Week 4 Individual Assignment: Balance Sheet and Income Statement BSA/500 Week 4 Individual Assignment: Balance Sheet and Income Statement Short Commentaries Based on your analysis of the balance sheets and financial statements of Kroger Co. and Simon Transportation, evaluate the financial health of both companies. Discuss the impact of liabilities, equity, and cash flow management on the overall stability and potential for growth of each company. Provide a comparison of their strategies in managing debt and assets. (Word count: 800 - 1000 words) Company one (in the same industry as Kudler Fine Foods): Kroger Co. is a very large organization and knows how to watch their bottom line and stay ahead of the competitors. The organization keeps a very steady bottom line after looking at their balance sheet. Kroger’s keeps their assets above the liability bottom line so the company makes a profit overall. The stock options are very good in the company so this will keep the shareholders happy. Understanding the things that can make the company grow is the overall goal of the management team and Kroger’s understands this. Company two (in the same industry as Riordan Manufacturing): Company three (in the same industry as Huffman Trucking): Simon Transportation had to file Chapter 11 bankruptcy after showing a couple of years of hardship in their agency. This company was known for transporting temperature - controlled products for major companies like Kraft, M&M Mars, and Wal - Mart. Reviewing their balance sheet was a way to see how problems can be caught and maybe worked on if it is not too late. If you look at the cash flow of the company you can see that they were using borrowed money to operate and a business cannot grow in this state. Their records show a sign of the customers not paying their taps on time so the company as all of its assets tied up in accounts receivables. Simon was booked up with about 44% of debt after you divide the shareholder equity and the long term debt. This would not have been that bad if the company was able to have a high return on equity, but they did not. With the short term loans taking over the company it was possible now for the banks to come in and take over the company, because they are not able to pay the bills. Simon Transportation took a major hit and could not recover from the drastic financial situation they had gotten into. Company four (in the same industry as McBride Financial Services): Appendix Company one (in the same industry as Kudler Fine Foods): Insert should insert a Balance Sheet here: You should insert an Income Statement here: • KROGER CO Balance Sheet • View: Annual Data | Quarterly Data Period Ending Q4 FY10 Q3 FY10 Q2 FY10 Q1 FY10 Q4 FY09 Assets Cash and Short Term Investments 1.49 B 1.51 B 1.78 B 1.28 B 1.08 B Net Receivables 845.00 M 847.00 M 805.00 M 828.00 M 909.00 M Total Inventories 4.97 B 5.26 B 4.65 B 4.77 B 4.94 B Progress Payments & Others — — — — — Prepaid Expenses 300.00 M 282.00 M 338.00 M 300.00 M 301.00 M Other Current Assets 319.00 M 291.00 M 306.00 M 305.00 M 261.00 M Current Assets Total 7.62 B 7.91 B 7.55 B 7.18 B 7.48 B Long Term Receivables — — — — — Investment in Unconsolidated Subsidiaries 0.00 0.00 0.00 0.00 0.00 Other Investments — — — — — Property, Plant & Equipment Net 14.15 B 14.11 B 14.00 B 13.98 B 13.93 B Property, Plant & Equipment Gross 26.72 B 25.67 B 23.90 B 22.44 B 20.98 B Accumulated Depreciation 12.57 B 11.74 B 10.74 B 9.94 B 9.20 B Other Assets 1.74 B 1.74 B 1.73 B 1.72 B 1.71 B Deferred Charges — — — — — Tangible Other Assets — — — — — Intangible Other Assets 1.14 B 1.16 B 1.16 B 1.16 B 1.16 B Period Ending Q4 FY10 Q3 FY10 Q2 FY10 Q1 FY10 Q4 FY09 Total Assets 23.50 B 23.76 B 23.28 B 22.88 B 23.13 B