PART 2: THE BALANCE SHEET (Intel Corporation year 2019)

The balance sheet summarizes the companys assets, liabilities and equity. Assets are usually grouped into one of the following categories: current assets, investments, capital assets (property, plant and equipment and intangible assets), and other assets. Liabilities are grouped into current and long-term.

1. On what page of the annual report does the balance sheet appear? ____

2. Explain what the accounting equation is and how the balance presents this equation (pick up the appropriate numbers from the balance sheet):

3. Asset Growth

The "size" of a corporation is commonly measured by the amount of total assets on the corporation's balance sheet. A corporation is considered "growing" if total assets increase from one year to the next. The rate of growth is measured by the change in total assets divided by the total assets of the previous year:

a. Determine the percentage growth in assets for this company. ____

Computation:

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b. Identify the balance sheet accounts most significant in explaining the change in total assets of the corporation? What events might explain the reasons for the changes in these accounts?

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4. Common-size Analysis

Common size analysis is used to analyze the relative importance of each item on the balance sheet. Specific items are usually expressed as a percentage of total assets. These percentages are often compared to the percentage of previous years or to the percentages calculated for another corporation in the same industry. Complete common-size analysis for the following items for your company's balance sheet.

Current Assets Investments Property, Plant & Equip. Intangible Assets Other Assets Total Assets Current Liabilities Total Liabilities Shareholders' Equity

Current Year ______________ ______________ ______________ ______________ ______________ ______________ ______________ ______________ ______________

Previous Year ______________ ______________ ______________ ______________ ______________ ______________ ______________ ______________ ______________

Explain what you can infer from the common size analysis:

5. Assessing Working Capital

Current assets are called "current" because they are converted into cash during the operating cycle. Current liabilities are liabilities liquidated by current assets or other current liabilities within the operating cycle. Working capital is equal to current assets minus current liabilities. In other words, working capital is the amount of current assets remaining after the current liabilities have been paid.

Working capital is considered a measure of the solvency of a corporation because a negative working capital indicates the corporation is not able to pay current liabilities maturing in the next operating cycle. Calculate working capital for the corporation as follows:

Current Assets Minus: Current Liabilities Working Capital

Current Year _______________ _______________ _______________

Previous Year _____________ _____________ _____________

By how much did the amount of working capital increase or decrease compared to the previous year?___________

What balance sheet accounts explain the most significant changes in working capital?

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What can you infer from the working capital analysis?

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