Module 1 discussion
What year did the FASB take on the responsibility of
developing generally accepted accounting principles (GAAP)? Which body accepted
the primary responsibility for the development of GAAP prior to the FASB? Do
you believe the FASB should continue to be the organization primarily
responsible for the development of GAAP? Why or why not?
Module 2 discussion
The balance sheet, also known as the statement of position,
shows a company’s financial position at a point in time. Included on the
balance sheet are various assets that are reported at an estimated value.
Discuss the importance of the balance sheet to stakeholders, including, but not
limited to, investors, creditors, and governmental entities. With the core
value of integrity in mind, explain why it is important that management ensure
the reliability of the estimates used by accountants and the information
provided on the balance sheet.
Module 3 discussion
An income statement is a summary of revenues and expenses
and gains and losses, ending with net income for a specific period of time.
Indicate the two traditional formats for presenting the income statement. Which
of these formats is preferable for analysis? Why?
Module 4 discussion
Ratio analysis is quantitative analysis of information
contained in a company’s financial statements. Common-size analysis converts
each line of financial statement data to an easily comparable amount measured
as a percent. Both ratio analysis and common size analysis are important tools
used to analyze the financial results of corporations. Explain the importance
of both types of analysis. In your explanation, it is imperative you provide
examples of ratios with their measurement. Do you believe ratio analysis is
better than common size analysis or vice versa? Why or why not?
Module 5 discussion
Companies carry various types of long-term assets on their
books. These may include property, plant and equipment, investments in bonds,
investments in stocks, patents, and goodwill, to name a few.
Is it feasible for managers to get a precise measurement of
the funds that could be available from long-term assets to pay long-term debts?
Locate the annual report (10K) of a publicly traded company.
Discuss the types of long-term assets on the books that could potentially be
used to pay off the long-term debts. Is this company in a position to pay off
all their long-term debts with their long-term assets?
Module 6 discussion
Profits might be compared with assets, sales, and
stockholders’ equity. Why might all three bases be used? Will trends in these
ratios always move in the same direction? Why?
Compute the ratios for an actual company. Did the ratios
move in the same direction from one year to the next?
Module 7 discussion
A member of the board of directors is puzzled by the fact
that the firm has had a very profitable year but does not have enough cash to
pay its bills on time. Explain to the director how a firm can be profitable,
yet not have enough cash to pay its bills and dividends.
Module 8 discussion
Financial ratios are used extensively to analyze, interpret,
and explain the information provided in financial statements.
Why do you believe this is so?
Who are some of the stakeholders interested in financial
ratios and analyses?
Calculate 3 or 4 financial ratios of an actual company. Show
how you calculated these ratios, describe the meaning of the ratios you
selected, and discuss why you chose to calculate these ratios.
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