Obtain an annual report from a corporation with which you are familiar. Some ide
ID: 398270 • Letter: O
Question
Obtain an annual report from a corporation with which you are familiar.
Some ideas to help get you started are: Amazon, Google, Target, Walmart, Mattel, Microsoft, and Apple.
Respond to the following questions and any analysis you consider useful:
Which annual report did you choose?
What type of opinion did the auditors provide on the financial statements?
Were any changes adopted in any accounting methods?
Were there any subsequent events, errors and fraud, illegal acts, or related-party transactions that have a material effect on the company’s financial position?
What are two trends in the company’s operations or capital resources that management considers significant to the company’s future?
Does the company engage in more than one significant line of business? If so, compare the relative profitability of the different segments.
How stable are the company’s operations? Has the company’s situation deteriorated or improved with respect to liquidity, solvency, asset management, and profitability?
Explanation / Answer
Which annual report did you choose? – I have opted for Amazon annual report 2017 published in its website.
What type of opinion did the auditors provide on the financial statements? – The audit is done by Ernst & Young LLP. They provided the positive reviews in terms of compliance with accounting standard of U.S., COSO Criteria as well as Internal control.
Were any changes adopted in any accounting methods? – There were changes in corporate tax rates and introduction of some mandatory deductions which were introduced, and accordingly new accounting guidance were adjusted retrospectively to consolidated statements of cash flow.
Were there any subsequent events, errors and fraud, illegal acts, or related-party transactions that have a material effect on the company’s financial position? – No errors and fraud are detected.
What are two trends in the company’s operations or capital resources that management considers significant to the company’s future? –
First and foremost is the inventory risk which is associated due to change in customer demand, changes in pricing and product life cycle, over stock or under stock, defects found in the product, etc., Therefore, they need to effective forecast the market demand and supply and inventory required and re-order level. Secondly, they may face intellectual property rights as many e-commerce businesses are established and many are copying and trading.
Does the company engage in more than one significant line of business? If so, compare the relative profitability of the different segments – The company has entered into new products and services which helped it to grab the larger share of market and attract largest no. of customers but this has also attracted greater risk feasibility and probability.
How stable are the company’s operations? Has the company’s situation deteriorated or improved with respect to liquidity, solvency, asset management, and profitability? – The company operations as per the report is risky somewhat. They face many uncertainties and changes in market trends threatened them. Still the company is performing good in terms of figures and profitability. They are continuing adopting new technological advancement and enhancing their scale of operations. They are expecting the lower profitability in new projects as compare to older one.
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