ACC 221 Chapter : ShindlerEmily-ARP Pg15.pdf

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1> based on both of the accounts receivable efficiency indicators, in which fiscal year, 2013 or 2012, did j&j more efficiently manage the accounts receivable asset? x 2013. [ x only one answer ] x 2012. Leverage indicators (at year-end) -- interest coverage (pg. 3> based on the times interest earned ratio, were the creditors" interest payments more secure in. [ x only one answer ] x 2013. 1> based on working capital, the current ratio, and the quick ratio did liquidity increase or decrease from.

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BradburnCorporation was formed 5 years ago through a public subscription ofcommon stock. Daniel Brown,

who owns

15%

owns 15% of the common stock, was one of theorganizers of Bradburn and is its

current president. The companyhas been successful, but it currently is experiencing a shortage offunds. On

June 10, Daniel Brownapproached the Topeka National Bank, asking for a 24-monthextension on two

$35,000

notes, which are due on June30, 2013, and September 30, 2013. Another note of

$6,000

is due

on March 31, 2014, but heexpects no difficulty in paying this note on its due date. Brownexplained that

Bradburnâs cash flow problemsare due primarily to the companyâs desire to finance a

$300,000

plant

expansion over the next 2fiscal years through internally generated funds.

The commercialloan officer of Topeka National Bank requested financial reportsfor the last 2 fiscal years.

BRADBURN CORPORATION

Statement of FinancialPosition

Accounts receivable (net)

131,800

125,500

Inventories (at cost)

105,000

50,000

Plant & equipment (net ofdepreciation)

Liabilities and Owners'Equity

Common stock (130,000 shares,$10 par)

Total liabilities and owners'equity

$1,852,000

$1,740,500

^aCash dividends were paid at the rate of $1.00 per sharein fiscal year 2012
and $2.00 per share in fiscal year 2013.

SANDBURG CORPORATION

Income Statement

For The Fiscal Year EndedMarch 31

Income before incometaxes

Net income after incometaxes

$366,000

$297,000

Depreciation charges on theplant and equipment of

$100,000

and

$102,500

for the fiscal years endedMarch 31, 2012 and 2013, respectively, are included in cost ofgoods sold.

Instructions:

Fill in the provided matrixand utilize it as the matrix for "VLOOKUP" formulas within thecells below.

Average inventory - 2011

Total Assets = Mar 31, 2009

1,688,500

Total Assets = Mar 31, 2010

1,740,500

Total Assets = Mar 31, 2011

Inventories = EOY 2010

Amount

Inventories = EOY 2011

Amount

Net income after taxes

(a) Compute the followingitems for Bradburn Corporation:

(1) Current ratio for fiscalyears 2012 and 2013.

Note: The formulas in somecell formulas are "live" and need values placed in their sourcecells.

2012 Current ratio =

Currentassets
----------------------- =
Current liabilities

Currentassets
----------------------- =
Current liabilities

(2) Acid-test (quick) ratiofor fiscal years 2012 and 2013.

2012 Quick ratio =

Current assets -Inventories
----------------------- =
Current liabilities

Current assets -Inventories
----------------------- =
Current liabilities

(3) Inventory turnover forfiscal year 2013.

2013 Inventory Turnover =

Cost of goodssold
------------------------------------ =
Average inventory

(4) Return on assets forfiscal years 2012 and 2013. (Assume total assets were

$1,688,500

at March 31, 2011.)

2012 Return on assets =

Net income
----------------------- =
Average total assets

Formula

---------------- =

Formula

2013 Return on assets =

Net income
----------------------- =
Average total assets

Formula

---------------- =

Formula

(5)Percentage change in sales, cost of goods sold, gross margin, andnet income after taxes from fiscal year
2012 to 2013. Omit "000" from thevalues.

Net income after taxes

#VALUE!

Formula

Note: The formulas in somecell formulas are "live" and need values placed in their sourcecells.

(b)Identify and explain what other financial reports and/or financialanalyses might be helpful to the
commercial loan officer of Topeka NationalBank in evaluating Daniel Brownâs request for a timeextension
on Bradburnâs notes.

Otherfinancial reports and financial analyses which might be helpful tothe commercial loan officer of Spokane National Bank include:

Enter text answeras appropriate.

(c)Assume that the percentage changes experienced in fiscal year 2013as compared with fiscal year 2012
for sales and cost of goods sold will berepeated in each of the next 2 years. Is Bradburnâs desire to
finance the plant expansion frominternally generated funds realistic? Discuss.

Entertext answer as appropriate.

Funds available for plant expansion

Assumptions: Complete as appropriate.

Sales increase at a rate of

Cost of goods sold increases at rate of

despite depreciation remaining constant.

Other operating expenses increase at the same rateexperienced from 2012 to 2013;

i.e., at

Depreciation remains constant at

Dividends remain at

per share.

