14
Diluted (loss) earnings per share attributable to Best Buy Co., Inc.(1)
Continuing operations $ (4.73) $ 1.84 $ (2.89) $ 3.44
Discontinued operations $ (0.16) $(0.22) $ (0.47) $ (0.36)
Diluted (loss) earnings per share $ (4.89) $ 1.62 $ (3.36) $ 3.08
Dividends declared per Best Buy Co., Inc. common share $ 0.16 $ 0.15 $ 0.62 $ 0.58
Weighted average Best Buy Co., Inc. common shares outstanding (in millions)
Basic 347.5 393.3 366.3 406.1
Diluted 347.5 403.4 366.3 416.5

 

(Best Buy, 2010)

 

Over all the company has had its ups and downs and they are planning on their profit to increase through the next fiscal year, which has just begun.

With the wide variety of technical product we offer, we are able to hire and provide jobs for people in more than just one slot in the technology field of work. With the addition of ore products available online, it gives us the opportunity to serve people all around the world. Along with me online sales we will have a need for more technical assistant technicians and customer service representatives from so many different backgrounds. A lot of people feel more comfortable dealing with someone from their “neck of the Woods”.

No matter what country we open a store, the products we sell will be valuable. Because we do provide such a wide variety of electronics, there is no one or two products that would not benefit the country in some way.

 

 

Works Cited

Best Buy. (2010). Quartery Earnings. Retrieved 06 11, 2012, from BestBuy.com: http://phx.corporate-ir.net/phoenix.zhtml?c=83192&p=quarterlyearnings

Best Buy. (2012). ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. Washington D.C.: UNITED STATES.

Best Buy. (n.d.). Corporate Officers. Retrieved 06 11, 12, from BestBuy.com: http://phx.corporate-ir.net/phoenix.zhtml?c=83192&p=irol-govmanage

 

 

 

0

The chief executive officer

Financial Leadership Profile

 The chief executive officer for best buy is Mike Mikan. The Best Buy board of directors has appointed G. Mike Mikan to the role of interim Chief Executive Officer of Best Buy Co., Inc. (NYSE: BBY). Mike, who will remain on the board while serving as interim CEO, has been a Best Buy director since April 2008. Mike formerly served as executive vice president and chief financial officer of UnitedHealth Group Incorporated and chief executive officer of Optum, a health care services company and affiliate of UnitedHealth. He has strong financial and operational expertise, as well as public company leadership experience. Mike is a Minneapolis native and holds a B.A. from the University of St. Thomas. He is active in the Twin Cities and serves as a board member of Breck School. (Best Buy)

The Chief Financial Officer for Best Buy is Jim Muehlbauer. He was named Executive Vice President, Finance and Chief Financial Officer in 2008. In 2007, he was appointed Enterprise Chief Financial Officer (interim). From 2006 to 2007, he served as Senior Vice President and Chief Financial Officer — Best Buy U.S., and from 2003 to 2006, as Senior Vice President — Finance. Prior to joining us, Mr. Muehlbauer spent ten years with The Pillsbury Company, a consumer packaged goods company, where he held senior-level finance management positions, including vice president and worldwide controller, vice president of operations, divisional finance director, director of mergers and acquisitions and director of internal audit. A certified public accountant (inactive), Mr. Muehlbauer spent eight years with Coopers & Lybrand LLP (now PricewaterhouseCoopers) including senior manager positions in the firm’s audit and consulting practices. He serves on the board of overseers of the University Of Minnesota Carlson School Of Management. (Best Buy)

Both of these men have more than adequate experience to do the jobs for in the positions that they have been placed in. Not only are their educational backgrounds an asset to their positions but their past experiences play a huge part in how they do their jobs today.

