What type of business organization is it?

Amplify Energy Corp., is a limited liability company (LLC) and it trades in the NewYork Stock Exchange under the symbol "AMPY"

• What types of products or services does it sell?

The company is involved in the exploitation and production of oil and natural gas properties across various states that include Oklahoma, East Texas / North Louisiana, offshore California, as well as the Rockies and South Texas.

• On what day of the year does its fiscal year-end?

According to the 2020 10-K filling, the fiscal year of the company ends on December 31st of each year. It recent annual report, it ended on 31st of December 2019.

• For how many years does it present complete balance sheets? Income statements? Cash flow statement?

The annual reports shows that financial statements are presented for the two years in the balance sheet (2019 and 2018) and for the income statement and the cash flow statement, the statements show two years and predecessor period which was some months of the year

• Are its financial statements audited by independent CPA's? If so by whom?

Yes, the financial statements are audited by a certified CPA firm. IN this case, it was KPMG LLP.

• The major non-current asset accounts and any significant changes in them.

The balance sheet shows that major non-current assets are Oil and natural gas properties and Support equipment and facilities. The Oil and natural gas properties have increased from 598,331 in 2018 to 797,005 thousands in 2019. Support equipment and facilities ave also increased from 108,760 thousands in 2018 to 140,023 thousands in 2019

• The major non-current liability accounts and any significant changes in them.

The major non-current liabilities are Long-term debt and Asset Retirement Instruments. Long term debt has declined from 294,000 thousands in 2018 to 285,000 thousands in 2019. Asset retirement obligations have increased from 75,867 thousands in 2018 to 90,466 thousands in 2019

• Any significant changes in total shareholders' equity.

There was a small increase in total shareholders equity from 416,558 thousands in 2018 to 434,207 thousands in 2019.

• Whether financing for the investment in assets primarily comes from liabilities or from shareholders' equity.

The company uses both liabilities and equity to finance its assets. For instance, in 2019, the firm had total liabilities of 443,332 thousands and total equity of 434,207 thousands. Therefore financing of assets comes from both equity and debt financing.

• The major revenue and expense accounts of the most recent income statement.

Major revenue account is the Oil and natural gas sales, which makes over 98% of total revenue. As for the expense accounts, the major expenses are Lease operating expense, General and administrative expense and Depreciation, depletion, and amortization.

• Description of how the company has followed the conditions of the revenue principle.

Revenue related to oil and natural gas sales is recognized after passing of title passes, less royalties due to third parties. Using the sales method, the firm recognizes revenues after actual sales occur to purchasers of oil and natural gas.

• The percentage of prepaid expenses to total assets and the percentage of accrued liabilities to total liabilities.

In 2019, prepaid expenses are 13,238 thousands compared to total assets of 877,539 thousands hence it represents 1.51 percent. Accrued liabilities to total liabilities is 23,358 thousands divided by 443,332 thousands hence it is 5.27 percent

• A description of and explanation for the types of accrued liabilities reported in the notes to the financial statements.

Accrued liabilities are in different types and they include Accrued lease operating expense, Accrued capital expenditures, Accrued general and administrative expense, Operating lease liability, Asset retirement obligations, Accrued ad valorem tax, and Accrued interest payable. The above items are expenses that the firm has not yet paid or logged under accounts payable.

•  The percentage of revenues that go to cover expenses and that are in excess of expenses (i.e., the percentage that remains as net income).

The company had a net loss of (35,197) thousands from revenues of 275,575 thousands. Thus, the percentage of revenues that remains after meeting all expenses is 12.77 percent

Question

1. Read management’s report on internal control effectiveness. Did any material weaknesses or deficiencies exist during the year? Did the external auditors agree with management’s assessment?

2. How much did the company report in total Cash and Cash Equivalents? Does the company present enough information the determine the proportion of Cash versus Cash Equivalents? Does the company report Restricted cash?

3. Describe the company’s business in sufficient detail to be able to classify it as a service, merchandising, or manufacturing company. What products or services does the company provide?

4. Calculate the gross profit percentage at the end of the current and prior years and explain any change between the two years.

Answer rating: 100% (QA)

Amplify Energy Corp is a limited liability company LLC and it trades in the NewYork Stock Exchange under the symbol AMPY The company is involved in the exploitation and production of oil and natural g... View the full answer