The Balance Sheet: A Closer Look

Transcription

1 The Balance Sheet: A Closer Look Dr. Peter Wilson

2 Balance Sheet Assets Assets Resources owned by the firm Provide a probable future benefit to the firm Result of a past transaction Different valuation bases Inventories, Fixed Assets, Intangibles are valued at Historical Cost Investments in stocks and bonds, financial assets & liabilities are valued at Market Value Current Assets Assets that will be used up or converted into cash within one year Non-current Assets Assets that will take longer than one year to be used by the firm

3 Balance Sheet Liabilities Liabilities Obligation of the firm Requires outflow of cash or other net assets Result of a past transaction Current Liabilities liabilities that will be paid or settled within one year Accounts payable Notes payable Taxes payable Non-current Liabilities will be paid or settled beyond one year Long-term debt Leases Bonds Deferred income taxes

4 Balance Sheet Shareholders or Owners Equity Shareholders Equity Residual interest of the owners in the assets of the firm Assets Liabilities = Shareholders Equity Also called the Net Worth or Book Value of the Firm Elements of Shareholders Equity Common Stock and Additional paid-in capital: amount received for the stock when first issued to the public. Retained earnings: cumulative net income or net loss reduced by dividends paid. Treasury stock: amount paid to buyback the firm s own shares from current shareholders Accumulated Other Comprehensive Income: technical account that includes income items that do not appear on the Income Statement

5 Balance Sheet Format US GAAP vs. IFRS US GAAP Assets = Liab s + SE Assets listed in order of decreasing liquidity: most liquid assets listed first. Liabilities: current liabilities listed before long-term liabilities Assets Liab s = SE Assets listed in order of increasing liquidity: least liquid assets listed first. Liabilities: long-term liabilities listed before current liabilities IFRS

6 Balance THE KROGER Sheet CO. Assets (in millions, except par values) January 30, 2016 January 31, 2015 ASSETS CONSOLIDATED BALANCE SHEETS Current assets Cash & temporary cash investments $ 277 $ 268 Store deposits in-transit Receivables 1,734 1,266 FIFO inventory 7,440 6,933 LIFO reserve (1,272) (1,245) Prepaid & other current assets Total current assets 9,892 8,911 Property, plant & equipment, net 19,619 17,912 Intangibles, net 1, Goodwill 2,724 2,304 Other assets Total assets $ 33,897 $ 30,497

7 Balance THE KROGER Sheet CO. Liabilities CONSOLIDATED BALANCE SHEETS (in millions, except par values) January 30, 2016 January 31, 2015 LIABILITIES Current liabilities Current portion of long-term debt including obligations under capital leases & financing obligations $ 2,370 $1,874 Trade accounts payable 5,728 5,052 Accrued salaries & wages 1,426 1,291 Deferred income taxes Other current liabilities 3,226 2,888 Total current liabilities 12,971 11,392 Long-term debt including obligations under capital leases & financial obligations Face-value of long-term debt including obligations under capital leases & financial obligations 9,708 9,723 Adjustment to reflect fair-value interest rate hedges 1 Long-term debt including obligations under capital leases & financial obligations 9,709 9,723 Deferred income taxes 1,752 1,209 Pension & postretirement benefit obligations 1,380 1,463 Other long-term liabilities 1,287 1,268 Total liabilities 27,099 25,055 Commitments & contingencies (see Note 13)

8 Balance THE KROGER Sheet CO. CONSOLIDATED BALANCE SHEETS Shareholders Equity (in millions, except par values) January 30, 2016 January 31, 2015 SHAREHOLDER S EQUITY Preferred shares, $100 par per share, 5 shares authorized & unissued Common shares, $1 pa per share, 2,000 shares authorized; 1,918 shares issued in 2015 & ,918 1,918 Additional paid-in capital 2,980 2,748 Accumulated other comprehensive loss (680) (812) Accumulated earnings 14,011 12,367 Common stock in treasury, at cost, 951 shares in 2015 & 944 shares in 2014 (11,409) (10,809) Total Shareholder s Equity The Kroger Co. 6,820 5,412 Noncontrolling interests (22) 30 Total Equity 6,798 5,442 Total Liabilities & Equity $ 33,897 $ 30,497

9 Balance Sheet Balance Sheets At 12 March 2016 and 14 March 2015 J Sainsbury: Balance Sheet Group Note 2016 m 2015 m Non-current assets Property, plant and equipment 11 9,764 9,648 Intangible assets Investments in subsidiaries Investments in joint ventures and associates Available-for-sale financial assets Other receivables 17a Amounts due from Sainsbury s Bank customers 17b 1,649 1,412 Derivative financial instruments ,529 12,032 Current assets Inventories Trade and other receivables 17a Amounts due from Sainsbury s Bank customers 17b 1,695 1,599 Available-for-sale financial assets Derivative financial instruments Cash and bank balances 27b 1,143 1,285 4,413 4,421 Assets held for sale ,444 4,505 Total assets 16,793 16,537

