In the third quarter, Toys “R” Us showed $2. 3 billion of liquidity which included cash and cash equivalents of about $399 million and available lines of credit that totals about $1. 9 billion. The amount of cash used in the operating activities totaled to $449 million which was lower than the previous year (About Toy “R” US Corporate). Toy “R” Us along with other companies is responsible for disclosing components of cash and cash equivalents along totals from the cash flow statement with the equivalent items showing in the balance sheet.
Extraordinary items, interest and dividends, taxes on income and foreign currency cash flows and non-cash transaction should be disclosed separately. Accounts receivable is another short-term liquid asset that results from credit sales to customers. Credit is offered to increase sales, uncollectible accounts associated with credit sales should be charged as expenses in the period in which the sales are made. A small number of customers account for a large share of Toy “R” US net sales and accounts receivable. Toy “R” Us receivables in 2012 are $236 million. Total current receivables make up 4. 6 percent of total assets for the year.
Accounts and other receivables consist primarily of receivables from vendor allowances and consumer credit card and debit card transactions. The accounts receivable turnover compares the level of receivables with sales. Its allowance for doubtful accounts reduced to 2. 9 million in fiscal year 2011 to 2012. Toy “R” Us capital expenditure plays a major role of it long term toy and juvenile strategy (Toys “R” Us, Inc. ). By the end of the quarter the company had about $2 billion of liquidity, including cash and cash equivalents of about $6 million and unused available for lines of credit totaling $1 billion.
Inventory is another current asset of a company. Inventory represents items held for resale that will go into the manufacturing of goods to be sold. Toy “R” Us financial disclosures states that the inventory balances of $3,551 on October 27, 2012 and $2,232 million on January 28, 2012. This financial disclosure wants investors to know that inventory on this statement were at completion. Toys “R” Us offers customers the Toys R Us Credit Cards, both by GE Capital Retail Bank.
Toy “R” Us maintains disclosure controls and procedures that are designed to ensure and maintain information that is required to be disclosed in the financial reporting. The purpose of the disclosures notes to the financial reporting presents information which cannot be presented on income statement, balance sheet and statement of cash flows. Analyzing the disclosures contained within the notes to the financial statements is mainly conducted in order to identify the company financial performances, such as, cash and cash equivalents, receivables and its inventory.
Toy “R” Us wants to be committed to maintaining and conducting its business with integrity ensuring that each asset, liability, expense and other transaction are disclosed accurately. The disclosure analysis defines whether or not the company under analysis is a good or bad investment for the company interested in acquisition (ehow. com). References Kieso, D. E. , Weygandt, J. J. , & Warfield, T. D. (2010). Intermediate accounting (13th ed. ). Hoboken, NJ: John Wiley & Sons. About US – Toy “R” Us Corporate, retrieved February 25, 2013 from http://www. toysrusinc. com How to Write a Disclosure Analysis Paper | eHow. com