Use the following information from Sketchers, Inc.'s financial statements for the fiscal year ended December 31, 2019 to answer the next four questions. Assume Investments will be sold within a year and Prepaid expenses will be used up within a year. Accounts are listed in alphabetical order. All amounts are in millions of dollars. SKECHERS |Accounts payable Accounts receivable Accumulated depreciation | Cash 765 Inventories Investments (will be sold in 1 year) Long-term debt 1,070 699 112 610 1,119 825 Other current liabilities 309 Other long-term assets Other long-term liabilities Prepaid expenses Property, plant, and equipment Retained earnings Common stock 277 1,334 Cost of goods sold Current portion of long-term debt Depreciation expense | Dividends General and administrative expenses Income tax expense Interest expense 2,729 26 66 114 1,349 111 2,259 5,220 1,514 Sales Selling expenses Short-term debt Wages payable 89 370 83 23 Interest revenue 92 1. Calculate Skechers' Total Current Assets as of December 31, 2019. a. $1,769 million b. $2,594 million c. $2,708 million d. $2,820 million 2. Calculate Skechers' Total Assets as of December 31, 2019. a. $6,113 million b. $4,893 million c. $3,559 million d. $2,073 million 3. Calculate Skechers' Total Current Liabilities as of December 31, 2019. a. $1,238 million b. $1,232 million c. $1,172 million d. $929 million 4. Calculate Skechers' Net Income or Net Loss for the year ended December 31, 2019. a. $266 million Net Loss b. $407 million Net Income c. $152 million Net Loss d. $347 million Net Income
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
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