10 Balance Sheet Balance Sheets At 12 March 2016 and 14 March 2015 J Sainsbury: Balance Sheet Group Note 2016 m 2015 m Current liabilities Trade and other payables 19a (3,077) (2,961) Amount due to Sainsbury s Bank customers and banks 19b (3,173) (3,395) Borrowings 20 (223) (260) Derivative financial instruments 30 (43) (75) Taxes payable (158) (188) Provisions 22 (46) (44) (6,720) (6,923) Liabilities held for sale 18 (4) - (6,724) (6,923) Net current (liabilities)/assets (2,280) (2,418) Non-current liabilities Other payables 19a (269) (265) Amount due to Sainsbury s Bank customers and other deposits 19b (582) (266) Borrowings 20 (2,190) (2,506) Derivative financial instruments 30 (69) (38) Deferred income tax liability 21 (237) (215) Provisions 22 (129) (77) Retirement benefit obligations 31 (408) (708) (3,884) (4,075) Net assets 6,365 5,539

11 Balance Sheet J Sainsbury: Balance Sheet Balance Sheets At 12 March 2016 and 14 March 2015 Group Note 2016 m 2015 m Equity Called up share capital Share premium account 23 1,114 1,108 Capital redemption reserve Other reserves Retained earnings 26 3,370 3,057 Total equity before perpetual securities 5,869 5,539 Perpetual capital securities Perpetual convertible bonds Total equity 6,365 5,539

12 Balance Sheet Reflects a Firm s Business Model & Strategy Strategic decisions impact the balance sheet Sell a Product or service Manufacture internally or outsource Organic growth vs. growth by acquisition

13 Dow & Yahoo: Company A Dow & Yahoo: Which is Which? Company B Balance Sheet as of: Dec Dec Assets Cash And Equivalents 12.4% 3.6% Short Term Investments Which is Which? - 9.3% Accounts Receivable 7.4% 2.3% Inventory 10.1% - Other Current Assets 6.1% 1.4% Total Current Assets 36.0% 16.6% Net Property, Plant & Equipment 26.2% 3.4% Long-term Investments 9.0% 77.4% Goodwill 17.8% 1.8% Other Intangibles 11.0% 0.8% Total Assets 100.0% 100.0% Liabilities Accounts Payable 8.1% 0.5% Accrued Expenses 4.7% 2.3% Short-term Borrowings 3.7% - Total Current Liabilities 16.5% 2.8% Long-Term Debt 23.8% 2.7% Capital Leases - 0.1% Other Non-Current Liabilities 21.2% 30.1% Total Liabilities 61.5% 35.7% Pref. Stock, Convertible 5.9% - Common Stock 11.9% 19.5% Retained Earnings 41.8% 10.1% Treasury Stock (9.0%) (2.0%) Comprehensive Inc. and Other (13.2%) 36.6% Total Preferred & Common Equity 37.4% 64.2% M inority Interest 1.1% 0.1% Totaln Stockholders' Equity 38.5% 64.3% Total Liabilities And Equity 100.0% 100.0%

14 Company A Company B Citibank Which and is Nike: Which? Which is Which? Balance Sheet as of: Dec May Assets Citibank & Nike: Cash And Equivalents 0.9% 14.7% Short Term Investments 53.5% 10.8% Accounts Receivable % Inventory % Other Current Assets - 6.9% Total Current Assets 54.4% 70.2% Net Property, Plant & Equipment % Net Loans 34.9% - Goodwill 1.3% 0.6% Other Intangibles 9.4% 12.7% Total Assets 100.0% 100.0% Liabilities Accounts Payable % Accrued Expenses 6.6% 14.4% Short-term Borrowings 13.1% Other Current Liabilities 52.4% Total Current Liabilities 72.1% 24.6% Long-Term Debt 10.5% 9.4% Other Non-Current Liabilities 4.5% 8.7% Total Liabilities 87.1% 42.7% Preferred Stock 0.9% - Common Stock 6.3% 36.4% Retained Earnings 7.7% 19.4% Treasury Stock (0.4%) - Comprehensive Inc. and Other (1.7%) 1.5% Total Preferred & Common Equity 12.8% 57.3% M inority Interest 0.1% - Total Equity 12.9% 57.3% Total Liabilities And Equity 100.0% 100.0%

15 Company A Company B Apple & Which Walmart: is Which? Which is Which? Balance Sheet as of: Jan Jan Assets Apple & Walmart: Cash And Equivalents 4.4% 6.4% Short Term Investments % Accounts Receivable 3.5% 11.4% Inventory 22.2% 0.6% Total Current Assets 30.1% 33.1% Net Property, Plant & Equipment 61.2% 8.5% Long-term Investments 0.3% 56.7% Goodwill 8.4% 1.7% Total Assets 100.0% 100.0% Liabilities and Stockholders' Equity Accounts Payable 19.8% 11.6% Accrued Exp. 9.8% 9.4% Short-term Borrowings 2.8% 2.5% Total Current Liabilities 32.4% 23.5% Long-Term Debt 19.5% 23.4% Capital Leases 1.9% - Other Non-Current Liabilities 4.3% 12.2% Total Liabilities 58.1% 59.1% Common Stock 1.1% 10.7% Retained Earnings 45.1% 30.2% Accumulated Other Comprehensive Income (4.3%) Total Stockholders' Equity 41.9% 40.9%

16 . ALL RIGHTS RESERVED.