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ACC 321 – Intermediate Financial Accounting

Case 1

Use the following method to name your file:

C1_LastName.docx or .pdf

For example: C1_Wieland.docx

Due: Tuesday, January 10^th (penalties start on Thursday, January 12^th)

The goal of this case is to apply the materials from Chapters 1 – 5 and 21 to Acushnet.

Obtain a copy of the company’s latest annual report (10-K) using this link to EDGAR (the SEC’s website) or Acushnet’s Investor Relations:

https://www.sec.gov/edgar/searchedgar/companysearch.html

or

https://www.acushnetholdingscorp.com/investors/overview/default.aspx 

Ch. 1

1. Identify three specific stakeholders for Acushnet and describe how they use financial information.

Ch. 2

2. Illustrate the following qualitative characteristics / assumptions using specific examples related to Acushnet company:

A. Predictive Value

B. Materiality

C. Neutrality

D. Free from Error

E. Reporting Entity

F. Monetary Unit

3. What is the company’s fiscal year end?

Ch. 3

4. Using Acushnet company’s financial statements and related notes, identify a deferral and and an accrual. Explain the timing of the cash flows for each and describe the income statement and balance sheet accounts associated with each item.

Ch. 4

5. Use Acushnet company’s financial statements to illustrate the articulation of the financial statements (see Exhibit 4.1).

6. Identify and describe two examples of historical cost information presented in Acushnet company’s financial statements. Why is historical cost used instead of fair value?

7. Identify and describe one example of fair value information presented in Acushnet company’s financial statements (see Note 12, p. F-25). Why is fair value used instead of historical cost?

8. What did total assets, total liabilities, and total stockholders’ equity equal at the end of 2021?

9. Use the Acushnet financials excel file to create a common-sized balance sheet and rate of change balance sheet and answer the following questions:

o Which asset comprises the largest percentage of total assets?

o Which liability comprises the largest percentage of total assets?

o Which asset grew the most (in percentage terms) from 2020 to 2021?

o Which liability grew the most (in percentage terms) from 2020 to 2021?

10. Compute the following ratios for Acushnet company:

· Return on assets (assume tax rate is 17%)

· Debt-to-assets ratio

· Current ratio

· Inventory turnover in days

· Accounts Receivable Turnover in days

What do these ratios indicate about the company’s financial condition?

Ch. 5

11. Identify three uses for Acushnet company’s income statement.

12. What is the main source of revenue for Acushnet company? Describe Acushnet’s revenue recognition policy in your own words (see p. F-16).

13. Use the Acushnet financials excel file to create a common-sized income statement and rate of change income statement and answer the following questions:

· How has the gross profit margin changed over the last 3 years?

· What is the largest expense item, as a percentage of sales? What did the company say about the change in cost of sales from 2020 to 2021?

· What was the change in sales over the last 3 years? What was the change in net income over the last 3 years?

14. What were Acushnet company’s cash flows from operating, investing, and financing activities for the current year? How much depreciation and amortization did Acushnet’s add back in the operating section? How much did Acushnet’s spend on capital expenditures? How much cash dividends did Acushnet’s send to stockholders?