Berkshire Hathaway Inc.

March 23, 2018 Education

Berkshire Hathaway Inc. – Executive Summary This team has been assigned to perform an executive summary of Berkshire Hathaway Inc. (BHI). This company has been profitable for the last three fiscal years, and is on the U. S. Stock Exchange. This summary will contain information gathered from BHI’s most recent annual report. Using the company’s balance sheet, cash flow statement, and income statement (all three are attached following the references) 14 key areas will be addressed: 1. Company history| 2. Audit firm| 3. Stock exchange| 4. Cash and cash equivalents| 5. Total current assets| 6. Two largest current assets| 7.

Total assets| 8. Accounts payable| 9. Total current liabilities| 10. Two largest current liabilities| 11. Total liabilities| 12. Net revenues| 13. Net income| 14. Change in net income| BHI is a conglomerate with headquarters in Omaha, Nebraska. They can actually trace their roots back to a textile company established by Oliver Chase in 1839 (BHI, 2010). In 1962, Warren Buffet started buying stock in BHI, and is now the CEO. By 1985, BHI was no longer a textile operation; it was now solely an insurance company (BHI, 2010). BHI has a Audit Committee Charter that is comprised of at least three directors.

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All of whom have been determined to have no material relationship to the company, and is otherwise independent, under the rules of the New York Stock Exchange Inc. and rule 10a-3 under the Securities Exchange Act of 1934 (BHI, 2010). BHI is on the New York Stock Exchange and their ticker symbol is BRK. A (BHI, 2010). BHI is ranked the #1 corporate status according to the 11th annual Harris United States quotient. BHI is a company owning subsidiaries engaging in a figure of diverse activities. This company is listed with BRKA and BRKB stock exchange that are known as class A and B shares. Class B shares are designed never to trade above 1/30th of the price of Class A shares, although they can sell for less than that. ” Included as well is the ticker symbol that contains the “Fair Isaac Corporation FICO. ” FICO obligation is to transform businesses by making every decision count. Shareholders in BHI approved a 50-1 split of the company’s class B shares. This means the price of the stock will drop about $67 a share. “Berkshire introduced lower prices in Class B the year of 1996 to allow smaller investors to gain entry to the company (Harris, 2010, p. 10). BHI has gained net worth during 2009 around $21. 8 billion. That increased the value of both Class A an Class B stocks by 19. 8%. “The business has grown from 16 million in 1967, to 62 billion at the end of 2009, and the float of the company has grown from $2. 7 billion to $9. 6 billion (BHI, 2010). ” With that, they ended the recent annual period with 297,119,000 in assets, 166,017,000 in liabilities, and 97,130,000 in net tangible assets that has increased dramatically over the years. BHI’s stock produced a total return of 76% from years 2000-2010, and they continue to invest successfully. Berkshire now has a market value of $164 billion, making Buffett’s stake worth more than $50 billion (Staff & Wire Reports, 2007). ” BHI is reporting its assets in the Annual Report year end 2009 as $297,119 billion dollars. The report also indicated that the 2008 assets were $267,399 billion dollars; an increase of almost 30 billion dollars over the previous year. Accounts payable totaled $161,334 billion in 2009 and $153,962 billion in 2008. Liabilities from 2008 to 2009 have increased just over $12 billion dollars. The amounts payable for the Insurance sector are $90,241 billion in 2009 and $87,436 billion in 2008.

The Utility and Energy sector is virtually unchanged with $25,474 billion in 2009 and $25,328 billion in 2008. Financial products went from $30,656 billion in 2008 to $26,394 billion in 2009. Taxes for 2009 were almost $20 billion, is approximately double in 2008 of 10 billion. Accounts are classified by asset accounts, liability accounts or shareholder’s equity accounts, however the most common classification between accounts are assets and liability. Assets are anything the company owns that has future value. Examples include cash, property, equipment, accounts receivable and investments.

Copyrights, trademarks and patents are also considered assets. Liabilities are items or things the company owes. Some examples are accounts payable or yearly payroll and business lease costs. At Berkshire Hathaway, the two largest current liabilities at the end of its two most recent annual reporting periods are losses and loss adjustment expenses and accounts payable, accruals and other liabilities. The company’s total liabilities at the end of its two most recent annual reporting periods was (in millions), $161,334 in 2009 and $153,692 in 2008.

Revenue is the amount of money a company receives during a specific period with other business and customers. Revenue is calculated by multiplying the price at which goods or services are sold by the number of units or amount sold (BKS, 2009). BHI’s revenues, or net revenues, for the last three annual reporting periods were (dollars in millions), $112,493 in 2009, $107,786 in 2008 and $118,245 in 2007. According to BHI’s financial report, their net income before taxes was $11,552. 00, after taxes $8,014. 00 and the total net income for 2009 was $8,055. 00. In 2008, BHI had an income before taxes of $7,574. 0, after taxes $5,596. 00 and a total net of 4,994. 00. The year 2007 was a good year for BHI. Before taxes they reported an income of $20,161. 00, after taxes $13,567. 00 and their total income was $13,213. 00. After looking at these figures, one can see how the economy has influenced this company and how they have been able to maintain a steady income. Although 2007 was beneficial to the company’s success it just goes to show, everyone is affected by the decline in the economy. The report shows from 2007 to 2008 there was an $8,219. 00 decrease in the income for the company.

