ACG3357CBE Section 01CBE Accounting for Business Managers

I have already started this assignment, I just need help revising. I have attached my documents that need revising. FEEDBACK: You have a very good start on this assignment, however, you have one requirement not provided, see grading rubric below.

Also, you provide a very basic and limited revenue forecast by only use 3 periods of history. See comments provided.

Grade for Deliverable 7100% of total grade1F – 1 – No PassCriterion 10% of total grade0A – 4 – MasteryPrepared a detailed income statement vertical and horizontal analysis using three years of data.Criterion 2 (Did not use items from the income statement to identify which expenses (costs) are likely fixed, variable, product, and period costs.0% of total grade0I – 0 – Not SubmittedNot SubmittedCriterion 30% of total grade0A – 4 – MasteryCreated a detailed ratio analysis report showing International Business Machines Corporation and its largest 4 competitors based on total revenue.Criterion 40% of total grade0C – 2 – CompetencePrepared a basic sales (revenue) forecast for the upcoming year including assumptions, calculations, and rationale. You only use 3 periods of historical data, see comments provided in your submission.Criterion 50% of total grade0A – 4 – MasteryProvided very detailed comments on recent accounting standards or ethical considerations that affect IBM.

×I recommend you review the Assignment Instructions along with the Grading Rubric and make sure you complete each requirement as requested.Assignment Content

CompetenciesAnalyze the role of accounting in business operations.Apply the principles of accrual accounting and accounting cycles.Appraise the financial health and performance of a company.Analyze cost behaviors and production costing methods.Employ accounting data for business analysis and prediction.Evaluate accounting-related legal and ethical business implications.Student Success CriteriaView the grading rubric for this deliverable by selecting the “This item is graded with a rubric” link, which is located in the Details & Information pane.ScenarioThe Vice President of Finance called you into a meeting to discuss the overall vision and future of your company. He states that he has always admired International Business Machines (IBM) since he studied the company in college. The VP has not followed the company as of late and would like you to prepare an update as to how IBM is doing over last three years and the top line outlook for next year. The VP would like you to use similar techniques that you have used in writing your previous reports.InstructionsUsing the financial statements of International Business Machines Corporation:Prepare an income statement vertical and horizontal analysis of International Business Machines Corporation using three years of data. Use Mergent Online to download the most current income statement data to Excel, financial year ended 2023.Be sure to search for International Business Machines Corp, and choose the United States entity. FAQ for accessing and downloading income statementsUsing the line item descriptions from the income statement, create a new tab and identify which expenses (costs) are likely fixed, variable, product, and period costs.Using Mergent Online, in a new tab create a ratio analysis report showing International Business Machines Corporation and its largest 4 competitors based on total revenueDownload the financial ratios for IBM and its competitors into Excel. Format and arrange the data for the following in a professional manner:Current RatioGross MarginInventory as % of Total AssetsInventory TurnoverDebt/Equity RatioNet Current Assets as % of Total AssetsNet PPE as % of Total AssetsNet Profit Margin %Operating Margin %R + D as % to Total RevenueROA %ROE %ROI %Selling and General Admin as % of Total RevenueTotal Asset TurnoverNote: Not all of the above ratios are available in Mergent Online, some will require your calculations.4.___Using all of the the historical income statement data available for IBM, in a new tab prepare a total revenue forecast for the upcoming year including your assumptions, calculations, and rationale.5.___Using the SEC.gov website, find articles on of International Business Machines Corporation and comment in a Word document on any recent accounting standards or ethical considerations that affect the company.Note: you must use Excel to perform all of your calculations, manual data entry will Not be accepted.You should submit one Excel Workbook with all worksheets (tabs) required, plus, one Word document for your narrative.Save your assignment as Microsoft Excel and Word files. (Mac users, please remember to append the “.xlsx” and “.docx” extension to the filename.) The name of the file should be your first initial and last name, followed by an underscore and the name of the assignment, and an underscore and the date (yyyy-mm-dd). An example is shown below: INTERNATIONAL BUSINESS MACHS COM (IBM)
Income Statement – Annual (As Reported)
FYE December
12/31/2023 12/31/2022 12/31/2021
Currency
USD
USD
USD
Scale
Million
Million
Million
Total Revenue
61860
60530
57350
Cost of Revenue, Total
27560
27842
25865
Gross Profit
34300
32688
31485
Selling/General/Admin. Expenses, Total
18609
18577
18608
Research & Development
6775
6567
6488
Operating Income
8690
1156
4837
Interest Expense (Income), Net
Gain (Loss) on Sale of Assets
Net Income Before Taxes
8690
1156
4837
Provision for Income Taxes
1271
-696
213
Net Income
7502
1639
5743
Preferred Dividends
Basic EPS Excluding Extraordinary Items
8.14
2.05
5.16
Basic EPS Including Extraordinary Items
8.23
1.82
6.41
Normalized Basic EPS
7.46
6.15
5.79
Basic Weighted Average Shares
911210
902664
895991
Diluted EPS Excluding ExtraOrd Items
8.05
2.03
5.11
Diluted EPS Including ExtraOrd Items
8.14
1.8
6.35
Normalized Diluted EPS
7.37
6.09
5.73
Diluted Weighted Average Shares
922074
912269
904641
Dividends Per Share
6.63
6.59
6.55
Depreciation & Amortization
4396
4802
6417
Number of Employees
305300
311300
307600
Source: Mergent Online
INTERNATIONAL BUSINESS MACHS COM (IBM)
Vertical Income Statement
FYE December
12/31/2023 12/31/2022 12/31/2021
Total Revenue
100.00%
100.00%
100.00%
Cost of Revenue, Total
44.55%
46.00%
45.10%
Gross Profit
55.45%
54.00%
54.90%
Selling/General/Admin. Expenses, Total
30.08%
30.69%
32.45%
Research & Development
10.95%
10.85%
11.31%
Operating Income
14.05%
1.91%
8.43%
Interest Expense (Income), Net
Gain (Loss) on Sale of Assets
Net Income Before Taxes
14.05%
1.91%
8.43%
Provision for Income Taxes
2.05%
-1.15%
0.37%
Net Income
12.13%
2.71%
10.01%
Depreciation & Amortization
7.11%
7.93%
11.19%
INTERNATIONAL BUSINESS MACHS COM (IBM)
Horizontal Income Statement
FYE December
12/31/2023 12/31/2022
Total Revenue
2.20%
5.54%
Cost of Revenue, Total
-1.01%
7.64%
Gross Profit
4.93%
3.82%
Selling/General/Admin. Expenses, Total
0.17%
-0.17%
Research & Development
3.17%
1.22%
Operating Income
651.73%
-76.10%
Interest Expense (Income), Net
Gain (Loss) on Sale of Assets
Net Income Before Taxes
651.73%
-76.10%
Provision for Income Taxes
-282.61% -426.76%
Net Income
357.72%
-71.46%
Preferred Dividends
Basic EPS Excluding Extraordinary Items
297.07%
-60.27%
Basic EPS Including Extraordinary Items
352.20%
-71.61%
Normalized Basic EPS
21.30%
6.22%
Basic Weighted Average Shares
0.95%
0.74%
Diluted EPS Excluding ExtraOrd Items
296.55%
-60.27%
Diluted EPS Including ExtraOrd Items
352.22%
-71.65%
Normalized Diluted EPS
21.02%
6.28%
Diluted Weighted Average Shares
1.07%
0.84%
Dividends Per Share
0.61%
0.61%
Depreciation & Amortization
-8.45%
-25.17%
US$ Millions
IBM Current Revenue
$
62,365
Four IBM Competitors based on Total Revenue
US$ Millions
Amazon
$
604,334
Microsoft
$
245,122
Alphabet
$
328,284
Accenture
$
64,476
Ratio
1. Current Ratio
2. Gross Margin
3. Inventory as % of Total Assets
4. Inventory Turnover
5. Debt/Equity Ratio
6. Net Current Assets as % of Total Assets
7. Net PPE as % of Total Assets
8. Net Profit Margin %
9. Operating Margin %
10. R + D as % to Total Revenue
11. ROA %
12. ROE %
13. ROI %
14. Selling and General Admin as % of Total Revenue
15. Total Asset Turnover
RATIO ANALYSIS REPORT
Amazon
IBM
1.12
1.1
56.09%
48.04%
0.86%
6.31%
20
8.9
220.3
30.1
-0.90%
1.41%
6.45%
6.31%
14.21%
7.36%
14.31%
9.00%
11.33%
14.23%
6.66%
8.62%
38.33%
21.93%
8.70%
12.26%
29.84%
24.29%
0.5
1.2
PORT
Microsoft
1.27
69.76%
0.24%
39.6
25.1
6.73%
30.18%
35.96%
44.56%
12.04%
19.07%
37.13%
25.37%
13.08%
0.5
Alphabet
2.08
57.47%
0.00%
0
4.4
22.30%
36.89%
27.49%
29.83%
13.99%
22.63%
31.79%
28.11%
13.12%
0.8
Accenture
1.16
32.58%
0.00%
0
10.48%
8.13%
11.03%
14.20%
0
13.64%
26.20%
21.11%
16.94%
1.2
FYE December
Scale
Total Revenue
Revenue Growth Rate
CAGR
2024 Forecasted Revenue in $M
12/31/2021
Million
$
57,350
12/31/2022 12/31/2023
Million
Million
$
60,530 $
61,860
5.54%
2.20%
103.86%
$
64,246.31
Rationale for Forecast
Based on IBM’s current performance and the assumption of continuous and
stable growth, the forecast was calculated.
By taking into account the CAGR, year-to-year variations are reduced and a
more reliable estimate is generated.
IBM’s overall revenue for the next year is expected to be about $64,246 million.
1
IBM Written Narrative
Abby Juckel
Rasmussen University
08/15/2024
2
IBM Written Narrative
Examining IBM’s latest SEC.gov filings, which include the 10-Q for 2023, indicates that
over the years, it has adhered to some major accounting standards and paid due attention to some
very important ethical considerations. In further detail, adopting ASC 606, Revenue from
Contracts with Customers, and ASC 842, Leases, has made a difference for IBM in how
financial reporting is adopted at IBM. IBM has enhanced its process of recording and
recognizing revenue for its long-term service contracts in consideration of ASC 606 so that
revenues are now reported in a way that depict the reliable and accurate transfer of control to
customers. This change has hence affected the timing of recognizing revenues, and IBM had to
reassess most of its contracts against these standards.
In addition, IBM has adopted ASC 842, which requires the business to record lease
obligations on its statement of assets, liabilities and equity. IBM’s financial statements are now
more transparent as a result of this accounting adjustment, and it provides investors with a better
understanding of the company’s long-term financial commitments and liabilities.
Regarding ethical compliance, IBM still places a strong emphasis on adhering to
international cybersecurity and data privacy standards, especially in light of its major position in
cloud computing and artificial intelligence. The company’s strict corporate governance policies,
which place a high priority on diversity, equity, and inclusion programs, demonstrate its
dedication to moral business practices.
3
References
IBM 10-Q Quarterly Report, SEC.gov, 2023
https://www.sec.gov/Archives/edgar/data/51143/000155837022010985/ibm-20220630x10q.htm
Financial Accounting Standards Board (FASB) Updates on ASC 606 and ASC 842.