Writing Assignment
A. What is an annual report?
An annual report refers to an official report on the performance of a company in the previous year.
B. Name the federal government agency that requires a publicly held corporation to keep shareholders informed of its state of business.
US Government Accountability Office
C. What is the purpose of auditing financial statements?
Gives a financial overview of the company’s operations, the audit provides an accurate financial outline of a company that can be used to verify the company’s performance over a given time.
The audits provide proper records of transactions into the company’s books of accounts.
D. What is the name of rules and regulations used to prepare financial statements?
a. Accounting Principles
E. Name two other primary financial information sources.
a. Balance Sheet
b. Income Statement
F. What type of information is provided in the statement of earnings (also called income statement or profit and loss statement)? Please be as brief as possible.
a. Statement of Revenue and Expense
b. The statement provides the information on how the business acquires its revenues and expenses in all its activities either working or non operating or both. The statement also provides the net loss or profit obtained within a given time span mostly a fiscal year.
G. What type of information is provided in the statement of financial position (also called balance sheet)? Please be as brief as possible.
The balance sheet contains the information on the company’s assets and the debts. The assets are recorded in one column of the sheet while the liabilities are recorded on the alternate side. The liabilities in a balance sheet entail all the liabilities that the company has to settle and are used in determining its financial position. A successful company can be determined by a balance sheet whose assets side is greater than the liabilities side. A company can be stated of being unstable if its liabilities are greater than the assets and thus vulnerable for collapse.
H. What type of information is provided in the statement of cash flows? Please be as brief as possible.
Provides the information on how the cash is moving into the company through the sales of assets and income from investments and taking out of money through payments and the payment of capital returns.
Briefly explain the purpose of Public Company Accounting Oversight Board (PCAOB).
The purpose of the PCAOB is to supervise the public companies auditors to defend the interests of the investors and that of the public in the setting up of a more organized, fair and autonomous audited financial statements
I. Under the new rules of the Sarbanes-Oxley Act of 2002, to whom does an auditor report?
The auditor report refers to the government.
J. What caused the new rule to be created?
The rule was created to create transparency in the disclosure of the information on the financial status of all firms. It was realized that some companies’ directors and Chief Executive Officers would intentionally sell their stocks at higher than the stipulated prices for more personal bonuses. Many companies had different unlawful ways of obtaining increased gains by manipulating the account books. Some companies could express their expenses as profits to persuade other entities of better status. The act was therefore formulated to avert all the financial tricks in the organizational trade.
K . Under the new rules of the Sarbanes-Oxley Act of 2002, name eight types of services that are “unlawful” if provided to a publicly held company by its auditor.
According to Accountants’ liability by ALI-ABACCPE, p. 92, they include;
• Bookkeeping
• Information systems design and implementation
• Appraisals or valuation services
• Actuarial services
• Internal audits
• Management and human resources services
• Broker/dealer and investment banking services
• Legal or expert services related to audit services.
What is the mission of SEC?
To defend the investors and the securities markets
How many commissioners does SEC have and who appoints them?
Five commissioners appointed by the President.
How many divisions and offices does SEC have?
The Securities and Exchange Commission has five divisions and twenty offices to serve in all its operations.
Briefly explain the Securities Act of 1933 and the Securities Exchange Act of 1934.
The securities act of 1933 necessitates earlier registration of securities before the public sale and sufficient revelation of applicable financial and other information in a prospectus to allow comprehensive analysis by possible investors. The act also entails antifraud requirements eliminating untrue disclosures.
The securities Exchange act of 1934 is relevant to secondary trading. The act controls the broker activities in the derived trade. The cat bans the activities that would unfairly influence prices in the global markets.
a. What is the address of CISCO’s website?
www.cisco.com/ – United States
http://www.google.co.ke/search?q=cisco+website&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a
b. When was the 2010 annual shareholders’ meeting?
2nd March, 2010
c. Where was the 2010 annual shareholders’ meeting?
At 555 Main Street in Racine, Wisconsin
d. Who is the corporation transfer agent?
Computershare Investor Services
e. Where is the agent located?
Washington DC
f. What is CISCO’s stock ticker symbol (Sym)?
CSCO
g. Go to http://finance.yahoo.com, type in the company’s ticker symbol to obtain, print, and state the closing price of the common stock. You may choose any day you wish in this academic quarter to report the closing price. (give me the link of the page)
http://www.fool.com/fool/free-report/18/sa-energystock-search-52321.aspx?logvisit=y&source=esamsskey0860031&aid=1634&engine=MSN&eftype=search&keyword=cisco+stock+price&ef_id=SIVN2BN-DVoAAAT6:20110521193319:s
h. Click on the “CSCO” link in the “Symbol” box to obtain, print, andstate the 52-week range.(give me the link of the page)
i. State the stock market on which the company’s stock is traded.
US Markets
1. When does the company’s fiscal year end?
31st December, 2007
2. What is the name of the Certified Public Accounting firm that audited the annual report?
Price waterhouseCoopers LLP (PwC)
3. What goals, objectives, and predictions are expressed in the “Letter to the Stockholders?”
• To ensure that the interests of IBM leaders are aligned with investors and the owners.
• To inspire the leaders to deliver high business performance as they had been doing in the previous years.
• To distinguish return in order to vary according to specific team performance.
• To draw and preserve more qualified leaders who are capable of riding the global enterprises into success.
Chapter 17, “Financial Statement Analysis,” must be reviewed in order to answer the ratio questions.
4. What is the company’s Current Ratio? What does it express?
Current Ratio = Current assets ÷ Current liabilities
5. What is the company’s Working Capital? What does it express?
Working Capital = Current assets – Current liabilities
6. What is the company’s debt (total liabilities) to stockholders’ equity Ratio?
Total Liabilities = Short term liabilities + long term liabilities
7. What does it express?
8. What is the company’s Accounts Receivable Turnover?—use “Total Revenue” (instead of net sales on account) as the numerator. What does it express?
Accounts Receivable Turnover = Net credit Sales ÷ Average accounts receivable
9. Prepare a horizontal analysis (similar to the example on page 71 of your textbook) for the following items in the balance sheet:
Increase (Decrease)
Current Year Previous Year Amount Percent
Total Current Assets
Property and
Equipment (net)
Total Assets
Total Current Liabilities
Total Liabilities
Total Stockholders’ Equity
10. Prepare a vertical analysis in relation to sales (similar to the example on page 120 of your textbook), with total revenue as the denominator, for the following items in the income statement.
Current Year
Previous Year
Amount Percent Amount Percent
Total Revenue (Also called Total Net Sales)
100%
100%
Total Cost of Sales (also called Cost of Goods Sold)
Gross Profit (also called Gross Margin)
Research and
Development
Selling, General, and
Admin. Expenses
Interest and other income (loss), net
Income Tax Expense*
Net Income (Loss)