Liabilities Short Term Debt & Current Portion of Long Term Debt 1.29 B 547.00 M 539.00 M 528.20 M 1.26 B Accrued Payroll — — — — — Income Taxes Payable 220.00 M 354.00 M 354.00 M 354.00 M 354.00 M Dividends Payable — — — — — Other Current Liabilities 3.04 B 3.26 B 3.18 B 2.96 B 2.90 B Current Liabilities Total 8.07 B 8.34 B 7.92 B 7.80 B 7.73 B Long Term Debt 7.25 B 7.42 B 7.24 B 6.94 B 7.42 B Provision for Risks & Charges — — — — — Deferred Taxes 750.00 M 577.00 M 555.00 M 560.00 M 722.00 M Deferred Income — — — — — Deferred Tax Liability in Untaxed Reserves — — — — — Other Liabilities 2.14 B 2.39 B 2.39 B 2.48 B 2.48 B Total Liabilities 18.21 B 18.49 B 18.11 B 17.38 B 18.20 B Shareholders Equity Non - Equity Reserves 0.00 0.00 0.00 0.00 0.00 Minority Interest 2.00 M - 3.00 M 4.00 M - 2.00 M 74.00 M Preferred Stock 0.00 0.00 0.00 0.00 0.00 Common Equity 5.30 B 5.26 B 5.16 B 5.11 B 4.85 B Common Stock 959.00 M 959.00 M 959.00 M 959.00 M 958.00 M Capital Surplus 3.39 B 3.34 B 3.33 B 3.36 B 3.36 B Revaluation Reserves — — — — — Other Appropriated Reserves — - 593.00 M — — — Unappropriated (Free) Reserves — — — — — Retained Earnings 8.22 B 8.01 B 7.88 B 7.68 B 7.36 B Equity in Untaxed Reserves — — — — — ESOP Guarantees — — — — — Unrealized Foreign Exchange Gain (Loss) 0.00 — — — — Unrealized Gain (Loss) on Marketable Securities - 247.00 M - 238.00 M - 228.00 M - 225.00 M 0.00 Treasury Stock 6.73 B 6.49 B 6.43 B 6.31 B 6.24 B Total Liabilities & Shareholders Equity 23.50 B 23.75 B 23.28 B 22.88 B 23.13 B Common Shares Outstanding 620.00 M 632.00 M 634.00 M 640.00 M 642.00 M Period Ending FY2010 FY2009 FY2008 FY2007 FY2006 Assets Cash and Short Term Investments 1.49 B 1.08 B 894.00 M 918.00 M 803.00 M Period Ending Q4 FY10 Q3 FY10 Q2 FY10 Q1 FY10 Q4 FY09 Net Receivables 845.00 M 909.00 M 944.00 M 786.00 M 778.00 M Total Inventories 4.97 B 4.94 B 4.86 B 4.86 B 4.61 B Progress Payments & Others - 827.00 M - 770.00 M - 800.00 M - 604.00 M - 450.00 M Prepaid Expenses 300.00 M 300.00 M — — — Other Current Assets 319.00 M 261.00 M 209.00 M 555.00 M 565.00 M Current Assets Total 7.62 B 7.48 B 7.21 B 7.11 B 6.76 B Long Term Receivables 0.00 0.00 0.00 0.00 0.00 Investment in Unconsolidated Subsidiaries 0.00 0.00 0.00 0.00 0.00 Other Investments 45.00 M 26.00 M 0.00 0.00 0.00 Property, Plant & Equipment Net 14.15 B 13.93 B 13.16 B 12.50 B 11.78 B Property, Plant & Equipment Gross 26.72 B 25.67 B 23.90 B 22.44 B 20.98 B Accumulated Depreciation 12.57 B 11.74 B 10.74 B 9.94 B 9.20 B Other Assets 1.69 B 1.69 B 2.84 B 2.69 B 2.68 B Deferred Charges — — — — — Tangible Other Assets 552.00 M 530.00 M 573.00 M 543.00 M 489.00 M Intangible Other Assets 1.14 B 1.16 B 2.27 B 2.14 B 2.19 B Total Assets 23.50 B 23.13 B 23.21 B 22.30 B 21.22 B Liabilities Short Term Debt & Current Portion of Long Term Debt 1.29 B 1.26 B 1.22 B 2.25 B 1.51 B Accrued Payroll 888.00 M 786.00 M 828.00 M 815.00 M 796.00 M Income Taxes Payable 220.00 M 354.00 M 344.00 M 239.00 M 268.00 M Dividends Payable — — — — — Other Current Liabilities 2.15 B 2.12 B 2.08 B 1.99 B 1.81 B Current Liabilities Total 8.07 B 7.73 B 7.63 B 8.69 B 7.58 B Long Term Debt 7.25 B 7.42 B 7.50 B 6.53 B 6.15 B Provision for Risks & Charges 946.00 M 1.08 B 1.17 B — — Deferred Taxes 750.00 M 568.00 M 384.00 M 367.00 M 722.00 M Deferred Income — — — — — Deferred Tax Liability in Untaxed Reserves — — — — — Other Liabilities 1.19 B 1.40 B 1.25 B 1.80 B 1.84 B Total Liabilities 18.21 B 18.20 B 17.94 B 17.38 B 16.29 B Shareholders Equity Non - Equity Reserves 0.00 0.00 0.00 0.00 0.00 Minority Interest 2.00 M 74.00 M 95.00 M 0.00 0.00 Preferred Stock 0.00 0.00 0.00 0.00 0.00 Common Equity 5.30 B 4.85 B 5.18 B 4.91 B 4.92 B Common Stock 959.00 M 958.00 M 955.00 M 947.00 M 937.00 M