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Discussion Forum 1
Prior to beginning work on this discussion forum, read Chapter 9 in the course textbook, Using Financial Accounting Information: The Alternative to Debits and Credits.
Using the same company and annual reports that you chose for your Week 1 – Discussion Forum, Reading and Using the Annual Report Case Study,
Calculate the current ratio and quick ratio for the latest two years, obtain the industry average ratios from the IBISWorld (Links to an external site.) database, available through the UAGC Library, or another outside resource of your choice, and analyze the results.
The IBISWorld database is accessible through the University of Arizona Global Campus Library. This database contains industry reports and market research on more than 1,300 United States industries. The reports provide key data, financial ratios, and benchmarks, plus industry forecasts. IBISWorld’s Data Wizard tool allows comparisons between a chosen company and industry best practices. If needed, review the Industry Wizard – Industry Product (Links to an external site.) tutorial on how to use this database.
Discuss what each of these ratios tells you about the company’s current financial condition, and how they compare to the industry averages.
Identify the major causes of any changes in these ratios and discuss your assessment of the company based on these changes.
Review the balance sheet and the notes to the most recent financial statements, and identify any contingent liabilities.
Discuss whether or not you agree with how the company chose to treat each contingency on the financial statements (i.e., recorded vs. disclosed, but not recorded).
Discuss the effect on the financial statements of the company’s treatment of the contingency.
Discuss whether the contingent liabilities change your assessment of the company.
Discussion Forum 2
Prior to beginning work on this discussion forum, read Chapter 10 in the course textbook, Using Financial Accounting Information: The Alternative to Debits and Credits.
Using the same company and annual reports that you chose for your Week 1 – Discussion Forum, Reading and Using the Annual Report Case Study,
Calculate the debt-to-equity ratio and times interest earned ratio for the company for the latest two years. Obtain the industry averages for these ratios and any other pertinent information from the IBISWorld (Links to an external site.) database, available through the UAGC Library, or another outside resource of your choice, and then analyze the results.
Discuss what each of these ratios tells you about the company’s use of debt and how it compares to the industry average.
Identify the major causes of any changes in these ratios and discuss your assessment of the company based on these changes.
If you were a lender, discuss whether you would you be willing to lend money to the company based on its use of debt.
Your initial response should be a minimum of 300 words for each discussion. Graduate school students learn to assess the perspectives of several scholars. Support your response with at least one scholarly and/or credible resource, in addition to the text.
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1 Discussion and Journal Student’s Name Institutional Affiliation Course Name Professor’s Name Date 2 Discussion and Journal The current ratio and profit margin ratio Company: T mobile Explanation Generally speaking, the current ratio is an approximate measure of a company’s capacity to pay its current maturing commitments, and it varies greatly from one sector to another. However, it is an accurate indication that an entity will meet its current maturing debt obligations when the current ratio is greater than 1. According to the calculations, T mobile will improve its current ratio in 2020 by almost 50% compared to its current ratio in 2019. This is owing to considerable growth in both the company’s current assets and current liabilities during the last year. The profit margin ratio, also known as the return on sales ratio, relates to the capacity of management to generate a profit for shareholders per each dollar of net sales generated. According to the calculations above, the entity will not sustain its return on sales from the 3 preceding year in the year 2020. In this case, the business could not properly and efficiently handle all of the expenditures and expenses that occurred throughout the operational cycle (Annual Report, 2019). An illustration of this would be the pandemic, which occurred in 1918. The Management Discussion and Analysis comments Financial status, operating performance, cash flows, liquidity, and other elements that may have a long-term impact on the company’s viability focus on Management Discussion and Analysis (MD&A). The merge with Sprint was cited as an example of how the company’s spectrum portfolio, client base, and market segmentation were enhanced. COVID-19 pandemic reaction was one of the most important aspects of MD&A. As a result, the company’s leadership adopted numerous measures to safeguard and assist its workers and communities and maintain relationships with consumers (Annual Report, 2020). The MD&A described how the pandemic will affect the company’s 2020 financial performance and how it is likely to continue to do so. The Auditor’s Report The auditor presented the business with an uninformed opinion on its financial statements. However, PricewaterhouseCoopers LLP of Seattle, Washington gave an audit opinion that the financial results were reported honestly and accurately in all significant ways in conformity with generally accepted accounting standards. Assessment Over the previous two years, T mobile has done well, as indicated by its net income both in 2020 and 2019. Additionally, a positive cash flow is a solid sign that the organization manages its finances quickly and successfully. As a result, the organization has a high chance of surviving the next few years. 4 References Annual Report, (2019): https://s24.q4cdn.com/400059132/files/doc_financials/2019/ar/TMUS2019-Annual-Report_WD-(Final).pdf Annual Report, (2020): https://s24.q4cdn.com/400059132/files/doc_financials/2020/ar/TMUS2020-Annual-Report.pdf
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