C521: Short-Term Liabilities and Liquidity - Accounting Pronouncements Related to Short-Term Liabilities - Accounting Assignment Help

Assignment Task:

Please review the class notes for Module 4 prior to beginning this mini case.

The purpose of this mini case is to provide you with a deeper understanding of short-term liabilities and liquidity.You will continue using the company you selected for mini case 1.Please submit your mini case on Canvas and include your company’s name on the document that you submit.

Required:

1. Briefly discuss the impact of any recent accounting pronouncements related toshort-term liabilities. You can find this information in the footnotes(e.g., Recent Accounting Pronouncements).

2. List the amounts of the company’s total current liabilities and total current assets for the last three years along with their common size percentages.
i. Briefly comment on the importance of current assets and current liabilities to your company’s balance sheet.
ii. If either or both ratios changed significantly over time, which current assets and/or current liabilities are primarily responsible for the change?

3. Calculate accounts payable turnover and #days to pay accounts payable for the past three years and explain any changes. Note that D&B doesn’t provide this ratio, so your analysis is restricted to your company’s ratio over time.

4. Review the Management Discussion and Analysis (MD&A) section and briefly summarize any discussion related to working capital.

5. Verify the calculation of the current ratio from the D&B Business Browser for the past three years and explain any changes.
a. Compare the ratio to its industry benchmark and comment on differences.

6. Calculate your company’s cash conversion cycle (CCC) for the past three years and briefly comment on its trend.Note that since D&B doesn’t provide the A/P turnover ratio, your analysis is restricted to your own company’s time series.
a. Which components of your company’s CCC require managerial attention and what can management do to mitigate the underperforming components of CCC?

7. Briefly comment on whether the current ratio or CCC is a better measure of liquidity for your company.

8. Does your company disclose supply chain financing arrangements? If so, briefly summarize the discussion and comment on the impact of these arrangements on the company’s liquidity.

9. If your company has a deferred (unearned) revenue account on its balance sheet, list the amounts of deferred revenue for the past three years and briefly comment on changes in its balance. 

10. In general, what do changes in deferred revenue imply for future revenues and cash flows?

11. Does your company report any contingent liabilities (litigation, warranty)?
a. If so, what do the footnotes disclose about the likelihood of a liability? 
b. If the likelihood is probable, how much of a liability is reflected on the balance sheet? 
c. Is the contingent liability listed separately or is it co-mingled with other liabilities?

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