Question

The Financial Accounting Standards Board (FASB) is a private, non-profit organization standard setting body whose primary purpose is to establish and improve generally accepted accounting principles (GAAP) within the United States in the public's interest.

Prepare a 2-3 page analysis discussing if you think this FASB proposal is a good idea now that you have seen the impact on the financial statements or if you think there is a potential for misleading financial statements as a result of this proposal.

	Jan. 28, 2017	Jan. 30, 2016
Liabilities and Stockholders’ Equity
Current Liabilities:
Short-term debt	309	642
Merchandise accounts payable	1,423	1,526
Accounts payable and accrued liabilities	3,563	3,333
Income taxes	352	227
Total Current Liabilities	5,647	5,728
Long-Term Debt	6,562	6,995
Deferred Income Taxes	1,443	1,477
Other Liabilities	1,877	2,123
Shareholders' Equity:
Common stock (304.1 and 310.3 shares outstanding)	3	3
Additional paid-in capital	617	621
Accumulated equity	6,088	6,334
Treasury stock	-1,489	-1,665
Accumulated other comprehensive loss	-896	-1,043
Total Macy's, Inc. Shareholders' Equity	4,323	4,250
Noncontrolling interest	-1	3
Total Shareholders' Equity	4,322	4,253
Total Liabilities and Shareholders' Equity	$19,851	$20,576

Answer 1

Reduction in short term and long term debt is a good sign, implying that company has earned income in the last year to pay off its debts. There is also reduction in Merchandise accounts payable and Other liabilities as well.

This implies that company has earned good revenue this month. This is also supported by the rise of income taxes payable/paid.

In addition company's share capital has also increased. Thereofre inflow of cash has also occurred through this route as well.

As per these observations, it does not appear that company is going through a financial crisis situation. Company's finances are currently well and debt accumulation in the future is less probable. Reduction in short term and long term debt is a good sign, implying that company has earned income in the last year to pay off its debts. There is also reduction in Merchandise accounts payable and Other liabilities as well. This implies that company has earned good revenue this month. This is also supported by the rise of income taxes payable/paid. In addition company's share capital has also increased. Thereofre inflow of cash has also occurred through this route as well. As per these observations, it does not appear that company is going through a financial crisis situation. Company's finances are currently well and debt accumulation in the future is less probable.