Professional Documents
Culture Documents
Chapter 05
PowerPoint Authors: Susan Coomer Galbreath, Ph.D., CPA Charles W. Caldwell, D.B.A., CMA Jon A. Booker, Ph.D., CPA, CIA Cynthia J. Rooney, Ph.D., CPA
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Regulators
Securities and Exchange Commission
Primary Responsibility Protect investors and maintain the integrity of the securities market.
Stock Exchanges
Primary Responsibility Along with state governments, set overall corporate governance standards.
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Managers
Management
Primary Responsibility Responsible for the information in the financial statements and disclosures. Chief Executive Officer (CEO): highest officer of the company Chief Financial Officer (CFO): highest officer associated with the financial and accounting side of the business Accounting Staff: prepare the details of the reports and bear professional responsibility for the accuracy of the information.
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Auditors
Independent Auditors
Primary Responsibility Follow established auditing standards to assess the fairness of the financial statements and related presentations
An unqualified, or clean, opinion states that the financial statements are fair presentations in all material respects in conformity with GAAP.
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Unqualified Opinion
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Private Investors
Individuals who purchase shares in companies
Lenders or Creditors
Suppliers, banks, commercial credit companies, and other financial institutions that lend money to companies
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Annual Reports
For privately held companies, annual reports are simple documents that include:
1. Four basic financial statements. 2. Related notes (footnotes).
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Annual Reports
For public companies, annual reports are elaborate due to SEC reporting requirements: 1. Nonfinancial Section
Includes a letter to the stockholders, a description of managements philosophy, products, successes, etc. SEC sets minimum disclosure standards for the financial section for public companies.
2. Financial Section
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Annual Reports
1. Summarized financial data for 5- or 10-years. 2. Management Discussion and Analysis (MD&A). 3. The four basic financial statements. 4. Notes (footnotes). 5. Independent Accountants Report and the Management Certification.
6. Recent stock price information. 7. Summaries of the unaudited quarterly financial data. 8. Lists of directors and officers of the company and relevant addresses.
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Assets used of turned into cash within one year. Assets used of turned into cash beyond one year.
Obligations paid of settled within one year. Obligations paid of settled after one year. Contributed capital.. Reinvested earnings.
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Nonrecurring Items
Income statements may contain three sections:
1. Continuing operations 2. Nonrecurring Items
a) Discontinued operations b) Extraordinary items
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Cash flows related to purchase and sale of productive assets and investments.
Cash flows related to borrowing and repaying loans and issue and repurchase of stock. Change in the cash account.
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This particular note relates to the Callaway Golfs policies regarding depreciation of Property, Plant, and Equipment.
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*(In
complex calculations, interest expense (net of tax) and minority interest are added back to net income. total assets + ending total assets) 2
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1(beginning
Asset Turnover
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Low-Cost Strategy
Rely on efficient management of accounts receivable, inventory and productive assets to produce high asset turnover.
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Discontinued Operations
Sale or abandonment of a segment of a business.
Extraordinary Items
Unusual
Infrequent
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End of Chapter 05
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