Current Company Profile

    For the first two quarters of fiscal 2012, the quarterly cash dividend was $0.15 per share. As of April 26, 2012, there were 3,100 holders of record of Best Buy’s common stock. Overall, during this fiscal year, the company has seen profits and losses. The company has acquired new services throughout the past few years that has helped influence the progress of the company. Some of these services include the addition of Geek Squad in 2003. Geek Squad provides several additional services to customer such as repair, technical support, and installation services. It is available in all US Best Buy stores. Also they acquired Magnolia Hi-Fi INC. Magnolia is a high end retailer of audio and video products. This allows Best Buy to have access a more upscale customer segment. (Best Buy, 2012)

Business Risk

     There are several different risks that Best Buy identifies in their report. One of these that they have identified is that their results of operations could materially deteriorate if we fail to attract, develop and retain qualified employees. (Best Buy, 2012) what they are saying here is that if they cannot attract , train and keep qualified people working in, not only customer service, but also in the several other positions that they have, the company will suffer. If they lose the knowledgably staff, customers may and will go somewhere else for their goods. Another risk they talk about is if they do not anticipate and respond to changing consumer preferences in a timely manner, our operating results could materially suffer (Best Buy, 2012) what I think they are trying to say is that it is important for them to keep up with the buying trends of people. They need to stay on top of the new technology of the day. With more and more companies improving their product, if Best Buy does not it can not only affect the status with the customers but also it can affect them financially.

Financial Performance

    The financial performance for this year’s fiscal year is, as follows:

 

 Fiscal First Quarter Financial Summary Three Months Ended
(U.S. dollars in millions, except per share amounts) May 28, 2011 May 29, 2010 Change YOY
Revenue $10,940 $10,787 1%
Gross profit $2,768 $2,793 (1%)
SG&A $2,484 $2,480 0%
Operating income $282 $313 (10%)
Diluted EPS $0.35 $0.36 (3%)
Key Metrics:
Comparable store sales % change(1) (1.7%) 2.8%
Gross profit as % of revenue 25.3% 25.9%
SG&A as % of revenue 22.7% 23.0%
Operating income as % of revenue 2.6%
 

Revenue Three Months ended May 28, 2011

Prior-Year Period  
($millions) Revenue Change YOY Comp. Store Sales Comp. Store Sales  
Domestic $7,859 (0.8%) (2.4%) 1.9%  
International 3,081 7.6% 0.4% 6.3%  
Total $10,940 1.4% (1.7%) 2.8%  
 

Gross Profit Three Months ended May 28, 2011

 
($millions) Gross Profit Change YOY % of Revenue  
Domestic $1,970 (3%) 25.1%  
International 798 6% 25.9%  
Total $2,768 (1%) 25.3%  
Selling, General and Administrative expenses (“SG&A”) Three Months ended May 28, 2011  
($millions) SG&A Change YOY % of Revenue  
Domestic $1,736 (0%) 22.1%  
International 748 1% 24.3%  
Total $2,484 0% 22.7%  

 

BEST BUY CO., INC.
CONSOLIDATED STATEMENTS OF EARNINGS
($ in millions, except per share amounts)
(Unaudited and subject to reclassification)
Three Months Ended Six Months Ended
Aug. 27 Aug. 28 Aug. 27 Aug. 28
2011 2010 2011 2010
Revenue $11,347 $11,339 $22,287 $22,126
Cost of goods sold 8,475 8,421 16,647 16,415
Gross profit 2,872 2,918 5,640 5,711
Gross profit % 25.3% 25.7% 25.3% 25.8%
Selling, general and administrative expenses 2,583 2,507 5,067 4,987
SG&A % 22.8% 22.1% 22.7% 22.5%
Restructuring charges 2 4
Operating income 287 411 569 724
Operating income % 2.5% 3.6% 2.6% 3.3%
Other income (expense):
Investment income and other 6 13 18 25
Interest expense (34) (21) (65) (44)
Earnings before income tax expense and 259 403 522 705
equity in loss of affiliates
Income tax expense 99 146 198 267
Effective tax rate 38.0% 36.1% 37.8% 37.9%
Equity in loss of affiliates (1)
Net earnings including no controlling interests 160 257 323 438
Net loss (earnings) attributable to no controlling interests 17 (3) (10) (29)
Net earnings attributable to Best Buy Co., Inc. $ 177 $ 254 $ 313 $ 409
Earnings per share attributable to Best Buy Co., Inc.
Basic 0.48 0.61 0.82 0.98
Diluted(1) 0.47 0.60 0.81 0.96
Dividends declared per Best Buy Co., Inc. common share 0.15 0.14 0.30 0.28
Weighted average Best Buy Co., Inc. common shares outstanding (in millions)
Basic 371.9 413.5 379.8 416.9
Diluted 381.4 423.6 389.5 427.7
 

