Financial Statement Interpretation Fin 571 Essay

2360 Words Jun 27th, 2016 10 Pages
Financial Statement Interpretation
LeMoura Giddings, Rebecca Tessen, James Scheu
FIN 571
May 30, 2016
Professor Arnold Harvey

Abstract
Learning Team C has chosen three organizations from three different industries. Team C has chosen CVS Health for service, Honda Motor Co., LTD for Manufacturing, and Starbucks Coffee for retail. Team C will calculate and explain the current ratio, quick ratio, net profit margin, asset utilization, and financial leverage. Team C will also discuss the DuPont Method. An analysis of the differences in the industries, the various conventions and how they affect these organizations, ISAB basis for accounting (IFRS) and FASB or GAAP accounting principles, the strategies for working capital for all three
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GAAAP helps to analyze how financial statements are prepared and presented (Financial Accounting Foundation, 2016). GAAP principles include recognition, measurement, presentation, disclosure (Financial Accounting Foundation, 2016). Recognition is what should be presented on a financial statement (Financial Accounting Foundation, 2016). Such as assets, liabilities, and more (Financial Accounting Foundation, 2016). Measurements are the amounts that should be reported for each section of the statement (Financial Accounting Foundation, 2016). Presentation is what line items should be displayed in financial statements (Financial Accounting Foundation, 2016). Disclosure is the any specific information that is important to the users of the financial statements (Financial Accounting Foundation, 2016).
Strategies for Managing Working Capital
CVS Health operates their business according to three key pillars of success: Productive, long-term growth, generating significant cash flow, and optimizing capital allocation. Using these guiding principles, CVS Health has generated $6.5 billion in free cash flow. In 2015, the health care company increased net revenue by 10% to $153 billion, and its operating profit increased 10%. CVS Health manages its working capital to cover short-term liabilities, however, primarily; they reinvest those funds into expanding the business. One example of covering short-term liabilities may be to cover the

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