Financial Statement Analysis
Financial Statement Analysis
April Cruz, Litesha Forbes, Phillip Gibson, Jessica Hewlett, Lily James, Velda Justin, and Nzingha Reel
ACC/561
September 27, 2010
Mark Tischler
Financial Statement Analysis
The accounting information of this paper provides a financial statement analysis for three distinct companies: Mercedes Benz, a foreign manufacturer of vehicles; Macy’s Inc, a retail department store, and American Airlines, an airline company. The analysis for each company includes the quick and current liquidity ratios, the DuPont ratio, profit margin, asset utilization, and financial leverage. Discussions in this paper include how the differences of each industry affect presentations as they relate to different International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) measurement conventions, and on how uses of the cash basis of accounting differ from the accrual basis of accounting.
Mercedes Benz (dollars are in millions) In 2009, Mercedes Benz had a total of $27,964 in current assets and current liabilities of $27,579 (Daimler AG, 2010). To determine the current liquidity ratio, we divide current assets into current liabilities, which is a total of $1.013. This represents an acceptable liquidity ratio that means if Mercedes Benz had to pay off their liabilities, they could do so without running into financial trouble. To calculate the Quick Ratio, we subtract current assets from stock and then divide by current liabilities. This gives a result of $.8373 that indicates the company is at risk and not attractive to investors and stockholders. Mercedes Benz should be careful with investments to ensure they are not excessively risky. Mercedes profit margin in 2009 was 5.23% with an expected 10% climb in 2010 and asset utilization was at 0.66 in 2009 (Daimler AG, 2010).
Macy’s (dollars are in millions) Macy’s Current Liquidity Ratio for 2009 was $1.314 (Macy’s Inc., 2010). Current assets
April Cruz, Litesha Forbes, Phillip Gibson, Jessica Hewlett, Lily James, Velda Justin, and Nzingha Reel
ACC/561
September 27, 2010
Mark Tischler
Financial Statement Analysis
The accounting information of this paper provides a financial statement analysis for three distinct companies: Mercedes Benz, a foreign manufacturer of vehicles; Macy’s Inc, a retail department store, and American Airlines, an airline company. The analysis for each company includes the quick and current liquidity ratios, the DuPont ratio, profit margin, asset utilization, and financial leverage. Discussions in this paper include how the differences of each industry affect presentations as they relate to different International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) measurement conventions, and on how uses of the cash basis of accounting differ from the accrual basis of accounting.
Mercedes Benz (dollars are in millions) In 2009, Mercedes Benz had a total of $27,964 in current assets and current liabilities of $27,579 (Daimler AG, 2010). To determine the current liquidity ratio, we divide current assets into current liabilities, which is a total of $1.013. This represents an acceptable liquidity ratio that means if Mercedes Benz had to pay off their liabilities, they could do so without running into financial trouble. To calculate the Quick Ratio, we subtract current assets from stock and then divide by current liabilities. This gives a result of $.8373 that indicates the company is at risk and not attractive to investors and stockholders. Mercedes Benz should be careful with investments to ensure they are not excessively risky. Mercedes profit margin in 2009 was 5.23% with an expected 10% climb in 2010 and asset utilization was at 0.66 in 2009 (Daimler AG, 2010).
Macy’s (dollars are in millions) Macy’s Current Liquidity Ratio for 2009 was $1.314 (Macy’s Inc., 2010). Current assets
References: AMR Asset Utilization. Retrieved on Sunday, September 26, 2010 from http://ycharts.com/companies/AMR/asset_utilization AMR Corporation Retrieved on Sunday, September 26, 2010 from http://www.google.com/finance?q=NYSE:AMR Daimler AG. Retrieved on Sunday, September 26, 2010 from http://www.google.com/finance?q=ETR:DAI Financial Accounting Standards Board, (2010) http://www.fasb.org IFRS Foundation. (2010). IFRS. Retrieved from http://www.iasb.co.uk/ International Accounting Standards Board, (2010). Retrieved September 2010 from http:// www.iasb.org Macy’s Asset Utilization. Retrieved on Sunday, September 26, 2010 from http://ycharts.com/companies/M/asset_utilization Macy’s Inc. Retrieved on Sunday, September 26, 2010 from http://www.wikinvest.com/stock/Macy 's_Inc._(M) Steel, A. (2009). KPMG Retrieved from http://www.kpmg.org Tatum, M. (2003-2010). WiseGeek. Retrieved from http://www.wisegeek.com/what-is-accrual-basis-accounting.htm The Economist. (2010). Shocking new accounting rules. Retrieved from http://www.economist.com/node/16847810?story_id=16847810