Course Hero Logo

ACC 610 Final Project.docx - ACC -610 Final Project ACC-610...

Course Hero uses AI to attempt to automatically extract content from documents to surface to you and others so you can study better, e.g., in search results, to enrich docs, and more. This preview shows page 1 - 4 out of 10 pages.

ACC -610 Final ProjectACC-610 Final ProjectMichelle Sweeney, CMASouthern New Hampshire UniversityACC-610-R1002 Financial Reporting IProfessor Alex Khoja, CPA, CGMA, MACCNovember 5, 2017
ACC -610 Final ProjectFinancial statements are a tool to communicate important information to creditors andinvestors.This information can be in the form of quantitative data to include sales, inventory,payments to vendors and outstanding debt.Financial statements also include qualitative data thehelp a creditor or investor understand the future stability of the company. Qualitative data couldinclude expected changes that the company will face in the coming months or impendinglitigation that is probable but has not yet been filed.A prospective creditor or investor needs tolook at the information as a whole to decide on whether the company is viable and be able tocompare that information to other prospective companies.The US Financial AccountingStandards Board (FASB) created a conceptual framework in order to set up consistent guidelinesand accounting standards for a company to report their financial statements. This allows aninvestor compare Company X to Company Y to decide where they want to invest their funds.As a publicly traded company, Exxon Mobil (Exxon) prepares and publicizes financialstatements each year for current and potential creditors and investors to review.This financialinformation details events that occurred during the calendar year as well as events that areexpected to occur in the coming year.For a creditor, financial statements show the comprehensive financial health of acompany. A creditor can look at debt obligations, salaries and expense, and cash flow.This willtell a creditor if the company is a potential credit risk.Using ratios can help a creditor look fortrends in a company’s financial performance. The current ratio is a measurement that shows howwell a company can meet its current obligations. Exxon has a current ratio for 2016 and 2015 of .87 and .79 respectively.This means that Exxon does not have enough current assets to cover itscurrent obligations.This is just one of many ratios to take in to consideration. Additionally, acreditor would look to the Debt to Equity ratio. This ratio shows how far a company is in debt.
ACC -610 Final ProjectExxon has a debt to equity ratio of .9 for both 2016 and 2015. This tells a creditor 90% ofExxon’s debt obligation is covered by the shareholders.This would provide protection for acreditors money.A current or potential investor looks at a company’s financial statement for growthpotential, debt obligations, cash flow and equity.This would entail an investor to consider thequalitative data included in the financial statement disclosure statements.Exxon is forwardlooking at future energy demands and has outlined a plan to meet those demands.This growthwould be attractive to a potential investor. Since Exxon has a low debt to equity ratio, thisadditional growth would not be a concern.

Upload your study docs or become a

Course Hero member to access this document

Upload your study docs or become a

Course Hero member to access this document

End of preview. Want to read all 10 pages?

Upload your study docs or become a

Course Hero member to access this document

Term
Winter
Professor
DL
Tags
Balance Sheet, Generally Accepted Accounting Principles

Newly uploaded documents

Show More

Newly uploaded documents

Show More

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture