Samone King

Financial Reporting Problem, Part 1

08/21/2014
XACC290

Samone King

The company I chose is GameStop. To get the information needed, I will be looking at
GameStops financial statements (mostly the balance sheet and income statement). As of August
23, 2014, GameStops total assets, according to their balance sheet, come to $4,091.40
(investor.gamestop.com). There are a lot of things that can be counted at an asset to this
company. Other than cash, there are the amounts of trade they get, their inventory, buildings,
land and property, and what they give to charity just to name a few. Knowing this is very
important to a lot of people like the finance department, investors and even the board of
directors. This type of information show basically what the company has in their back pocket,
whether those assets are long term or short term, cash or property. It is important to be able to
account for what the company has in terms of assets because that is really what the company can
base its worth on. This information can also help the company plan for the upcoming fiscal year.
Now the total assets for 2013 were $3,872.20 (investor.gamestop.com). As one can see, they had
a $219.20 increase from 2013 to 2014. It is a small increase but still show that the company is
profiting.
One thing that is on the top of the asset list is the cash and equivalents. These represent
short-term, highly liquid (how fast the company can turn them into cash) investments that are
both readily convertible to known amounts of aches and so close to their maturity that they
present insignificant risk of changes in interest rates (investor.gamestop.com). These investments
have to originally be mature in three months or less to be consider to fall under this category. The
companys cash and cash equivalent at the end of the annual reporting period is $536.20
(investor.gamestop.com).

Samone King

When looking at the company, one has to look at more than their assets. Their liabilities
can also be a deal breaker. Investors do not want to invest in a company that will not make them
any money. A company can being in a lot of money but if their liabilities are high also, they
cannot be making much money. An investor can find the list of liabilities on the balance sheet.
The first thing investors should look when looking over the liabilities of a company are their
account payables. Accounts payable are accounts that the company owes suppliers for materials
and merchandise acquired on an open account (google.com). When it comes to GameStop, this is
the game systems and games that they take in. Their accounts payable at the end of the fiscal
year is $783.90 (investor.gamestop.com). In the previous year, it was $611.60
(investor.gamestop.com). Their accounts payable have increased by $172.30.
Net revenue typically refers to a companys revenue net of discounts and returns. There
are times when the user is referring to net profit, which is sales net of all expenses. Looking over
the annual income statements, which is a statement that shows a companys revenues and
expenses for both operating and non-operating activities, of GameStop for the past three year
(including this one), they seem pretty consistent. In 2014, the revenue was $9,039.50. In 2013,
there revenue was $8,886.70. In 2012, their revenue was $9,550.50 (inverstor.gamestop.com).
Their net income after taxes are $354.20 in 2014, $-269.80 in 2013, and $338.50 in 2012.
Current assets are cash and other assets that are expected to be converted to cash within a
year (google.com). When calculating a companys current assets, there are some things to look
at. There are the cash and short term investment, total receivables, total inventory, and prepaid
expenses. Going to GameStops balance sheet (a statement of the assets, liabilities and capital of
a business or other organization at a particular point in time) at the end of the fiscal year of 2014,

Samone King

their total current assets are $1,949.60. Now the current assets equaled to $1,749.50 at the end of
2013. It showed that there was an increase of $200 from 2013 to 2014.
There are a number of people that would benefit from the information that was provided.
Potential investors are in top priority. They can see how well the company is doing and what they
are lacking. They see how the company has been doing and the direction the company is going.
Same thing can be said for the CEO as well as the board of directors. They see what is working
for the company and what they need to do to change things. Employee can also benefit from this
information. Even though they cannot personally change things, they can see how secure their
jobs are in the future. If the company is doing well, they know that their job is secure. In some
type of way, this information can benefit everyone that has something to do with this or any
company.

Samone King

Reference

http://investor.gamestop.com/phoenix.zhtml?c=130125&p=irol-fundBalanceA
http://www.investorguide.com/stock-charts.php?ticker=GME
http://www.investopedia.com/terms/i/incomestatement.asp
http://phx.corporate-ir.net/phoenix.zhtml?c=130125&p=irol-reportsannual