 

 

BEST BUY CO., INC.
CONSOLIDATED STATEMENTS OF EARNINGS
($ in millions, except per share amounts)
(Unaudited and subject to reclassification)
Three Months Ended Nine Months Ended
Nov. 26, Nov. 27, Nov. 26, Nov. 27,
2011 2010 2011 2010
Revenue $12,099 $11,890 $34,386 $34,016
Cost of goods sold 9,155 8,907 25,802 25,322
Restructuring charges – cost of goods sold 13 13
Gross profit 2,931 2,983 8,571 8,694
Gross profit % 24.2% 25.1% 24.9% 25.6%
Selling, general and administrative expenses 2,616 2,598 7,683 7,585
SG&A % 21.6% 21.8% 22.3% 22.3%
Restructuring charges 137 141
Operating income 178 385 747 1,109
Operating income % 1.5% 3.2% 2.2% 3.3%
Other income (expense):
Gain on sale of investments 55 55
Investment income and other 8 8 26 33
Interest expense (37) (20) (102) (64)
Earnings before income tax expense and 204 373 726 1,078
equity in loss of affiliates
Income tax expense 72 133 270 400
Effective tax rate 35.5% 35.7% 37.2% 37.1%
Equity in loss of affiliates (1) (2)
Net earnings including no controlling interests 131 240 454 678
Net loss (earnings) attributable to no controlling interests 23 (23) 13 (52)
Net earnings attributable to Best Buy Co., Inc. $ 154 $ 217 $ 467 $ 626
Earnings per share attributable to Best Buy Co., Inc.
Basic $ 0.43 $ 0.55 $ 1.25 $ 1.53
Diluted(1) $ 0.42 $ 0.54 $ 1.23 $ 1.50
Dividends declared per Best Buy Co., Inc. common share $ 0.16 $ 0.15 $ 0.46 $ 0.43
Weighted average Best Buy Co., Inc. common shares outstanding (in millions)
Basic 359.7 397.1 373.1 410.3
Diluted 368.8 407.8 382.4 420.7

 

BEST BUY CO., INC.
CONSOLIDATED STATEMENTS OF EARNINGS
($ in millions, except per share amounts)
(Unaudited and subject to reclassification)
Three Months Ended Twelve Months Ended
Mar. 3, Feb. 26, Mar. 3, Feb. 26,
2012 2011 2012 2011
Revenue $16,630 $16,083 $ 50,705 $49,747
Cost of goods sold 12,554 12,145 38,113 37,197
Restructuring charges – cost of goods sold 19 9 19 9
Gross profit 4,057 3,929 12,573 12,541
Gross profit % 24.4% 24.4% 24.8% 25.2%
Selling, general and administrative expenses 2,765 2,654 10,242 10,029
SG&A % 16.6% 16.5% 20.2% 20.2%
Goodwill impairment 1,207 1,207
Restructuring charges 16 138 39 138
Operating income 69 1,137 1,085 2,374
Operating income % 0.4% 7.1% 2.1% 4.8%
Other income (expense):
Gain on sale of investments 55
Investment income and other 11 17 37 43
Interest expense (32) (23) (134) (86)
Earnings from continuing operations before income tax 48 1,131 1,043 2,331
expense and equity in (loss) earnings of affiliates
Income tax expense 370 341 709 779
Effective tax rate 774.1% 30.1% 68.0% 33.4%
Equity in (loss) earnings of affiliates (2) 2 (4) 2
Net (loss) earnings from continuing operations (324) 792 330 1,554
Loss from discontinued operations, net of tax (108) (104) (308) (188)
Net (loss) earnings including noncontrolling interest (432) 688 22 1,366
Net earnings from continuing operations attributable to

