Financial Reporting Assignment Example | Topics and Well Written Essays - 750 words

Financial Reporting - Assignment Example The assets listed in Coca-Cola Company’s balance sheet are classified into two main categories, current and other assets. Current assets are divided into two sections, with the first one being cash and cash equivalents and short term investments (The Coca-Cola Company, 2013). All the other assets that do not make up part of current assets are the long-term assets that are listed individually. In a balance sheet, cash equivalents always appear with cash as the first of current assets. From research, it is noted that cash equivalents are non-cash assets that are highly liquid or can be converted into cash immediately. This means that cash equivalents are assets that can be readily sold or disposed of and converted into cash for immediate use. Just like cash, cash equivalents are usually low risk and return assets, meaning that their face value rarely changes much. From the annual report for The Coca-Cola Company, it can be seen that the total value for the total current liabilit ies for 2012 was $27,821,000,000 while the total value for the total current liabilities for 2011 was $24,283,000,000 (The Coca-Cola Company, 2013). It should be noted that 2012 was the most recent annual reporting period while 2011 was the previous annual reporting period for The Coca-Cola Company. ... The creditors expect to be paid at a future date, so they review the financial statements to see if the company will be able to pay its debts in time. The creditors will look at the balance sheet to determine if the company has enough current assets to pay immediate debts and if the company’s debts can be covered by the assets that it owns. The creditors will also look at the annual reports to assess the liquidity of the company should it need to pay its debts immediately. Conversely, investors are the people who own the company, mostly in the form of shareholding. In any investment, the investors look to earn a return on their investment and get a return for their investment. This means that information contained in the balance sheet and income statements is important to the investors. The investors will look at dividends paid out to determine if they will earn a return on their investment, that is whether they will make a profit by investing in the company. The investors wil l also want to be sure that their original investment is paid back, so they look at the current assets and current liabilities to know if they will get paid the value of their investment. Finally, the employees of the company are assumed to want to work for the company for as long as possible. This means that the employees of the company expect the company to be a going concern, meaning that the company is expected to have sound performance and look to be profitable. To determine this, the employees of the company will look at the financial information presented in the balance sheet and income statements to determine if the company is growing or failing.