Docsity
Docsity
Prepare for your exams
Prepare for your exams

Study with the several resources on Docsity

Earn points to download
Earn points to download

Earn points by helping other students or get them with a premium plan

Guidelines and tips
Guidelines and tips
Sell on Docsity
Sell on Docsity
Docsity AI
Docsity AI
Log inSign up

Prepare for your exams

Study with the several resources on Docsity

Find documents

Prepare for your exams with the study notes shared by other students like you on Docsity

Search for your university

Find the specific documents for your university's exams

Docsity AINEW

Summarize your documents, ask them questions, convert them into quizzes and concept maps

Explore questions

Clear up your doubts by reading the answers to questions asked by your fellow students

Earn points to download

Earn points by helping other students or get them with a premium plan

Share documents
download point icon20 Points

For each uploaded document

Answer questions
download point icon5 Points

For each given answer (max 1 per day)

All the ways to get free points
Get points immediately

Choose a premium plan with all the points you need

Study Opportunities

Choose your next study program

Get in touch with the best universities in the world. Search through thousands of universities and official partners

Community

Ask the community

Ask the community for help and clear up your study doubts

Free resources

Our save-the-student-ebooks!

Download our free guides on studying techniques, anxiety management strategies, and thesis advice from Docsity tutors

Current Assets - Financial Statement Analysis - Home Work Solved, Exercises of Financial Statement Analysis

Amity University - BiharFinancial Statement Analysis

Current Assets, Balance Sheet, Cash and Cash Equivalents, Marketable Debt Securities, Inventories, Prepaid Expenses, Deferred Income Taxes, Current Assets, Plant and Equipment, Accumulated Depreciation. Its solved home work for course of Financial Statement Analysis.

Typology: Exercises

2011/2012

Uploaded on 12/13/2012

drup
drup 🇮🇳

4.6

(27)

119 documents

1 / 4

Toggle sidebar

This page cannot be seen from the preview

Don't miss anything!

bg1
Problem 3.1. Assets of Du Pont. Below is the asset section of the balance sheet of Du Pont for
7
December 31 2001 2000
----------- ---- ----
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 5,763 $ 1,540
Marketable debt securities 85 77
Accounts and notes receivable (Note 13) 3,903 4,552
Inventories (Note 14) 4,215 4,658
Prepaid expenses 217 228
Deferred income taxes (Note 9) 618 601
-------- --------
Total current assets 14,801 11,656
-------- --------
PROPERTY, PLANT AND EQUIPMENT (Note 15) 33,778 34,650
Less: Accumulated depreciation 20,491 20,468
-------- --------
Net property, plant and equipment 13,287 14,182
-------- --------
GOODWILL AND OTHER INTANGIBLE
ASSETS (Note 16) 6,897 8,365
INVESTMENT IN AFFILIATES (Note 17) 2,045 2,206
OTHER ASSETS (Notes 9 and 18) 3,289 3,017
-------- --------
TOTAL $ 40,319 $ 39,426
======== ========
This financial statement is much more complicated than that of Dell. Why? What additional
items are here, but not on the Dell balance sheet? Various items refer to specific notes. What
does this mean and why is it important? Is Du Pont a bigger company than Dell, based on
assets?
This financial statement discloses more details than the Dell financial sheet. Included
are Prepaid and Deferred Income Tax disclosures. In addition, PPE is presented at its
historical value and reduced on the balance sheet by Accumulated Depreciation. The
references to notes identify that more details are available on the particular asset.
Based on assets, Du Pont is a larger company.
docsity.com
pf3
pf4

Partial preview of the text

Download Current Assets - Financial Statement Analysis - Home Work Solved and more Exercises Financial Statement Analysis in PDF only on Docsity!

Problem 3.1. Assets of Du Pont. Below is the asset section of the balance sheet of Du Pont for

7 December 31 2001 2000

ASSETS CURRENT ASSETS Cash and cash equivalents $ 5,763 $ 1, Marketable debt securities 85 77 Accounts and notes receivable (Note 13) 3,903 4, Inventories (Note 14) 4,215 4, Prepaid expenses 217 228 Deferred income taxes (Note 9) 618 601

Total current assets 14,801 11,

PROPERTY, PLANT AND EQUIPMENT (Note 15) 33,778 34, Less: Accumulated depreciation 20,491 20,

Net property, plant and equipment 13,287 14,

GOODWILL AND OTHER INTANGIBLE ASSETS (Note 16) 6,897 8, INVESTMENT IN AFFILIATES (Note 17) 2,045 2, OTHER ASSETS (Notes 9 and 18) 3,289 3,

TOTAL $ 40,319 $ 39, ======== ======== This financial statement is much more complicated than that of Dell. Why? What additional items are here, but not on the Dell balance sheet? Various items refer to specific notes. What does this mean and why is it important? Is Du Pont a bigger company than Dell, based on assets?

This financial statement discloses more details than the Dell financial sheet. Included are Prepaid and Deferred Income Tax disclosures. In addition, PPE is presented at its historical value and reduced on the balance sheet by Accumulated Depreciation. The references to notes identify that more details are available on the particular asset. Based on assets, Du Pont is a larger company.

Problem 3.2. Preferred stock at Du Pont. The balance sheet of Du Pont includes the following:

STOCKHOLDERS' EQUITY Preferred stock, without par value - cumulative; 23,000,000 shares authorized; issued at December 31: $4.50 Series - 1,672,594 shares (callable at $120) $ 167 $ 167 $3.50 Series - 700,000 shares (callable at $102) 70 70 Common stock, $.30 par value; 1,800,000,000 shares authorized; Issued at December 31, 2001 - 1,088,994,789; 2000 - 1,129,973,354 327 339 Additional paid-in capital $ 7,371 $7,

Du Pont has preferred stock. Is this different than common stock? Explain. Are the amounts of preferred stock material in terms of total paid-in capital. Explain.

Preferred Stock is stock which receives preference on dividend distribution. A liability is created if yearly dividends are not paid on Preferred Stock, whereas Common Stock does not ensure yearly dividends to the holders. The amount of preferred stock are material in terms of Paid in Capital in that there is as much Preferred Stock in the corporation as there is Common Stock.

Problem 3.4. Cash flows from operations for Du Pont. CFO from operations for 2001 is presented below. Unlike Dell, CFO is considerably less than net income. Why?

CASH PROVIDED BY CONTINUING OPERATIONS Net income $ 4, Adjustments to reconcile net income to cash provided by continuing operations: Cumulative effect of a change in accounting principle (Note 11) (11) Depreciation 1, Amortization of goodwill and other intangible assets 434 Gain on sale of DuPont Pharmaceuticals (Note 7 ) (6,136)

Other noncash charges and credits – Accounts and notes receivable 435 Inventories and other operating assets (362) Increase (decrease) in operating liabilities: Accounts payable and other operating liabilities (634) Accrued interest and income taxes (Notes 4 and 9) 2, Cash provided by continuing operations $ 2,

Primarily, the sale of the Pharmaceuticals division created a large gain which leads to less Cash Flow represented by Net Income. This is a large reduction. Inventory and A/P maneuvers also affected the firm’s Cash Flow, making it lesser than Net Income.