Long-Term Liabilities and Cash Flow Analysis

Prior to beginning work on this discussion forum, read Chapter 10 in the course textbook, Using Financial Accounting Information: The Alternative to Debits and Credits.

Using the same company and annual reports that you chose for your Week 1 – Discussion Forum, Reading and Using the Annual Report Case Study, “BP” was the company used for the week 1 discussion.

  • Calculate the debt-to-equity ratio and times interest earned ratio for the company for the latest two years. Obtain the industry averages for these ratios and any other pertinent information from the Mergent Online database, available through the University Library, or another outside resource of your choice, and then analyze the results.
  • Discuss what each of these ratios tells you about the company’s use of debt and how it compares to the industry average.
  • Identify the major causes of any changes in these ratios and discuss your assessment of the company based on these changes.
  • If you were a lender, discuss whether you would you be willing to lend money to the company based on its use of debt.

Your initial response should be a minimum of 200 words.

 

Reference Book:

Annual Report. (2020). BP company. Retrieved from https://www.bp.com/content/dam/bp/businesssites/ en/global/corporate/pdfs/investors/bp-annual-report-and-form-20f-2020.pdf   

 

Porter, G., & Norton, C. (2018). Using financial accounting information: The alternative to debits and credits (10th ed.). Retrieved from https://www.cengage.com 

 

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