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38 of 57Visit UMT online at www.umtweb.eduChapter 1, ACCT125
Hershey Foods CorporationRetained Earnings StatementFor the Year Ended December 31, 2001
(in thousands)
Retained earnings, January 1, 2001 $2,702,927Add net income $207,156Less dividends 154,750Increase in retained earnings 52,406Retained earnings, December 31, 2001 $2,755,333From the
For the Year Ended December 31, 2001(in thousands)
Net cash flows from operating activities $ 706,405Cash flows from investing activities:
Investments in property, plant, and equipment $(187,029)Proceeds from sale of property, plant, and equipment 63,042
Net cash flows used in investing activities $(123,987)Cash flows from financing activities:
Cash receipts from financing activities, including debt $ 30,589Dividends paid to stockholders (154,750)Repurchase of stock (40,322)Other, including repayment of debt (315,757)
Net cash flows used in financing activities $(480,240)Net increase in cash during 2001 $ 102,178Cash as of January 1, 2001 31,969Cash as of December 31, 2001 $ 134,147
Note the time periodNote the time period
47 of 57Visit UMT online at www.umtweb.eduChapter 1, ACCT125
48 of 57Visit UMT online at www.umtweb.eduChapter 1, ACCT125
The The business entity conceptbusiness entity concept limits the economic data in limits the economic data in the accounting system to the accounting system to
data related directly to the data related directly to the activities of the business.activities of the business.
The The business entity conceptbusiness entity concept limits the economic data in limits the economic data in the accounting system to the accounting system to
data related directly to the data related directly to the activities of the business.activities of the business.The cost concept
determines the amount initially entered into the accounting records for
purchases.
The cost concept determines the amount initially entered into the accounting records for
purchases.
Accounting ConceptsAccounting Concepts
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A business normally expects to continue operating for an indefinite period of time. This is known as the
going concern concept.
A business normally expects to continue operating for an indefinite period of time. This is known as the
going concern concept.Under the matching concept, revenues for a period are matched
with the expenses incurred in generating the revenue.
Under the matching concept, revenues for a period are matched
with the expenses incurred in generating the revenue.The objectivity concept requires
that entries in the accounting records and the data reported on financial statements be based on
objective evidence.
The objectivity concept requires that entries in the accounting
records and the data reported on financial statements be based on
objective evidence.
Accounting ConceptsAccounting Concepts
50 of 57Visit UMT online at www.umtweb.eduChapter 1, ACCT125
The unit of measure concept requires that all economic data be
recorded in dollars.
The unit of measure concept requires that all economic data be
recorded in dollars.Financial statements should contain all relevant data a reader needs to
understand the financial condition and performance of a business. This is the adequate disclosure concept.
Financial statements should contain all relevant data a reader needs to
understand the financial condition and performance of a business. This is the adequate disclosure concept.
The accounting period concept is the process in which accounting
data are recorded and summarized in financial statements.
The accounting period concept is the process in which accounting
data are recorded and summarized in financial statements.
Accounting ConceptsAccounting Concepts
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DEC. 31
2003
Balance Sheet Dec. 31, 2003
Income statement for the
year ended December 31,
2003
Next slide
Financial History of a BusinessFinancial History of a Business
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DEC. 31
2004
Balance Sheet Dec. 31, 2004
Income statement for the
year ended December 31,
2004
Next slide
Financial History of a BusinessFinancial History of a Business
53 of 57Visit UMT online at www.umtweb.eduChapter 1, ACCT125
DEC. 31
2005
Balance Sheet Dec. 31, 2005
Income statement for the
year ended December 31,
2005
Financial History of a BusinessFinancial History of a Business
54 of 57Visit UMT online at www.umtweb.eduChapter 1, ACCT125
Describe and illustrate the use of horizontal analysis to analyze and evaluate a company’s performance.6
Learning ObjectiveLearning Objective
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Hershey Foods CorporationIncome Statement
For the Year Ended December 31, 2001 and 2000(in thousands)
Sales $4,557,241 $4,220,976 $336,265Cost of sales 2,665,566 2,471,151 194,415Gross profit $1,891,675 $1,749,825 $141,850Selling and admin. expenses 1,269,964 1,127,175 142,789Operating income before taxes $ 621,711 $ 622,650 $ (939)
2001 2000 Amount Percent
$336,265$4,220,976
8.0%
Horizontal AnalysisHorizontal Analysis
56 of 57Visit UMT online at www.umtweb.eduChapter 1, ACCT125
Hershey Foods CorporationIncome Statement
For the Year Ended December 31, 2001 and 2000(in thousands)
Sales $4,557,241 $4,220,976 $336,265Cost of sales 2,665,566 2,471,151 194,415Gross profit $1,891,675 $1,749,825 $141,850Selling and admin. expenses 1,269,964 1,127,175 142,789Operating income before taxes $ 621,711 $ 622,650 $ (939)
2001 2000 Amount Percent
$194,415$2,471,151
8.0%7.9%
Horizontal AnalysisHorizontal Analysis
57 of 57Visit UMT online at www.umtweb.eduChapter 1, ACCT125
Hershey Foods CorporationIncome Statement
For the Year Ended December 31, 2001 and 2000(in thousands)
Sales $4,557,241 $4,220,976 $336,265Cost of sales 2,665,566 2,471,151 194,415Gross profit $1,891,675 $1,749,825 $141,850Selling and admin. expenses 1,269,964 1,127,175 142,789Operating income before taxes $ 621,711 $ 622,650 $ (939)