Answer the accounting question in doc Need to do the reformulated sheet in Excel 1. York Inc is a consumer products firm listed in the US stock mark

Answer the accounting question in doc
Need to do the reformulated sheet in Excel

1. York Inc is a consumer products firm listed in the US stock markets. Its Balance Sheet and Income Statements for the years ending 2019 and 2018 are given below. The Reformulated Statement of Stockholders Equity for the years ending 2019 and 2018 are given below.

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Answer the accounting question in doc Need to do the reformulated sheet in Excel 1. York Inc is a consumer products firm listed in the US stock mark
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YORK INC. INCOME STATEMENTS

Consolidated Income Statement

12 Months Ended

in USD millions, except per share data

Dec. 31, 2019

Dec. 31, 2018

Net Sales

23,815

22,938

Cost of goods sold

15,835

15,234

Gross Profit

7,980

7,704

Sales and general expenses

4,528

4,198

Other (income) and expense, net

185

116

Operating Profit

3,267

3,390

Interest income

24

31

Interest expense

(292)

(330)

Income before tax and other operating income

2,999

3,091

Provision for income taxes

(946)

(895)

Income before other operating income

2,053

2,196

Share of net income of equity companies

277

197

Net Income

2,330

2,393

Net income attributable to NCI

(120)

(132)

Net Income Attributable to Common

2,210

2,261

Earnings Per Share

Basic

Net Income Attributable to Common

3.12

3.19

Diluted

Net Income Attributable to Common

3.09

3.16

YORK INC. BALANCE SHEETS

Consolidated Balance Sheet

Dec. 31, 2019

Dec. 31, 2018

in USD millions

Current Assets

Cash and cash equivalents

1,091

958

Accounts receivable, net

2,966

3,079

Notes receivable

262

242

Inventories

2,848

2,440

Deferred income taxes

224

163

Other current assets

203

155

Total Current Assets

7,594

7,037

Property, Plant and Equipment, net

10,027

9,640

Investments in Equity Companies

449

426

Goodwill

2,884

2,730

Other Intangible Assets

386

372

Long-Term Notes Receivable

430

728

Other Assets

868

918

Total Assets

22,638

21,851

Current Liabilities

Debt payable within one year

293

732

Trade accounts payable

3,903

3,565

Accrued expenses

1,331

1,277

Accrued income taxes

125

95

Dividends payable

323

300

Total Current Liabilities

5,975

5,969

Long-Term Debt

5,784

5,750

Noncurrent Employee Benefits

2,412

2,387

Deferred Income Taxes

755

654

Other Liabilities

269

262

Stockholders’ Equity

Preferred stock – 10 million shares outstanding

10

10

Common stock – 708 million shares outstanding

708

708

Additional paid-in capital

510

479

Common stock held in treasury -70 million shares

(5,671)

(4,904)

Accumulated other comprehensive income (loss)

(1,759)

(2,200)

Retained earnings

13,303

12,395

Total Stockholders’ Equity available to CSE

7,101

6,488

Noncontrolling interests

342

341

Total Stockholders’ Equity

7,443

6,829

Liabilities and Stockholders’ Equity, Total

22,638

21,851

Reformulated Statement of Stockholders Equity (in USD millions)

Balance at December 31, 2017

5,795

Transactions with Shareholders

Stock issues for stock options

490

Stock repurchases

(1,107)

Cash Dividend

(1,458)

Total Transactions with Shareholders

(2,075)

Comprehensive income

Net income reported

2,261

Net translation gain (loss)

743

Pension adjustment

(38)

Other

92

Total Comprehensive income for 2018

3,058

Balance at December 31, 2018

6,778

Balance at December 31, 2018

6,778

Transactions with Shareholders

Stock issues for stock options

178

Stock repurchases

(971)

Cash Dividend

(1,279)

Total Transactions with Shareholders

(2,072)

Comprehensive income

Net income reported

2,210

Net translation gain (loss)

391

Pension adjustment

68

Other

39

Total Comprehensive income for 2019

2,708

Balance at December 31, 2019

7,414

Notes:
The firm bears a 35% statutory tax rate.
Working cash is estimated to be $120 million and $115 million for 2019 and 2018 respectively.
Notes receivable bear interest of 8% per calendar year.

Required:

a) Prepare the Reformulated Balance Sheet and Income Statements for the years 2019 and 2018 in preparation for valuation.

b) Comment on what the reformulated financial statements tell you about Yorks strategy. (200-300 words)
c) Discuss the implications of earnings management for accounting quality. (500-600 words)

2. Discuss the analysis of the profitability as a breakdown of the return of common equity into its drivers. In your discussion explain why borrowing might lever up the return on common equity. (500-600 words)

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