Company is PFIZER

SCENARIO: You are a new hire for a major corporation completing your eight-week rotation related to accounting, financial reporting, budgeting, cost control, and profit maximization. As part of your rotation you are learning about the accounting process and how to use accounting information to make managerial decisions.

B. Review your SEC 10-K companys balance sheet (statement of position).

Your SEC 10-K company communicates their philosophy and financing strategy on the balance sheet through reporting of assets and liabilities. First, what is Working Capital? It is calculated as:

Current Assets Current Liabilities = Working Capital

Working capital (WC) may be negative if current liabilities (CL) exceed current assets (CA). If this occurs, what does this indicate about the corporations financial position? Is this a cause for concern? How does your SEC 10-K company address this issue? Do they discuss strategy for overcoming a negative working capital?

The basic accounting equation is: Assets Liabilities = Owners Equity. This basic equation is illustrated by reporting assets, liabilities and owners equity on the balance sheet. If owners equity is positive, this is a favorable position. For some companies, especially if they recently recapitalized with debt, there may be negative equity. Discuss your corporations financial position reported on the balance sheet.

Consider the classified balance sheet. What is a classified balance sheet? How is a classified balance sheet different from a more traditional balance sheet format that lists all assets and liabilities as one total. What is the benefit of creating subtotals within assets and within liabilities to separate current from non-current?

Provide a summary of the accounting concepts learned through the readings and practice quizzes for this week. Demonstrate your understanding of the week's concepts. The more detailed your write-up documenting your understanding the higher it will be graded. (See Rubric for details.)

After addressing the above topics, additional topics you can incorporate into your weekly homework assignment:

• Why do companies need to value their accounts receivable at the end of each accounting period?
• Discuss the differences between the inventory accounting methods (LIFO, FIFO, Weighted Average, Specific Identification). Do these inventory methods reflect the actual flow of inventory?
• What are some of the current liabilities you learned about in this weeks readings.
• What topic(s) gave you trouble this week (if any)?/What topic(s) do you feel you were able to grasp? Post questions in the homework discussion thread!