Then from 2008 to 2009, there was an increase of 3061. 00. Year 2008 had been a rough year for BHI, but they were able to maintain their business even with the fluctuation of income they received. In conclusion, BHI has had their ups and downs. This report has shown in the past three years 2008 was its worst and 2007 was its best. As the economy improves in the market place an encouraging increase of income will be present as seen in the year 2009. One can take away from this report the importance of annual reporting, liabilities, assets and income in maintaining a successful and happy business. References

Berkshire Hathaway Inc. , (2010). Berkshire Hathaway Inc. Retrieved on April 18, 2010 from http://www. berkshirehathaway. com/ Business Knowledge Source, (2009). What are revenues? Retrieved from the Business knowledge source website on April 18, 2010: http://www. businessknowledgesource. com/investing/what_are_revenues_028260. html Harris Interactive, (2007). Berkshire Hathaway Ranks #1 on Corporate Reputation, According to 11th Annual Harris Interactive U. S. Reputation Quotient(R) RQ(R) Survey. (2010, April). Real Estate Weekly News,10. Retrieved April 20, 2010, from Career and Technical Education. Document ID: 2009700701). Staff and Wire Reports, (2007, March 2). Berkshire Hathaway reports sharply lower profits in quarter ; However, for the full year, the firm’s earnings rose 29. 2% to $11. 02 billion. Buffalo News, Central Edition. p. D7. Retrieved April 20, 2010, from Business Dateline. (Document ID: 1228072551). Berkshire Hathaway Inc. Balance Sheet All amounts in millions of US Dollars except per share amounts. | Assets| Dec 09| Dec 08| Dec 07| Current Assets| Cash| 30,558. 0| 25,539. 0| 44,329. 0| Net Receivables| 14,792. 0| 14,925. 0| 13,157. 0| Inventories| –| –| –|

Other Current Assets| –| –| –| Total Current Assets| –| –| –| Net Fixed Assets| 46,656. 0| 45,157. 0| 36,190. 0| Other Noncurrent Assets| 250,463. 0| 222,242. 0| 236,970. 0| Total Assets| 297,119. 0| 267,399. 0| 273,160. 0| Liabilities and Shareholder’s Equity| Dec 09| Dec 08| Dec 07| Current Liabilities| Accounts Payable| –| –| –| Short-Term Debt| –| –| –| Other Current Liabilities| –| –| –| Total Current Liabilities| –| –| –| Long-Term Debt| 37,909. 0| 36,882. 0| 33,826. 0| Other Noncurrent Liabilities| 128,108. 0| 121,250. 0| 118,601. 0| Total Liabilities| 166,017. | 158,132. 0| 152,427. 0| Shareholder’s Equity| Preferred Stock Equity| –| –| –| Common Stock Equity| 131,102. 0| 109,267. 0| 120,733. 0| Total Equity| 131,102. 0| 109,267. 0| 120,733. 0| Shares Outstanding (thou. )| 1,641. 2| 1,641. 2| 1,641. 2| Berkshire Hathaway Inc. Income Statement All amounts in millions of US Dollars except per share amounts. | | Dec 09| Dec 08| Dec 07| Revenue | 112,493. 0| 107,786. 0| 118,245. 0| Cost of Goods Sold| –| –| –| Gross Profit | 112,493. 0| 107,786. 0| 118,245. 0| Gross Profit Margin| –| –| –| SG&A Expense| 60,764. 0| 8,052. 0| 7,098. | Depreciation & Amortization| –| –| –| Operating Income| 11,552. 0| 7,574. 0| 16,523. 0| Operating Margin| 10. 3%| 7%| 14%| Nonoperating Income| 2,932. 0| 4,444. 0| 3,638. 0| Nonoperating Expenses| –| –| –| Income Before Taxes| 11,552. 0| 7,574. 0| 20,161. 0| Income Taxes| 3,538. 0| 1,978. 0| 6,594. 0| Net Income After Taxes| 8,014. 0| 5,596. 0| 13,567. 0| Continuing Operations| 8,055. 0| 4,994. 0| 13,213. 0| Discontinued Operations| –| –| –| Total Operations| 8,055. 0| 4,994. 0| 13,213. 0| Total Net Income| 8,055. 0| 4,994. 0| 13,213. 0| Net Profit Margin| 7. 2%| 4. %| 11. 2%| Diluted EPS from Total Net Income| 5,193. 00| 3,224. 00| 8,548. 00| Dividends per Share| –| –| –| Berkshire Hathaway Inc. Cash Flow Statement All amounts in millions of US Dollars except per share amounts. | | Dec 09| Dec 08| Dec 07| Net Operating Cash Flow| 15,846| 11,252| 12,550| Net Investing Cash Flow| (11,161. 0)| (32,066. 0)| (13,428. 0)| Net Financing Cash Flow| 233. 0| 2,286. 0| 1,366. 0| Net Change in Cash| 5,019. 0| (18,790. 0)| 586. 0| Depreciation & Amortization| | | | Capital Expenditures| (4,937. 0)| (6,138. 0)| (5,373. 0)| Cash Dividends Paid| | | |

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