Week 2 Team Paper - Running head: FINANCIAL STATEMENT...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Running head: FINANCIAL STATEMENT ANALYSIS 1 Financial Statement Analysis Anthony/Blackstone/Gordon/Jackson ACC 561 February 7, 2011 Reza Rafi
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
FINANCIAL STATEMENT ANALYSIS 2 Abstract Through the analysis of three companies of different sectors, this paper will demonstrate some basic concepts, techniques, and conventions of financial accounting. The three sectors covered include the retail department store Dillard’s Inc., Mercedes Benz, a foreign manufacturer of vehicles, and American Airlines, an airline company. For these three companies, basic calculations which can be seen in financial statements were completed. These calculations were used to compute the quick and current asset utilization, DuPont ratio, liquidity ratios, financial leverages, and profit margin for each of the companies. The discussion will include how the differences between industries and different IASB (International Accounting Standards Board) and FASB (United States Financial Accounting Standards Board) measurement conventions affect presentations, and the differences between cash basis and accrual basis accounting.
Background image of page 2
FINANCIAL STATEMENT ANALYSIS 3 Financial Statement Analysis Dillard’s Inc (Dollars are in Millions) In 2010, Dillard’s department store had a total of $1,749 in current assets and a current liability of $769K (Forbes). To determine the current liquidity ratio, we divided the current assets into the current liabilities, which is a total of $2.27. This represents an acceptable liquidity ratio, meaning if Dillard’s had to pay off their liabilities they could do so without running into financial trouble. To calculate the quick ratio, you subtract current assets from current inventory, then divide by current liabilities, resulting in a quick ratio of 0.3 (The Street). A low quick ration indicates that the company is at risk and not attractive to investors and stockholders. Dillard’s should be careful with investments to ensure they are not excessively risky.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 6

Week 2 Team Paper - Running head: FINANCIAL STATEMENT...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online