5:28 4 BXCC Mobile Acct 2001 Financial Statement... Principles of Financial Acco

Question

5:28 4 BXCC Mobile Acct 2001 Financial Statement... Principles of Financial Accounting Examination of a Corporate Annual Report Student's Name Please choose a publicly traded company to work on. You may select a company whose securities are traded on the NYSE, AMEX or NASDAQ. Please do not select a company that is a financial institution or services company The company should sell merchandise Part I . Fill in some basic information about your company. Name of company Principal exchange where the company trades Market price of the stock as of (date) Annual dividend Last dividend paid on z Read the business summaries and management's discussion and analysis (MD&A;) Summarize the remarks (ex. Poor operating results/expansion plans/sale of a division, etc.) Open With Print

Explanation / Answer

Part I

1. Name of company - IBM corporation

Principal stock exchange - NYSE

Stock price as on june 29, 2018 - 139.70 USD

Annual dividend in 2017 - 5.5 USD

Last dividend payment date - 09 june, 2018

2) Summary of management discussion

Total consolidated revenue decreased in 2017 by 1.3% year on year adjusted for currency

Revenue grew in fourth quarter by 0.9%

Second half performance was better than first half

From segment perspective, strategic imperatives generated solid revenue growth of 11%

Cognitive solutions revenue increased 1%

From geographic perspective, America growth declined 1%

Europe, Middle East and Africa decreased 3%

Asia pacific decreased 1%

Consolidated gross margin declined 2.1 points year on year due to investments, mix and higher retirement related costs.

Future outlook

In cognitive solutions, performance will be driven by shift to AI. Watson, security and industry vertical solutions

Company continued to move its offerings as a service delivery model and in 2018 will continue to build scale.

Company made 5 acquisitions at a cost of 134 million USD

Company continued its 2 divestments of micro electronics and industry standard server Business.

Company made 5 other divestments.

3) IBM creates value for clients through integrated solutions and products that leverage

Data

Information technology

Deep expertise in industries and business processes

Broad ecosystem of partners and alliances

4) auditing firm - pwc llp

No problems or exceptions reported in audit report.

5) no new terms in financial statements

Financial statements were presented clearly in accordance with US GAAP.

Financial statements consisted of income statement, balance sheet, notes to financial statements and cash flow statements

All accounting policies were clearly disclosed.

Prior year figures were presented for comparison

Segment wise performance data was available.

Part II

Current ratio - current assets/ current liabilities = 49735/37363 = 1.33:1

Quick ratio = current assets - inventory/ current liabilities = 48152/37363 = 1.29:1

Receivable turnover ratio = revenue/accounts receivable = 79139/8929 = 8.86 times

Average days sales collected = 365/ receivable turnover ratio = 365/8.86 = 41 days

Inventory turnover ratio = sales/ inventory = 79139/1583 = 49.99 times

Profit margin = net income/ revenue * 100 = 5953/79139*100 = 7.27%

Return on assets = net income / total assets = 5953/125356 *100 = 4.59%

Return on equity = net profit/ equity *100 = 5953/18246*100 = 32.63%

Debt equity ratio = long term debt/equity = 39837/18246 = 2.18:1

Dividend yield = 5500/18246*100 = 30.14%

Price earning ratio = price per share/ earning per share = 139.70/12.43 = 11.24 : 1

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