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 Accounting Tutor: None Selected Time limit: 1 Day

Complete vertical and horizontal analysis for the 2 most recent annual reports.
2. Identify any areas if any that would cause concern in following US GAAP principles
3. How is this financial information useful to the management team in decision making

May 8th, 2015

VERTICAL ANALYSIS

Closey studying the Income Statements and the Balance Sheets in detail we find that the Corporation has US\$ 3350 Million of "Cash or Cash Equivalents" as of year ended 2008 as against US\$ 7307 Million in the previous year showing a decline of 54.15% on year-on-year basis. In the year 2008, the Corporation had Total Current Assets of US\$ 19,871 Million. Therefore, the Corporation of 16.85% of Assets as Cash or Cash Equivalents. If we take into account Total Assets, the Corporation had Total Assets of US\$ 50,175 Million for the year ended 2008. In this context, the Corporation had cash assets of 6.67% of Assets as Cash or Cash Equivalents.

If we look at the liabilities, the Total Liabilities of the Corporation stood at US\$50175 Million as agains the Stock Holders equity of US\$ 39,088 Million. If we see the Debt ratio of the Corporation, which is one of the most important financial ratio to assess the Corporation's financial health, is also used to indicate a proportion of Debt a Corporation has in relative terms of its Total Assets and examines the leverage of the Corporation and also the potential risks that the Corporation might face vis-a-vis its load of the Debt. Debt ratio is calculated by dividing the total Debt by Total Assets. This being greater than 1, indicates more debt than assets of the Corporation and vice versa.

Looking by this, If we divide the total debt of US\$ 37624 Million with total assets of US\$ 50175 Million, corporation it comes ot 0.74 which is as such acceptable and well within health limits.

horizontal analysis

For the horizontal analysis, there is both a dollar change in an account balance from the beginning of the year (prior year balance) and the end of the year (current year balance); as well as a percentage change in the account balance. So, for the balance sheet, pick a few accounts and tell me what the dollar change was and/or the percentage change was. The same for the income statement. This is useful to investors in several ways. If the company had done a big advertising campaign, from looking at the income statement I would expect to see an increase in revenues and I would expect to see advertising expense increase significantly from the prior year. If the company was expanding, on the balance sheet I would expect to see a significant increase in buildings, equipment, land and an increase in depreciation on the income statement. It might also be decreases -- such as the sale of land, buildings, equipment it might lead me to think that the company was downsizing or had sol
off some of the company. Reading the footnotes of the financial statements would also confirm the changes in the account balances.

May 8th, 2015

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May 8th, 2015
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May 8th, 2015
Dec 10th, 2016
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