Plant expansion is financed equally over the twoyears(

each year).

Loan extension is granted.

(d)Should Topeka National Bank grant the extension on Bradburnâs notesconsidering Daniel Brownâs statement
about financing the plant expansionthrough internally generated funds? Discuss.

Enter text answer as appropriate.

ochreoyster815

Financial Report Analysisâ Ford MotorCompany

View the 2013 Annual Report for the Ford Motor Company, aFortune 50 company, linked here as well as on the CourseInformation page. Using this report, answer the followingquestions:

1. Does the company use a multiple-step or a single-step formaton its income statement? Explain.

2. What was the net income for 2013? What was the basic netincome (earnings) per common share for 2013?

3. What was the gross profit for 2013? For 2012?

4. How much interest expense was incurred in 2013? In 2012?

5. What was the amount of income before income taxes for 2013?For 2012?

6. What was the amount of selling, general, and administrativeexpenses in 2013? Of this amount, what was the amount forstock-based compensation expense?

7. What amount of dividends on common stock was paid per shareand in total in 2013?

8. What were the total revenues and income before income taxes,respectively, for the fourth quarter of 2013?

9. How much was the net cash provided (or used) by operatingactivities in 2013? In 2012?

10. How much was the net cash provided (or used) by investingactivities in 2013? In 2012?

11. How much was the cash provided by the issuances of debt in2013? In 2012?

12. What were the cash and cash equivalents at the end of 2013and 2012? What does the company classify as cash equivalents?

13. What were the total accounts receivable (net) at the end of2013? At the end of 2012?

14. Assuming that all revenues were net credit sales, and thatthe total accounts receivable (net) at the end of 2011 were $8,281million, compute the receivables turnover for 2013 and 2012. (Hint:Assume the total of accounts receivable is in trade receivables).Round your answer to two decimal places. What is your evaluation ofthe ratio and the difference between the two years?

15. Which inventory method(s) does the company use? Explain whyyou think the company selected this method(s).

16. Compute the inventory turnover ratio for 2013 and 2012 usingthe ending inventory instead of the average inventory. What is yourevaluation of the difference?

17. What was the total amount of inventories on December 31,2013 and 2012? What were the principal categories of inventory onthese dates?

18. What was the amount of the current assets on December 31,2013?

19. What was the amount in the allowance for doubtful accountson December 31, 2013?

20. What is the par value of the companyâs common stock? Howmany shares had been issued at the end of 2013?

21. What was the long-term debt on December 31, 2013? Of thistotal, which was the highest long-debt item and how much wasit?

22. What was the accumulated depreciation on December 31, 2013?What method does the company use to depreciate its property, plant,and equipment?

23. What was the amount of accounts payable and accrued expenseson December 31, 2013? How much was for accrued interest expenses atDecember 31, 2013?

24. What were the reinvested (retained) earnings on December 31,2013?

25. What were the total assets on December 31, 2013?

26. What were the current liabilities on December 31, 2013?

27. What was the cost of the treasury stock held by the companyon December 31, 2013?

28. What are the companyâs operating segments?

29. What are the companyâs segment products and services?

30. What is the estimated useful life of the property, plant,and equipment; land improvement; and buildings?

31. What was the total amount of intangible assets that thecompany reported at the end of 2013, and how did the companycapitalize and amortize the different intangible assets?

32. Why does the company amortize some of its intangible assetsbut not others?

33. Do you think that the company has additional âintangiblesâthat are not recorded on the balance sheet? Why? How would thisissue affect your understanding of the companyâs financialperformance?

34. What were the total debt and debt components at the end of2013?

35. What are the companyâs commitments and contingencies?

36. What are the terms of the companyâs credit agreement?

Complete your assignment in a Microsoft Word document andclearly identify each numbered item to which you are responding.Part of your grade will be based on the organization of yourproject. Show all supporting calculations for your responses, asapplicable. Specifically, questions 3, 4, 13, 14, 16, 17, 18, and34 require calculations. In order to clearly show quantitativeresponses with calculations, insert a table(s) in Word so that yourcompleted assignment is well organized and composed of only onedocument for submission.

periwinklemammoth3

Case 2.3 Walgreens Co. and Subsidiaries

The following excerpts are from the 2013 Walgreen Co. Form 10-K:

CONSOLIDATED BALANCE SHEETS

Walgreens Co. and Subsidiaries at August 31,2013 and 2012

(in millions, except shares and per share amounts)

