Disclosure Analysis Paper

Essay by nuttybUniversity, Bachelor'sB, October 2007

download word file, 1 pages 3.0

The company that I chose to use as the basis for this assignment was Mattel, Inc. and Subsidiaries. They have their most recent financial statements available right on their website. This paper will analyze the disclosures related to cash and cash equivalents, receivables, and inventory. It will also identify the components of cash and cash equivalents.

Cash and Cash EquivalentsThe balance sheet lists a balance for cash and equivalents at $997,734 (in thousands). The disclosure for cash and equivalents notes that this includes short-term, highly liquid investments that have maturities of three-months or less. These investments are stated at cost, which it notes is comparable to market.

Accounts ReceivableAccounts Receivable includes Allowance for Doubtful Accounts and has a balance of $760,643 (in thousands) on the balance sheet. The disclosures for this account note that Mattel grants credit on an unsecured basis. Each customer must undergo extensive evaluations on an ongoing basis to receive credit from Mattel, they are then set up with credit limits and payment terms.

Each customer is reviewed at least once a year, Customers that are perceived to be a credit risk are required to provide a letter of credit, they may be required to factor or purchase some form of credit insurance with a third party, finally for some they are required to pay in advance for their purchases.

InventoriesThe balance sheet lists inventories with a balance of $376,897 (in thousands). Mattel values its inventory at lower of cost or market, and uses the first-in, first-out (FIFO) for determining cost.

ConclusionMattel appears to be a stable company that will be around for a long time. They evaluate customers extensively before giving them any sort of credit. For high-risk customers they have other requirements. I believe that Mattel provided adequate disclosure for Cash and equivalents, accounts receivable,