Your SEC 10-K company communicates its philosophy and financing strategy on the balance sheet by reporting assets
Question:
Your SEC 10-K company communicates its philosophy and financing strategy on the balance sheet by reporting assets and liabilities. First, what is Working Capital? It is calculated as: Current Assets - Current Liabilities = Working Capital Working capital (WC) may be negative if current liabilities (CL) exceed current assets (CA). What does this indicate about the corporation's financial position if this occurs? Is this a cause for concern? How does your SEC 10-K company address this issue? Do they discuss strategies for overcoming negative working capital?
The basic accounting equation isAssets - Liabilities = Owners' Equity. This basic equation is illustrated by reporting assets, liabilities, and owner's equity on the balance sheet. If the owner's equity is positive, this is a favorable position. For some companies, especially if they recently recapitalized with debt, there may be negative equity. Discuss your corporation's financial position reported on the balance sheet.
Consider the classified balance sheet. What is a classified balance sheet? How is a classified balance sheet different from a more traditional balance sheet format that lists all assets and liabilities as one total? What is the benefit of creating subtotals within assets and liabilities to separate current from non-current?
- Review your SEC 10-K company's Statement of Owner's Equity (or a similar name such as the statement of retained earnings, or statement of stockholder's equity, etc.).
- The change in the value of retained earnings from the beginning of the year to the end of the year is reported in this statement. What are retained earnings? What does the retained earnings balance represent? What is it an accumulation of over the life of a corporation?
- When cash dividends are paid, they are funded from the accumulated profits of the corporation (retained earnings). Thus, dividends decrease retained earnings. If net income and other 'credits' to retained earnings exceed the value of dividends paid during the period, retained earnings may increase. If they do not exceed the dividends paid, retained earnings likely decrease.
- What do you learn about dividends for your SEC 10-K company? Did they issue dividends?
- What are the risks and opportunities of issuing dividends to shareholders each year?
This is the link to the company I am working with: https://www.sec.gov/ixviewer/ix.html?doc=/Archives/edgar/data/0001744489/000174448923000216/dis-20230930.htm#iefb04f78647c4ff1bec79f603e36c3da_169
Accounting Principles
ISBN: 978-1119048473
7th Canadian Edition Volume 2
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak