Financial statement analysis

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Reference no: EM13342458

ACCT 301A - 2014 Fall
Financial Statement Analysis
Please submit your answers before the class on Oct 13 (Monday). You can submit your response individually,
or you may collaborate with other students but the maximum number of students in a team is 3. Teams need
only submit one paper for all members, with all team member names listed prominently on the front.
1. Assessing Short-term Liquidity1
The following table reports information for three retailers in the apparel business.
GAP Spiegel J.Crew
Working capital activity ratios:
1. Days inventory held 73.0 108.2 93.9
2. Days accounts receivable outstanding 0.0 90.2 0.0
3. Days accounts payable outstanding 43.8 116.5 49.6
Operating cycle (1+2) 73.0 198.4 93.9
Cash conversion cycle (1+2-3) 29.2 81.9 44.3
Current ratio 2.1 0.7 1.3
Required:
(1) Do any of these companies appear to have a short-term liquidity problem?
(2) Which company has the most serious mismatching between cash inflows and cash outflows?
2. Analysis of Segment Reporting
The annual report (10-K filing) of 2013 Apple Inc. is available in Titanium.2 Please refer to the sub-section,
Item 8 Financial Statements and Supplementary Data, to respond to the following questions.
(1) What are the reportable segments and what is the basis for the company to choose the segment structure?
(2) What are the reconciliation items from the Company's segment operating income to the consolidated
financial statements (total operating income)? Please list the items as specific as possible using disclosed
information.
(3) Which segment has shown the greatest improvement in sales and profitability over the past two years?
(4) Which product has shown the greatest improvements in sales over the past two years?
(Bonus Question) What sub-items are included under Item 8, and what sub-topics are included under Note
to Consolidated Financial Statements?
1 This case is based on Revsine et al., Financial Reporting and Analysis, 4th edition (McGraw Hill, 2009). 2 Original source of the annual report is either Apple Inc. Investor Relations Web page

Reference no: EM13342458

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