Cash and cash equivalents

Property & equipment, at cost,less accumulated deprec & amortization

$12,138

$12,038

Equity investment in Alliance Boots

$2,410

$2,161

Alliance Boots call option

Other noncurrent assets

Liabilities and Shareholders' Equity

Current Liabilities

Short-term borrowings

$570

$1,319

Trade accounts payable

$4,635

$4,384

Accrued expenses and other liabilities

Total Current Liabilites

$8,883

$8,722

Noncurrent liabilites

Long-term debt

$4,477

$4,073

Deferred income taxes

$600

$545

Other noncurrent liabilities

$2,067

$1,866

Total noncurrent liabilites

$7,144

$6,504

Commitments and contingencies(see note)

Shareholders' Equity

Preferred stock, $.0625 per value; authorized 32 million shares;

issued 1,028,180,150 shares in 2013 and 2012

Employee stock loan recievable

Accumulated other comprehensive (loss) income

($98)

$68

Treasury Stock at cost, 81,584,572 shares in 2013 and

84,124,816 shares in 2012

($3,114)

($2,985)

Total Shareholders' Equity

$19,454

$18,236

Total Liabilites and Shareholder's Equity

$35,481

$33,462

The accompanying Notes to Consolidated Financial Statements are integral parts of these statments.

Notes to Consolidated financial Statements

1.Summary of Major Accounting Policies

Description of Business

The company is principally in the retail drugstore business and its operations are within one reportable segment. At August 31,2013 there was 8,582 drugstore and other locations in 50 states, the District of Columbia, Guam, and Puerto Rico. Prescription sales were 62.9% of total sales for fiscal 2013 compared to 63.2% in 2012 and 64.7% in 2011.

Allowance for Doubtful Accounts

The provision for bad debt is based on both historical write-off percentages and specifically identified receivables. Activity in the allowance for doubtful accounts was as follows (In millions):

	2013	2012	2011
Balance at beginning of year	$99	$101	$104
Bad debt provision	$124	$107	$88
Write-offs	($69)	($109)	($91)
Balance at end of year	$154	$99	$101

Inventories

Inventories are valued on a lower of last-in, first-out (LIFO) cost or market basis. At August 31, 2013 and 2012, inventories would have been greater by $2.1 billion and $1.9 billion, respectively, if they had been valued on a lower of first-in, first-out (FIFO) cost or market basis. As a result of declining inventory levels, the fiscal 2013 and 2012 LIFO provisions were reduced by $194 million and $268 million of LIFO liquidation, respectively. Inventory includes product costs, inbound freight, warehousing costs, and vendor allowances not classified as a reduction of advertising expense.

3.Leases

The company owns 20.2% of its operating locations; the remaining locations are leased premises. Initial terms are typically 20 to 25 years, followed by additional terms containing renewal options at five-year intervals, and may include rent escalation clauses. The commencement date of all lease terms is the earlier of the date the company becomes legally obligated to make rent payments or the date the Company has to right to control the property. The Company recognizes rent expense on a straight-line basis over the term of the lease. In addition to minimum fixed rentals, some leases provide for contingent rentals based upon a portion of sales.

Minimum rental commitments at August 31, 2013, under all leases having an initial or remaining non-cancelable term of more than one year are shown below (in Millions):

	Capital Lease	Operatin Lease
2014	$19	$2,536
2015	$19	$2,514
2016	$18	$2,464
2017	$17	$2,389
2018	$15	$2,292
Later	$270	$23,507
Total Minimum lease Payments	$358	$35,702

The capital lease amoutn includes $155 million of imputed interest and executory costs. Total minimum lease payments have not been reduced by minimum sublease rentals of approximately $140 million on leases due in the future under non-cancelable subleases.

The Company remains secondarily liable on 26 assigned leases. The maiximum potential undiscounted future payments are $18 million at August 31, 2013. Lease option dates vary, with some extending to 2041.

WALGREEN CO. INFORMATION FROM CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
For the Years Ended August 31,2013 and 2012 (in millions)
	2013	2012
Sales	$72,217	$71,633
Net Income	$2,450	$2,127

Required:

a. Using the consolidated balance sheets for Walgreen Co. for August 31,2013 and 2012, prepare a common-size balance sheet.

b. Which current asset is the most significant? Which noncurrent asset is the most significant? Are the relative proportions of current and noncurrent assets what you would expect for a drug store?

c. Analyze accounts recievable and allowance for doubtful accounts.

d. What inventory is used to value inventories? Has Walgreen experienced inflation or deflation? Explain your answer. Explain the reference in the inventory note to the LIFO liquidation and what this means with regard to net income reported.

e. Assess the level of debt and risk that Walgreen has by looking only at the balnce sheet.

f. Estimate the dollar amount of dividends Walgreens paid in 2013.

g. Does Walgreen use off-balance sheet fiancing? Explain your answer.

h. Evaluate the creidtworthiness of Walgreen based on the Balance sheet and the excerpts from the notes.

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ACC 221 Chapter : ShindlerEmily-ARP Pg15.pdf

ACC 221 Full Course Notes

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