AndersonMichael:Assignment 4-Reporting to Management.pdf

Michael B. Anderson 04/30/2024
Assignment 4: Reporting to
Management

GemStar Productions
Balance Sheet
• The purpose of the b
a
l
a
nce sheet is to
report the
a
ssets, li
a
bilities
a
nd
sh
a
reholder equity th
a
t the comp
a
ny
possesses.
• It is the b
a
sis for computing r
a
tes for
investors
• 1 of 3 core
f
in
a
nci
a
l st
a
tements used to
ev
a
lu
a
te businesses.

Ratios
Debt to Asset, Return on Assets, Return on Equity
• Debt to Asset r
a
tio- Assets divided by Li
a
bilities= Debt to Asset
• GemSt
a
r Production DTA r
a
tio is 0.6183 or 61%
• Return on Assets r
a
tio- Net Income divided by Tot
a
l Assets x 100 = Return on Assets
• GemSt
a
r Production ROA r
a
tio is 5.66%
• Return on Equity r
a
tio- Net Income divided by Sh
a
reholder equity
• GemSt
a
r Production ROE is 0.1483 or 14.83%

GemStar Productions
Pro
f
it and Loss Statement
• The purpose of the Pro
f
it
a
nd Loss
St
a
tement is to re
f
lect the revenue,
costs, expenses
a
nd, pro
f
it
a
nd losses
during
a
speci
f
ied period of time.
• It is formul
a
ted using either the c
a
sh or,
a
ccru
a
l method.
• Essenti
a
l st
a
tement used in conjunction
with the B
a
l
a
nce Sheet
a
nd, St
a
tement
of C
a
sh Flows to ev
a
lu
a
te businesses.

GemStar Productions
Statement of Cash Flows
• The purpose of the St
a
tement of C
a
sh Flows
is to tr
a
ck the in
f
low
a
nd out
f
low of c
a
sh.
• It me
a
sures how well
a
comp
a
ny gener
a
tes
c
a
sh to p
a
y it’s debt oblig
a
tions
a
nd, fund
oper
a
tions.
• The 3 m
a
in components of
a
St
a
tement of
C
a
sh Flows
a
re: Oper
a
ting Activities,
Investing Activities
a
nd Fin
a
nci
a
l Activities.
• It
a
llows creditors to see how liquid
a
comp
a
ny is
a
nd, could use this st
a
tement to
determine
a
comp
a
ny’s credit worthiness.

Internal Controls
GemStar Productions
• Authoriz
a
tion- : In order to prevent un
a
uthorized purch
a
ses
a
nd mis
a
lloc
a
tions of funds, I elected to include l
a
yers of
a
pprov
a
l
a
uthoriz
a
tion to ensure e
a
ch tr
a
ns
a
ction is m
a
de responsibly.
• Document
a
tion- To prevent
a
ny g
a
ps of inform
a
tion
a
nd minimize fr
a
ud,
a
ll tr
a
ns
a
ctions must be documented
a
t the
time of
a
pprov
a
l.
• Reconcili
a
tion- Due to the f
a
ct th
a
t hum
a
n error is inevit
a
ble, we would h
a
ve to set in pl
a
ce procedures to cross
check
f
in
a
nci
a
l st
a
tements
a
nd documents to ensure th
a
t
a
ny losses or mis
a
ppropri
a
ted funds h
a
ve been identi
f
ied
a
nd the situ
a
tion is recti
f
ied quickly to ensure more loss h
a
s not been t
a
ken.
• Security- To control the integrity of physic
a
l
a
ssets, we must secure them using locks on doors, s
a
fes,
a
nd security
c
a
mer
a
s. We will
a
lso h
a
ve to m
a
ke sure th
a
t computers
a
nd other digit
a
l
a
ssets
a
re properly secured using strong
p
a
sswords
a
nd even 2 F
a
ctor Authentic
a
tion to ensure no un
a
uthorized personnel c
a
n
a
ccess propriet
a
ry
inform
a
tion
a
nd resources they
a
re not supposed to h
a
ve
a
ccess to.
• Seper
a
tion of Duties- This is done to reduce risk by dividing work duties
a
mong multiple colle
a
gues within the entity.
It cre
a
tes
a
checks
a
nd b
a
l
a
nce system
a
nd, ensures th
a
t the power to m
a
ke
a
decision is not solely in one person’s
h
a
nds.

RECAP
Key Terms and Concepts
• Debit- An
a
ccounting entry th
a
t either decre
a
ses
a
li
a
bility or, incre
a
ses
a
n
a
sset.
• Credit- An
a
ccounting entry th
a
t incre
a
ses
a
li
a
bility or, decre
a
ses
a
n
a
sset.
• C
a
sh B
a
sis Accounting- Revenue is reported only when c
a
sh is received,
a
nd expenses
a
re
reported when c
a
sh is p
a
id out.
• Accru
a
l B
a
sis Accounting- Money is
a
ccounted for before it is received.
• Fin
a
nci
a
l St
a
tement- Written records th
a
t convey the
f
in
a
nci
a
l
a
ctivities of
a
comp
a
ny.

References
1.Hayes, Adam (Feb 22nd, 2024), Total Debt-to-Total Assets Ratio: Meaning, Formula, and What’s Good. https://www.investopedia.com/terms/t/
totaldebttototalassets.asp
2. Hargrave, Marshall (Jan 28, 2024), Return on Assets (ROA): Formula and ‘Good’ ROA De
fi
ned. https://www.investopedia.com/terms/r/
returnonassets.asp#:~:text=ROA%20is%20calculated%20by%20dividing%20a%20
fi
rm's%20net%20income%20by,found%20on%20its%20balance%20sheet.
3. Fernando, Jason(Jan 26,2024), Return on Equity (ROE) Calculation and What it Means. https://www.investopedia.com/terms/r/
returnonequity.asp#:~:text=ROE%20is%20a%20gauge%20of,the%20value%20of%20shareholders'%20equity.
4. https://pages.stern.nyu.edu/~adamodar/New_Home_Page/data
fi
le/roe.html
5. https://
fi
nance.yahoo.com/news/live-nation-entertainment-inc-nyse-170735401.html#
6. Fernando, Jason(Jan 31, 2024), Balance Sheet: Explanation, Components and Examples https://www.investopedia.com/terms/b/balancesheet.asp
7. Murphy B., Chris (Feb 29, 2024), Cash Flow Statement: What it is and Examples https://www.investopedia.com/investing/what-is-a-cash-
fl
ow-statement/
8. Fernando, Jason(Mar 5, 2024), Pro
fi
t and Loss Statement Meaning, Importance, Types and Examples https://www.investopedia.com/terms/p/plstatement.asp
9. Moral, Chizoba (Nov 28, 2023), Accrual Accounting vs. Cash Basis Accounting: What’s the Di
ff
erence?. https://www.investopedia.com/ask/answers/09/accrual-
accounting.asp#:~:text=Under this method, revenue is reported on the income statement,businesses and for personal
fi
nances.
10. Murphy B., Chris (Feb 2, 2024), Financial Statements: Lists of Types and How to Read Them. https://www.investopedia.com/terms/f/
fi
nancial-statements.asp

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