Discussion post 3 question please complete on different page

Question 1 week 6 Question 2 do this on a separate page Question 3 separate page Bank Liabilities: Trading account liabilities Derivative liabilities Short term borrowings Retirement of benefit obligations Accrued expenses and other liabilities Long-term debts Magazine Publisher Liabilities: Deferred tax Accounts payable Retirement of benefit obligations Unearned revenue Taxation and social security Other payables Department Store Liabilities: Short-term borrowings Accounts payable Long-term debt due within one year Obligations under capital lease due within one year Long-term debts Long-term obligations under capital lease Answer: Common Liabilities The liabilities that are common for three businesses are short term borrowings, long-term debts, taxation; accounts payable, retirement of benefit obligations, etc. These are the liabilities that are common for all the businesses as every business borrows money and pay taxes. Account payables are appearing in the balance sheet of magazine publisher and departmental store but not in the balance sheet of bank. The reason is that banks provide services and they are not involved in sale and purchase of goods. Account payables arise when the credit purchases are made from vendors or suppliers. Unique Liabilities The liabilities of bank are a lot different from the liabilities of magazine publisher and departmental store. The liabilities that are unique to a bank include trading account liabilities, derivative liabilities. These are unique to the banking business. A magazine publisher has unearned revenue as unique liability. The reason is that the publisher takes the subscription in advance from its customers and provided the magazine in future, say one year or five years. The advance received from customers is shown as unearned revenue as it is the money that has been received but is not earned. The liabilities unique to departmental store is obligation under longterm capital lease. The reason is that departmental stores open their outlets at various different locations and most of the outlets are on lease. So they have a high liabilities of lease payments. Analysis of Cash Flow: Under Armour, Inc. Answer 1: Following is the main source of cash of Under Armour, Inc. Proceeds from term loan $250 million Excess tax benefits from stock-based compensation $36.97 million Proceeds from term loan are good news for managers as more money is pumped in the company and they can manage the financial affairs easily. But it is not good news for stockholders and creditors. The reason is that due to increase in debts the debt to equity ratio will increase and the stockholders may think that increase in debts will lead to increase in the interest obligations and as a result of it the profitability will decrease. The creditors may also think that the debts of company are increasing and too much debt may result in insolvency of the company and their money can turn into bad debts. Answer 2: Following are the three most significant differences between net cash provided by operating activities and net income: The depreciation and amortization expenses are deducted as expense before determining net income, but in statement of cash flow they are added back to net profit because these are non-cash expenses and do not result in outflow of cash. Gain or loss on disposal of asset is deducted before determining net income whereas it is added back in operating section of statement of cash flows as such loss decreases net income. The effect of change in current liabilities is taken to derive cash flow from operating activities whereas no such effect is taken to derive net income. Answer 3: Under Armour, Inc. has purchased more plant assets in 2014 as compared to 2013 and 2012. The cash flows from investing activities section of statement of cash flows shows outflow of cash for purchase of property and equipment was $50.65 million and $87.83 million during the fiscal years 2012 and 2013 respectively. It increased to $140.53 million during the fiscal year 2014. It shows that the company has buy more plant assets during fiscal year 2014. Answer 4: The largest item in financing activities section of statement of cash flow is proceeds from term loan of $250 million. The probable reason for seeking term loan may be that the company wants to expand its business by commissioning new plants or may be looking forward for acquiring any other company. The other reason may be that the company desires to increase range of its products and more money is needed for it. Answer 5: During the fiscal year 2014 the net cash provided by operating activities is $219.03 million which is significantly higher than $120.07 million in fiscal year 2013. The main reasons for increase in cash flow from operating activities are: increase in net income, increase in depreciation and amortization expenses and increase in accounts payable. The net cash used in investing activities has decreased during fiscal year 2014 and stood at $153.31 million as compared to $238.10 million in fiscal year 2013. The reason is that there was outflow of cash of $148.10 million for purchase of business. Net cash provided by financing activities was $182.31 million during fiscal year 2014 which has increased significantly in comparison to $126.80 during fiscal year 2013.The primary reason for high inflow of cash in 2014 was the proceeds from term loan for $250 million