Financial Analysis: Operating Liabilities, Long-Term Debt, Equity, and Comprehensive Income for BBBY

Operating Liabilities

1. Operating liabilities arise from ordinary operations and provide a less expensive source of financing.  Answer the following questions:

a. Identify the current operating liabilities(only include liabilities that will impact operating expenses) for each company and the applicable common-size percentage for each operating liability in the current year using your common-size balance sheet from part 2 of the financial analysis case.  Explain why you picked these as the current operating liabilities.  Operating liabilities were discussed in Module 4, but relates to module 7 with the continuation of the discussion on liabilities.

List current operating liabilities and applicable common-size percentage for each account for the most recent year.

BBBY

PIR

Explanation:   

b. Identify the largest current operating liability for each company and explain why this current operating liability is so large compared to the other current operating liabilities.

c. What current liabilities did you not include in your analysis of current operating liabilities?  Make sure you list out each of the current liabilities that were not included in “a”.  Explain why you did not include them.

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Explanation:  

d. Read the notes to the financial statements of each company related to contingencies.  Identify what these contingencies are for each company and how the company is reporting or not reporting these contingencies in the financial statements.  Provide the page number of where you found this information.  

BBBY:

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2.  Using the Common-size statements from part 2 and notes to the financial statements answer the following questions:

a. What are the common-sized percentages of long-term debt for each company in the current year?  Use your common-sized balance sheets from Part 2.

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b. Using the appropriate audited financial statement what is the amount of long-term debt excluding the current portion of long-term debt?   Name the financial statement you found this information.  Using the notes to the financial statements, what is the maturity date range of the long-term debt, and provide the page number you found this information?

In thousands Total Dollar amount of long-term debt stated on a financial statement and name of financial statement Maturity Date range Page note reference.

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c. How much is considered current maturity of this long-term debt for the current year if applicable and what financial statement did you find this on?

In Thousands How much is considered current maturity of this long-term debt for the current year if applicable? What financial statement is this information found or should be found on? What is the name of the subsection that listed this information or should have listed it?

Identifying Current Operating Liabilities and Common-Size Percentages

d. Identify the financial statement that shows or should show the issuance and/or payment of any type of debt for cash in the current year.  Provide the name of the section of the financial statement that provides this information even if there was no debt issued or paid and the name of the section this information would be provided.  Provide the specific action: issuance and/or payment of long-term debt or borrowings using cash and the amount(s) of issuance and/or repayment of long-term debt.  

In Thousands Financial Statement Name of section Action and Amount of issuance and/or repayment of any type of debt or borrowings

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3.  Find the BBBY and PIR credit ratings for long-term debt using the following resources:  Moody’s and Standard and Poor’s.  

a. What are the credit ratings from each of these agencies in reference to long-term debt?  Click on the Family Tree Rating tab set out in Moody’s after you search for the company.  For Standard and Poor’s Global use the local currency for BBBY and for PIR you will use the most current related research and credit information. 

Moody’s Standard and Poor’s Global

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b. Are the two companies similarly rated?  Explain your response.  Which one is higher rated?  Read over pages 7-21 and 7-22 in the textbook.

4.  Use the balance sheet and the statement of stockholders’ equity to determine how the company has structured its equity.

a. What proportion of assets is financed with equity per your common-sized balance sheet of the current year from Part 2 of the case analysis vertical analysis? Explain what this percentage means.  

Proportion of assets financed with equity

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Explain what this percentage means.  

b. Using the consolidated statements of stockholders’ or shareholders’ equity in the 10-K, provide what accounts make up the stockholders’ or shareholders’ equity?  The accounts are listed at the top going horizontally.  

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c. What transactions occurred in stockholders’ or shareholders’ equity or investment during the current year?  The transactions are listed vertically on the left side of the statement.  

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d.   Using the statements of shareholders’ equity provide the number of shares repurchased and the total dollar amount of this repurchase for the current year if applicable.   Some companies will show this as treasury stock or state repurchase of common stock, but they are the same thing.

In Thousands #shares Total dollar amount repurchased

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Identifying the Largest Current Operating Liability

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e. Using the statements of shareholders’ equity, are there any employee stock-based payment expenses listed?  What was the total amount of the stock-based compensation expense as shown on this statement in the total column?  Go to the notes of the financial statements and provide information on how the employee stock-based payment expenses are determined.  Also, provide the page number you found this note. 

In Thousands Are there any employee stock-based payment expenses listed?  What was the total amount of the stock-based compensation expense as shown on this statement in the total column?  Go to the notes of the financial statements and provide information on how the employee stock-based payment expenses are determined.  Also, provide the page number you found this note information. 

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5.  As discussed in the text, the least costly form of financing is internal, which is reinvesting profits into new investments is a low-cost means to grow the company and return even more to stockholders.

a. Review the consolidated statements of comprehensive income/loss for the current year.  List all the accounts that are used in computing comprehensive income for the current year and the dollar amount for each of these accounts that influence current comprehensive income.  

In Thousands All accounts that impacted Comprehensive income for current year The dollar amount for each of these accounts that impact current comprehensive income during current year.

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b. Which financial statements includes the accumulated or cumulative other comprehensive income/loss (AOCI)? Read over the discussion of AOCI on ages 8-20 to 8-22 and explain why AOCI should be examined.

Name the financial statements that includes AOCI

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Explain why AOCI should be examined.  

c. Provide the financial statement that shows the amount of dividends paid in the current year and the section name that dividends paid shows on the statement if applicable.  What was the amount of the dividends paid, if the company paid dividends?   Provide the common stock dividends per share?  Discuss why companies declare dividends or do not declare dividends?  Provide a reference other than the text and other than Wikipedia or Investopedia to support your response.  Provide an APA citation.

In Thousands Name the financial statement that list out dividends paid if applicable and the section name that dividends paid shows on the statement if applicable. Amount of Dividends paid in dollar amount 

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Provide the Common stock dividends per share, if applicable.  Hint:  to find this per share amount go to the bottom of the statement of earnings.

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Discuss why companies declare dividends or do not declare dividends?  Provide a reference other than the text and other than Wikipedia or Investopedia to support your response.  Provide an APA citation.

d. Which statement can you find the basic and diluted earnings per share (EPS) attributable to the continued operations of the shareholders of the company? What is the basic EPS for the current year?  What is the diluted EPS for the current year? Comment on the trend of EPS and how diluted EPS has been impacted.

Name the financial statement that Shows EPS Basic EPS Diluted EPS

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