02_ELI_LILLY_A - ELI LILLY & CO. (A)1 A view of financial...

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1  A view of financial accounting is that it is the process of measuring, disclosing, and providing assurance about information that will allow contracting parties to increase (maximize?) the efficiency of their contracts. Contract efficiency produces larger gains to trade through control of agency costs and sharing information between the contracting parties. While the significance of particular contracts varies as a function of the company’s competitive and operational strategies, examples of contracts common to many companies include: 2 Sales, service and warranty contracts; Co-development and co-promotion contracts; Vendor contracts for inventories and other supplies and services; Lease contracts; Short- and long-term debt contracts; Derivative contracts to hedge particular risks (e.g., commodity price risk and foreign currency risk); Employee contracts including stock-based compensation and retirement contracts; Common stock contracts. For this assignment, you will familiarize yourself with Eli Lilly & Co. Browse the company’s website, becoming acquainted with the types of information the company discloses. Download and review its most recent annual reports. 3 Team-Based Class Presentation Assignments – prepare a brief presentation to the class that includes PowerPoint slides. The instructor will assign in advance presentation responsibility for specific elements of the following requirements. Class day 1 1. Briefly identify the goals, objectives and primary business processes of Eli Lilly & Co. Identify the primary sources and uses of the capital Eli Lilly employs in operating its business, measuring these sources and uses in relative terms as a percentage of total sources and uses. A company’s business activities consist of: Financing – obtaining the financial capital necessary to acquire the economic resources necessary to conduct its operations; Investing – obtaining the economic resources necessary to conduct its operations; 1 Prepared by Prof. Clifton Brown, Department of Accountancy, University of Illinois at Urbana-Champaign. All rights reserved, 2011. 2 Keep in mind that contracts are nested within organizations and others not directly party to an immediate contract also utilize accounting information about that contract in executing, monitoring and/or controlling their own contracts. For example, most companies have sales contracts between themselves and their customers. However, in their contracts with the company, stockholders also may have decision-related interests in information about sales contracts. 3
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This note was uploaded on 07/30/2011 for the course ACCT 560 taught by Professor Chandler during the Summer '11 term at University of Illinois, Urbana Champaign.

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02_ELI_LILLY_A - ELI LILLY & CO. (A)1 A view of financial...

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