noncontrolling interests

(1,319) (50) (1,387) (127)
Net loss from discontinued operations attributable to

noncontrolling interests

53 13 134 38
Net (loss) earnings attributable to Best Buy Co., Inc. $(1,698) $ 651 $(1,231) $ 1,277
Basic (loss) earnings per share attributable to Best Buy Co., Inc.
Continuing operations $ (4.73) $ 1.88 $ (2.89) $ 3.51
Discontinued operations $ (0.16) $ (0.23) $ (0.47) $ (0.37)
Basic (loss) earnings per share $ (4.89) $ 1.65 $ (3.36) $ 3.14
Diluted (loss) earnings per share attributable to Best Buy Co., Inc.(1)
Continuing operations $ (4.73) $ 1.84 $ (2.89) $ 3.44
Discontinued operations $ (0.16) $(0.22) $ (0.47) $ (0.36)
Diluted (loss) earnings per share $ (4.89) $ 1.62 $ (3.36) $ 3.08
Dividends declared per Best Buy Co., Inc. common share $ 0.16 $ 0.15 $ 0.62 $ 0.58
Weighted average Best Buy Co., Inc. common shares outstanding (in millions)
Basic 347.5 393.3 366.3 406.1
Diluted 347.5 403.4 366.3 416.5

 

(Best Buy, 2010)

 

Over all the company has had its ups and downs and they are planning on their profit to increase through the next fiscal year, which has just begun.

 

Investment Opportunities

     If I were to invest in a company I might invest in Best buy because their profit margin is higher than their loss. As with any company, you face risks. There is no way to invest in any company with the guarantee that you will not suffer any type of loss.

 

0

Using common size income statements

Using common size income statements

Assignment 1 Week 2

Chapter 3

3.22 What is the advantage of using common size income statements to present financial information for several accounting periods?

There are many advantages to using common size income statements. The size of every company is different, and the net income affects a company in different ways, especially when considering the size of the company. Common size income statements typically display financial information in actual dollar amounts and in percentages, thus giving one a greater understanding of how the net income of a company is affecting the bottom line of a company. Common size income statements also can help when trying to analyze and understand the operating strategy of a company, and they also help when trying to understand how a particular operating strategy is working for a company. They also help when evaluating the performance of the managers, giving an indicator of the weaknesses and strengths of managerial action plans, helping the company to monitor the sales performance of the managers. They also help when comparing the net income of different sized companies versus others, showing in percentages how much the net income is affecting the company. When comparing this data over several accounting periods it makes it easier to see exactly what is working for a company and what isn’t working for a company.

 

3.25 Why does the periodic inventory system pose a major disadvantage for management in accounting for lost, stolen, or damaged goods?

According to our textbook, one of the major disadvantages of the periodic inventory system is that, “lost, damaged and stolen merchandise are automatically included in the cost of goods sold.” The reason why this is a disadvantage is because this system does not give an accurate accounting of the quantity of the lost, damaged and stolen goods, leaving management in the dark about what measures to take to curb the loss of inventory.

 

.ACC 201. 1. VitalSource Bookshelf. McGraw-Hill Create, , Monday, July 02, 2012. <http://online.vitalsource.com/books/9781121253193/page/115>

 

0

Use the financial statements for

 

1. Use the financial statements for Bernard Company from Problem 9-22 to calculate the following from 2012 and 2011.

 

Bernard Company
Balance Sheet
As of December 31
2011 2012

Assets
Current assets                                                                           2012                2011
Cash                                                                                        $16,000           12,000
Marketable securities                                                                20,000             6,000
Accounts receivable (net)                                                          54,000             46,000
Inventories                                                                                135,000           143,000
Prepaid items                                                                            25,000             10,000
Total current assets                                                                   250,000           217,000
Investments                                                                              27,000             20,000
Plant (net)                                                                                 270,000           255,000
Land                                                                                        29,000             24,000
Total assets                                                                              $576,000         $516,000
Liabilities and Stockholders Equity

