ACC 422 Intermediate Financial Accounting II
February 25, 2013
Toys “R” Us, Inc. is the company that I will analyze. To analyze the disclosures of the company’s financial statement is important because it allows one to understand the position of the company. Toys “R” Us is one largest in the world toy retailers offering a selection of toys and baby products for families around the world. For more than 60 years, Toys “R” Us has been an all-time favorite for kids and grown-ups with many kinds of toys, games, learning aids, electronics, apparel and furniture. Merchandise is sold in 872 Toys “R” Us and Babies “R” Us stores in the United States and Puerto Rico and in more than 645 international stores and over 150 licensed stores in 35 countries and jurisdictions (About Toy “R” Us Corporate). One category to analyze is cash and cash equivalents which are the most liquid current assets. On the statement of cash flows, cash has a much broader definition than just seeing it as cash on hand and cash in the bank. It cash equivalents plays an important role within. Cash equivalents are short-term investments that are easily converted to cash but treated like cash. In the third quarter, Toys “R” Us showed $2.3 billion of liquidity which included cash and cash equivalents of about $399 million and available lines of credit that totals about $1.9 billion. The amount of cash used in the operating activities totaled to $449 million which was lower than the previous year (About Toy “R” US Corporate). Toy “R” Us along with other companies is responsible for disclosing components of cash and cash equivalents along totals from the cash flow statement with the equivalent items showing in the balance sheet. Extraordinary items, interest and dividends, taxes on income and foreign currency cash flows and non-cash transaction should be disclosed separately.
Accounts receivable is another short-term liquid asset that results...