According to the textbook, the income statement measures the success of a company’s operations for a given period. The income statement is important to investors and creditors, because it determines the profitability, investment value, and creditworthiness of a company. Specifically, the income statement helps investors and creditors predict the amounts, timing, and uncertainty of future cash. Income statement preparers can make such informed predictions by analyzing a company’s financial statements, calculating the price-earnings ratio, and reviewing notes to the financial statements on the income statement. 

In order to complete this assignment, use the Internet to research and review financial statements for Exxon and Chevron for the years 2012 and 2013.

Write a five to six (5-6) page paper in which you:

1. Compare and contrast the limitations and usefulness of the single-step income statement and the multi-step income statement.
2. Analyze the gross profit, operating profits, and net income of both Exxon and Chevron for 2012 and 2013. Of the two (2) companies, speculate on the main reasons why one (1) company may have been more profitable than the other company.
3. Compute each company’s price-earnings (P / E) ratio and price-to-sales ratio (PSR). Identify primary estimates or assumptions that could result in overstated earnings, and use the ratio data to compare the quality of each company’s earnings.
4. Review notes to both Exxon’s and Chevron’s financial statements. Next, identify at least two (2) notes pertaining to the income statement, and explain the main way in which the notes in question could influence your decision to invest in each of the companies. Provide a rationale to justify your decision.
5. Use at least three (3) quality academic resources in this assignment. Note: Wikipedia and other Websites do not qualify as academic resources.

Your assignment must follow these formatting requirements:

• Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
• Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.

The specific course learning outcomes associated with this assignment are:

• Analyze the functions and the main sections of the four (4) primary financial accounting statements: the income statement, the statement of retained earnings, the balance sheet, and the statement of cash flows.
• Prepare the main sections of the four (4) primary financial accounting statements: the income statement, the statement of retained earnings, the balance sheet, and the statement of cash flows. 
• Use technology and information resources to research issues in intermediate accounting
• Write clearly and concisely about intermediate accounting using proper writing mechanics.

 

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CLASSMATE REPSONSE 1:

Accountants often express ROI as the product of two components – capital turnover and return on sales.  You are considering investing in one of three companies, all in the same industry, and are given the above information.

1.  Why would you desire the breakdown of ROI into return on sales and turnover on capital?

The reason we would desire such a breakdown is because those are the two items that calculate ROI.  The formula is ROI = return on sales X capital turnover.  Increasing either of those items will lead to an increase of ROI (MSA 602, 339).

2.  Compute the return on sales, turnover on capital, and ROI for three companies, and comment on the relative performance of the companies as thoroughly as the data permits:

Please see calculations in green on above table.  The following formulas were used:

Return on sales = income / revenue
Turnover on capital = revenue / invested capital
ROI = return on sales X turnover on capital

Adam is performing by far the best.  At an ROI of 24%, Adam is generating income of $.24 for every dollar invested.  Two factors are driving this success:  A high income (driving increased return on sales) and a lower capital (driving increased turnover on capital).

Basil and Colin have similar ROIs at 2%.  The reason for their struggles differ greatly.  While both have a high amount of invested capital, the drastic difference in revenue is the major effect.  While Collin has a huge amount of revenue, the low amount of income generated negatively impacts return on sales.  And while Basil has a solid return on sales, the low revenue amount negatively impacts turnover on capital.

CLASSMATE POST 2:

Princeton International should use the variable cost of 500 to minimize its taxes. This is the tax minimizing price because it results in the lowest amount of total taxes. In addition, the variable cost of 500 saves costs for all segments of the company.

The transfer price of 500 results in a total tax of 515.87. The transfer price of 800 would result in total tax of 825.39. The transfer price of 500 provides a total tax that is over 300 lower that a transfer price of 800.

 

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McDonalds Turnaround Based on Service & Quality

Case Summary

1.) In a narrative format discuss the key facts and critical issues presented in the case. ( 250 Words)

Case Analysis

2.) Why do you think McDonald’s lost its focus in the early 2000’s? ( 250 Words)

3.) How did service, improved quality and cleanliness turn McDonald’s profits and stock price in a positive direction? ( 250 Words)

Application

4.) As CEO of McDonald’s, based on the case and your experience, how would you improve operations in McDonald’s stores in the future? Who do you see as McDonald’s biggest emerging competitor and can McDonald’s improve by looking at their management strategy? ( 250 Words)

Each question are separate but you can make this into one document.  

 

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Use APA format. 1 Paragraph per question. Find articles to support your answer.

1.  Do you believe that integrity tests are valid and necessary?  Support your answer.

2.  Have you ever had a virtual interview?  Describe your experience.  Do you feel that the virtual interviews could have a potential risk of having an adverse impact?

3.  How do you think that using a video interview technique might impact a company’s “brand”?

 

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1. Access the ESPN One Nacíon website: http://espn.go.com/blog/onenacion/post/_/id/1357/mlb-managers-learn-spanish-to-unite-teams-and-clubhouses

2. Read the article and view the video regarding the need for MLB managers to learn Spanish.

3. Write a short essay (no more than one page) on what you have learned. Integrate strategic concepts that we have discussed in class (e.g., external environment analysis, strategies, competitive advantage, and career planning).

 

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