Analyze The Financial Statements Of A Publicly Traded Company

Course Project
Students Name
Institutional Affiliation
Contents TOC \o "1-3" \h \z \u Introduction PAGEREF _Toc485059014 \h 3Deferred Taxes PAGEREF _Toc485059015 \h 4Income Tax Provision PAGEREF _Toc485059016 \h 5Contribution plans PAGEREF _Toc485059017 \h 6Earnings per share/dilutive securities PAGEREF _Toc485059018 \h 7Share based compensation PAGEREF _Toc485059019 \h 7Cash flow presentation PAGEREF _Toc485059020 \h 8Financing/ investing activities PAGEREF _Toc485059021 \h 8Noncash transactions PAGEREF _Toc485059022 \h 9Conclusion PAGEREF _Toc485059023 \h 10References PAGEREF _Toc485059024 \h 11
Introduction
Harley Davidson Inc is a US company based in Milwaukee and is one of the leading manufacturer of motorcycles. The company was formerly known as HDI but currently, it is abbreviated as H-D. Also, it is listed in the New York Stock Exchange using the symbol HOG. The company was founded by the Davidson brothers known as Arthur, Walter and William during the first decade of the 20th century and hence the name Harley Davidson Inc. Most American companies collapsed during the era of the great depression. However Harley Davidson Inc was one of the two motorcycle manufacturing companies that survived the depression. The company was facing hard times in regard to its tenure. In addition, Harley Davidson Inc the company survived the stiff competition that such companies face from the Japanese industry. Also, the company made it out of the bad quality era.
Harley Davidson Inc. deals with the manufacturing and selling of heavy weight motorcycles that are above 750cc and made for cruising on highways. The main unique feature of the motorcycles is their design and the exhaust pipe as well. They are generally known as the Harleys and have a tradition like kind of design which gives them a chopper -like look. Apart from the for modern VRSC model family, the other Harley Davidson motorcycles represent the Classic Harley designs. At some point, the company tried to venture into the manufacturing of light weight vehicles but the idea did not turn out to be a success. They gave up the idea after the large sale of the Italian Aemacchi subsidiary during the year 1978. The company advertises it products by using events clubs and various museums (Oosterwal, 2010). As a result, interested parties are able to analyze their motorcycle before making the decision of purchasing one of their products.
Harley Davidson’s mission statement is to preserve and perpetuate the company by carrying out regular upgrades and improvements on the company’s products as well as the achievement of the financial objectives. The company is determined to add the service or manufacturing ventures that can lead to not only an increase in profits but mainly an increase in value of the organization. The current function of the company is the provision of accessories, motorcycles and services to their clients. In addition, their mission statement includes the provision of products and services that are designed to enhance the company’s image and, in turn, attract more customers. As a result, this works as a great way of increasing its market share and especially through a positive word of mouth.
Deferred Taxes
A deferred tax is an asset available in a company’s balance sheet which is kept for the future use whenever there is a need to reduce the future’s tax expense. It plays a big role in preventing the company from operating under losses in a case whereby the tax expense exceeds the amount that was planned for. The excess tax expense can be as a result of any net loss carryovers. It is important to ensure that there is a 50 percent probability that the general income of the company will be positive in the future before applying the deferred tax asset.
In addition, deferred tax liability arises due to the temporary difference that arises between the organizations account balances and tax carrying values. Also, its results from the difference of the estimated income tax that is payable for that year and the expected and enacted income tax. In addition, there exists a big difference between the amounts that the company can deduct for the purposes of paying taxes. As a result, this will bring about the difference between the taxable income and the income before the deduction of taxes. Deferred tax liability is thus, an indication that a company is bound to pay larger amounts of tax in the future in compensation for a transaction that occurred during the current fiscal year of the company.
In the case of Harley Davidson Inc, the amount of the deferred tax Asset is $132331 and $14611 as indicated in the company’s balance sheet for the year 2011 and 2010 respectively. The main components of the deferred tax assets are:
* Pension and postretirement benefit plan obligation
* Valuation Allowance
* Stock compensation
* Accruals not yet tax deductible
* Net operating loss carry forward
As a result of the tax that is in excess in the book and depreciation, then the amount of the deferred tax liabilities was less than the deferred tax asset. Thus, this resulted to the deferred tax asset in both years. Harley Davidson Inc carries out the review of the deferred tax asset valuation in a quarterly basis or anytime when there is a change within the organization that requires immediate attention. In order to carry out the review, the company has the obligation of taking into account the projected financial results and historical data of the company as well as the changes in taxation laws. As a result, this ensures that the company is up to date with all the necessary requirements related to the deferred tax assets.
Income Tax Provision
The income tax provision for Harley Davidson is $244,586 for 2011 and $130,800 for the year 2010. The provision f...