Liabilities
Current Liabilities
Notes payable                                                                          $17,000           $6,000
Accounts payable                                                                     113,800           100,000
Salaries payable                                                                        21,000             15,000
Total current liabilities                                                   151,800           121,000
Noncurrent liabilities
Bonds payable                                                              100,000           100,000
Other                                                                                       32,000             27,000
Total noncurrent liabilities                                                          132,000           127,000
Total liabilities                                                               283,800           248,000
Stockholders’ equity
Preferred stock, par value $10, 4% cumulative, non-
participating; 8,000 shares authorized and issued 80,000 80,000
Common stock, no par; 50,000 shares authorized;
10,000 shares issued                                                                80,000             80,000
Retained earnings                                                                      132,200           108,000
Total stockholders’ equity                                                         292,200           268,000
Total liabilities and stockholders’ equity                                     $576,000         $516,000

Bernard Company

Statement of Income and Retained Earnings

For the Years Ended December 31

2012 2011

Revenues
Sales (net)                                                                                $230,000        $210,000
Other revenues                                                                          8,000              5,000
Total revenues                                                               238,000          215,000
Expenses                                                                                   120,000          103,000
Selling, general, and administrative expenses                   55,000            50,000
Interest expense                                                                         8,000              7,200
Income tax expense                                                                   23,000            22,000
Total expenses                                                               206,000          182,200
Net earnings (net income)                                                          32,000            32,800
Retained earnings, January 1                                                      108,000          83,000
Less: Preferred stock dividends                                                  2,800              2,800
Common stock dividends                                                           5,000              5,000
Retained earnings, December 31                                                $132,000        $108,000

a. Working capital =                                                                 98,200             96,000

b. Current Ratio =                                                                    1.65:1              1.79:1

c. Quick Ratio =                                                                       0.757:1            0.52:1

d. Accounts receivable turnover (beginning receivables

at 01/01/2011, was $47,000) =                                                2.37                 4.5

e. Average number of days to collect accounts receivable          83                    78

f. Inventory turnover (beginning inventory at 01/01/2011,

was $140,000) =                                                                      4.2                   3.8

g. Average number of days to sell inventory =                36                    48
h. Debt to asset ratio =                                                 49%                 48%

i. Debt to equity ratio =                                                 97.13%            92.54%

j. Times interest earned =                                                          4                      4.556

k. Plant assets to long-term debt =                                            2.02                 2.08

l. Net margin =                                                             13.45%            15.26%

m. Asset turnover =                                                                  .41                   .42

n. Return on investment (ROI) =                                               3.7                   4.25

o. Return on Equity (ROE) =                                                    9.13                 8.17

p. Earnings per share =                                                 0.365               0.375

q. Book value per share of common stock =                             36.53               33.50

r. Price-earnings ratio (market price per share,

2011, $11.75; 2012, $12.50) =                                                3.75                 2.69

s. Dividend yield on common stock =                            136.87             149.25

 

0

Your Course Project

Your Course Project

Financial Statement Analysis Project — A Comparative Analysis of Oracle Corporation and Microsoft Corporation

 

Here is the link for the financial statements for Oracle Corporation for the fiscal year ending 2011. First, select 2011 using the drop-down arrow labeled for Year on the right-hand side of the page, and then select Annual Reports using the drop-down arrow labeled Filing Type on the left-hand side of the page.

 

You should select the 10k dated 6/28/2011 and choose to download in PDF, Word, or Excel format.

 

http://www.oracle.com/us/corporate/investor-relations/sec/index.html

 

Here is the link for the financial statements for Microsoft Corporation for the fiscal year ending 2011. You should select the 10k dated 7/28/2011 and choose to download in Word or Excel format.

 

http://www.microsoft.com/investor/SEC/default.aspx?year=2011&amp;filing=annual

 

A sample Project template is available for download in Doc Sharing. The sample project compares the ratio performance of Tootsie Roll and Hershey using the 2009 financial statements of Tootsie Roll and Hershey provided in Appendix A and Appendix B of your textbook.

   
Description

   

This course contains a course project where you will be required to submit one draft of the Project at the end of Week 5 and the final completed Project at the end of Week 7. Using the financial statements for Oracle Corporation and Microsoft Corporation, respectively, you will calculate and compare the financial ratios listed further down this document for the fiscal year ending 2011 and prepare your comments about the liquidity, solvency and profitability of the two companies based on your ratio calculations. The entire project will be graded by the instructor at the end of the final submission in week 7 and one grade will be assigned for the entire project.

