Unit 5
Question 1
Study the income statement. Concentrate on the operating expenses. Please write in your own words a paragraph – about 50 words – explaining the trends in operating expenses. Explain what you think “restructuring and asset impairment charges are.”
In Millions of $
2014
2013
2012
Operating Expense
20262
19230
18513
Trend
105%
103%
100%
The trend of operating expense for the three years is constant; it went up in 2013 by 3% and in went up another 2% in 2014. Restructuring and assets impairment charges are nil in 2012. It is recorded when there is decline in the value of an investment made by the company and the investment is recorded under equity method.
Question 2
Study the balance sheets for 2009 and 2010. Please discuss the current ratios for both years, writing a paragraph of at least 50 words, explaining what elements of the current ratios are responsible for the changes.
In Millions of $
2014
2013
Current Assets
27,730
32,084
Current Liabilities 16,019 13,568
Current Ratio 1.73 2.36 The liquidity position of the company has declined in the year 2014 as compared to 2013. In 2013 company had $2.36 to pay each dollar of current liabilities while in 2014 it went down to $1.73 to pay each dollar of current liabilities. The main reason for the decrease in current ratio is the heavy increase in short term debt.. The other items which has affected significantly are increase in inventory and cash and cash equivalent.
Question 3
Study the statements of cash flows. Please discuss the three activities detailed in the statement of cash flows and describe the information and where the preparer of a statement of cash flows can find the information. Your discussion should be one or more paragraphs totaling at least 50 words. The cash flow statement is showing cash generated from operating, investing and financing activities. The cash received and paid in from normal course of business
Study the income statement. Concentrate on the operating expenses. Please write in your own words a paragraph – about 50 words – explaining the trends in operating expenses. Explain what you think “restructuring and asset impairment charges are.”
In Millions of $
2014
2013
2012
Operating Expense
20262
19230
18513
Trend
105%
103%
100%
The trend of operating expense for the three years is constant; it went up in 2013 by 3% and in went up another 2% in 2014. Restructuring and assets impairment charges are nil in 2012. It is recorded when there is decline in the value of an investment made by the company and the investment is recorded under equity method.
Question 2
Study the balance sheets for 2009 and 2010. Please discuss the current ratios for both years, writing a paragraph of at least 50 words, explaining what elements of the current ratios are responsible for the changes.
In Millions of $
2014
2013
Current Assets
27,730
32,084
Current Liabilities 16,019 13,568
Current Ratio 1.73 2.36 The liquidity position of the company has declined in the year 2014 as compared to 2013. In 2013 company had $2.36 to pay each dollar of current liabilities while in 2014 it went down to $1.73 to pay each dollar of current liabilities. The main reason for the decrease in current ratio is the heavy increase in short term debt.. The other items which has affected significantly are increase in inventory and cash and cash equivalent.
Question 3
Study the statements of cash flows. Please discuss the three activities detailed in the statement of cash flows and describe the information and where the preparer of a statement of cash flows can find the information. Your discussion should be one or more paragraphs totaling at least 50 words. The cash flow statement is showing cash generated from operating, investing and financing activities. The cash received and paid in from normal course of business