AC 298 Unit 5 seminar

1. AC 298Unit 5 seminar Professor Kris Friestad

2. In unit 5… • Examine financial information for Intel Corporation • Identify financial trends • Study financial statements • Income Statement • Balance Sheet • Statement of OE • Statement of Cash Flows

3. Unit 5 Project • For this activity you will collect the financial data of the Intel Corporation. Publicly traded companies such as Intel make their financial statements available online. • We know from our studies that financial statements are useful for internal purposes, as well as for external purposes, for potential investors. Intel’s financial statements tell a story, and we will identify some aspects of the financials and see if you can retell that story.

4. Unit 5 Project • Go to Intel’s “Annual reports, 10-Ks and proxy statements” page at http://phx.corporate-ir.net/phoenix.zhtml?c=101302&p=irol-reportsAnnual and download the PDF file titled Form 10-K. (This should be the second bullet point under 2007 Online Annul Report and 10-K). • This assignment will concentrate on these financial statements. • Download to look at during this seminar! :)

5. Intel corporation Intel information: 2007 2006 Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $38,334 $35,382 Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,430 17,164 Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,904 18,218 Research and development . . . . . . . . . . . . . . . . . . . . . . . . 5,755 5,873 Marketing, general and administrative . . . . . . . . . . . . . . . . 5,401 6,096 Restructuring and asset impairment charges . . . . . . . . . . . . 516 555 Amortization of acquisition-related intangibles and costs . . . 16 42 Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,216 5,652 Gains (losses) on equity investments, net . . . . . . . . . . . . . . 157 214 Interest and other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . 793 1,202 Income before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,166 7,068 Provision for taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,190 2,024 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,976 $ 5,044

6. Question 1 • Identify the income statement. Concentrate on the operating expenses. Please write in your own words a paragraph about 50 words defining operating expense and stating the trends in operating expenses. Tell what you think “restructuring and asset impairment charges are.”

7. Question 1 • Discussion points: • What are operating expenses? • What is the trend in operating expense? • What are the restructuring and asset charges? • Why is it important to identify trends? • How do we use these trends for future projections?

8. Question 2 • Identify the balance sheets for 2006 and 2007. Please visualize (calculate) the current ratios for both years, writing a paragraph of at least 50 words, stating what elements of the current ratios are responsible for the changes. • Do you know how to calculate the current ratio? (formula)

9. Question 2 • Formula for current ratio: Current assets / current liabilities • What caused the change? • Is the change good or bad? • What other ratios might you use with this organization? • For what purpose?

10. Question 3 • Identify the statements of cash flows. Please show the three activities (section) detailed in the statement of cash flows and identify the information and where the preparer of a statement of cash flows can find the information to prepare each section. Your statement should be one or more paragraphs totaling at least 50 words.

11. Question 3 • What are the three main areas of the Statement of Cash Flows? • What information is found in each area? • Cash inflow/outflow of what? • What is the importance of the Statement of Cash Flows? • What other ideas/thoughts do you have about the Statement of Cash Flows?

12. Question 4 • Show the statement of owner’s equity. Several factors are responsible for the change in the owner’s equity in the two years being compared. Intel has only one class of stock outstanding. Did the number of shares of that stock increase or decrease during the year 2007? Did the company pay a cash dividend during the year? If so, how much per share? Where did you find that information? Please identify those elements, writing a paragraph of at least 50 words, stating where you can find the details of these answers.

13. Question 4 • What is a cash dividend? • Does Intel pay other types of dividends? • Why is this information important? To whom? • Where else could you find information about Intel’s stocks, equity and related trading information?

14. Assignment Checklist… 1. Identify the trends in operating expenses (Question 1) 2. Show the current ratio (Question 2) 3. Identify the three activities (sections) on the statement of cash flows (Question 3) 4. The dividends paid, number of shares, and dividends per share (Question 4)

15. You… The accountant • How important is it for an accountant to analyze financial reports? • What kinds/types of analysis are accountants responsible for? • Share any other thoughts about the role of the accountant in financial statement preparation

16. Thinking about your final project… • What financial information have you located for the coffee shop? • Are the financial statements calculated accurately? • How do you know? • How can you and/or Mike use this information?

17. Thinking about your final project… • What conclusions have you drawn about: • The Income Tax 2006? • Sales Tax? • Others? • Are there any missing documents? • Do any of these missing items affect the bottom line?

18. Unit 5 project • Due TUESDAY AT 11:59PM ET • Use APA Guidelines • Be sure to look at notes I’ve made to previous projects so you don’t make same mistakes!

19. Unit 5… Half way there!! QUESTIONS?? Have a SUPER Week!