 

   
Overall Requirements

   

For the Final Submission:

 

Your final Excel workbook submission should contain the following. You cannot use any other software but Excel to complete this Project.

1)       A completed worksheet title page tab which is really a cover sheet with your name, the course, the date, your instructor’s name and the title for the project.

2)       A completed worksheet profiles tab which contains a one paragraph description regarding each company with information about their history, what products they sell, where they are located, etc.

3)       All 18 ratios for each company with the supporting calculations and commentary on your worksheet ratio tab. Supporting calculations must be shown either as a formula or as text typed into a different cell. The ratios are listed further down this document. Your comments for each ratio should include more than just a definition of the ratio. You should focus on interpreting each ratio number for each company and support your comments with the numbers found in the ratios.

4)       The Summary and Conclusions worksheet tab which is an overall comparison of how each company compares in terms of the major category of ratios (Liquidity, Profitability, and Solvency). A nice way to conclude is to state which company you think is the better investment and why.

5)       The Bibliography worksheet tab must contain at least your textbook as a reference. Any other information you use to profile the companies should also be cited as a reference.

Required Ratios for Final Project Submission

1)       Earnings per Share

2)       Current Ratio

3)       Gross Profit Rate

4)       Profit Margin Ratio

5)       Inventory Turnover Ratio

6)       Days in Inventory

7)       Receivables Turnover Ratio

8)       Average Collection Period

9)       Asset Turnover Ratio

10)   Return on Assets Ratio

11)   Debt to Total Assets Ratio

12)   Times Interest Earned Ratio

13)   Payout ratio

14)   Return on Common Stockholders’ Equity Ratio

15)   Free Cash Flow

16)   Current Cash Debt Coverage Ratio

17)   Cash Debt Coverage Ratio

18)   Price/Earnings Ratio [For the purpose of this ratio, for Oracle, use the market price per share on May 30, 2011 and for Microsoft, use the market price per share on June 30, 2011]

The Excel files uploaded in the dropboxes should not include any unnecessary numbers or information (such as previous years’ ratios, ratios that were not specifically asked for in the project, etc.).

 

Please upload your final submission to the Week 7 Dropbox by the Sunday ending Week 7.

For the Draft:

 

Create an Excel spreadsheet or use the Project template to show your computations for the first 12 ratios listed above. The more you can complete regarding the other requirements the closer you will be to completion when Week 7 arrives. Supporting calculations must be shown either as a formula or as text typed into a different cell. If you plan on creating your own spreadsheet, please follow the format provided in the Tootsie Roll and Hershey template file.

 

Please upload your draft submission to the Week 5 Dropbox by the Sunday ending Week 5.

 

Other Helpful information:

 

If you feel uncomfortable with Excel, you can find many helpful references on Excel by performing a Google search.

 

The Appendix to Chapter 13 contains ratio calculations and comparison comments related to Kellogg and General Mills so you will likely find this information helpful.

 

BigCharts.com provides historical stock quotes.

 

Either APA or MLA style can be used to complete the references on your Bibliography tab. There is a tutorial for APA and MLA style within the syllabus.

   
Grade Information

   

The entire project will be graded by the instructor at the end of the final submission in week 7 and one grade will be assigned for the entire project. The project will count for 18% of your overall course grade.

 

 

Category

Points

%

Description

Documentation
& Formatting

9

5%

The report will be submitted in the form of an Excel Workbook, with each page (worksheet) of the workbook named appropriately. Please do not use any other software (such as MS Works or Lotus) to complete the project. A quality report will include a title worksheet tab, a worksheet tab for the profile of the two companies, a worksheet tab for the ratio calculations and comments, a worksheet tab for the Summary and Conclusion, proper citations if applicable, and a bibliography worksheet tab for the references.

Organization
& Cohesiveness

9

5%

A quality report will include the content  described above in the documentation and formatting section. The ratios should be listed in the same order in which they appear in the project information above.

Editing

18

10%

A quality report will be free of any spelling, punctuation, or grammatical errors. Sentences and paragraphs will be clear, concise, and factually correct. Ratios will be expressed as numbers or percentages, depending on what is appropriate, as is shown in the textbook. Note that not all ratios are shown as percentages. Two decimal places is sufficient for each of the ratios.

Content

144

80%

A quality report will have correct ratio calculations and accurate supporting commentary. Any assumptions, if made, should be spelled out clearly. Supporting calculations must be shown either as a formula or as text typed into a different cell.

Total

180

100%

A quality report will meet or exceed all of the above requirements.

 

   
   

 

 

0

In this paper you will find

 

In this paper you will find information from articles that address financial reporting practices and ethical standards in health care finance. The paper will also address financial management of health care organizations in detail. In this paper there are several summaries that address the four elements of financial management as well as summaries that address acceptable accounting principles and general financial ethical standards. The paper also gives detailed examples from the articles that reflect ethical standards of conduct and financial reporting.

In many cases management are not trained to detect fraud and will not feel the need to question further about the possibilities. They will sign off on the findings without real concerns. Some of the major findings are sometime found later on, and by that time the situation may be very serious. The hire-up may penalize management for not recognizing the problem earlier. For example from the article the managers pointed the finger on the auditors and did not take on any of the responsibility for the overlook. Baker  (2007), “When questioned about why it took so long for these problems to come to light, management’s response was ‘well the external auditors signed the accounts and internal auditing said everything was all right,'” Durant says   (para. 5).

Managers and staff member responsible for financial reporting are required to do their jobs and do it with the understanding that they represent the organization that they work for. There may be individuals who would be involved in assisting in fraudulent behavior, however down the line they may be criminal charges addressed if those individuals are caught. Staff should be told about those issues and made aware of the consequences. According to Weinheimer (1997) “My experience has been that having high ethical standards and dealing truthfully and honestly with others eases our daily burdens. By trusting those with whom we interact and depending upon the commitments that others make, our work can be accomplished more effectively and efficiently “(p. 5).

Planning is an element that is needed to point out all the steps that must be taken to accomplish and organize. The ability to Control will insure that each area of the organization is following the plans that have been put into place of the success of the organization. When organizing and directing the staff a decision had to be made on how to utilize the most important resources available. Finally make the best decisions among all the choices that were discovered in the planning stage make, and be prepared to so what’s necessary.

These are guidelines rules, regulations and that are followed by accountants in the United States in order to make sure their practices are legal and ethical, in addition that all accounts should be updated in a timely manner, also all tax information should be provided within the time given time. Remain consistent truthful and accurate.

Practice honesty and accuracy maintain the ability to protect and never abuse the financial systems; do your job in good faith according to the legal practices. Many companies are providing their staff with training that will prepare them as well as maintain the reporting practices that are working but at the same show them new techniques. The article spoke of these training practices. Baker  (2007), ” The critical next step for the organization, he says, will be to further explore and consider implementing enterprise risk management, so that managers have the processes and tools they need to be more proactive in their assessment of, and response to, risk as a whole, which would include fraud(para. 5).

There is a huge responsibility in financial reporting practices, although management and their staff are responsible for the work, when any auditing take place, they seem clueless and somewhat unconcern until questioned. Managers need to implement the elements of financial management into their daily reporting practices; perhaps they may be prepared and aware. Financial staffs are required to follow certain practices by the United stated and they should be followed when it comes to generally acceptable accounting principles. We know that fraud is sometimes a major issue, ethical standard are important in decision making, doing the right thing as well as making those honest decisions along the way. Organization implementing training that will make their businesses aware and prepared will prove to be very successful in financial reporting practices.

 

 

 

 

 

 

 

 

 

Reference

Baker, N. (2007). The fraud disconnect: a shared understanding of where fraud-related responsibilities lie can help internal auditing and management avoid costly short circuits. Retrieved from http://findarticles.com/p/articles/mi_m4153/is_2_64/ai_n19020896/?tag=content;col1

Weinheimer, C. F. (1997, January). Ethical conduct more necessary than ever. http://findarticles.com/p/articles/mi_m3257/is_n1_v48/ai_14980641/, (p.5).