Financial reporting problem - Assignment Example

Analysis of Total Current Liabilities For the analysis of the total current liabilities, the financial ments of Costco Wholesale Corporation have been taken into consideration. The financial statements comprise of income statements and balance sheets for the year ended 28 August 2011 as the current year and 29 August 2010 as the previous year. The financial statements have the comparative figures for each head of account on comparative basis. The total current liabilities are found to $12,050 and $10,063 for the year ended 2010 and 2011 respectively.

There has been an increase of 19.7% in the year 2011 as compared to previous year. If the individual components of Total Current Liabilities are taken into account, it can be noticed that short term borrowing has been reduced to nil in 2011 which $26 last year. Accounts payable have increased by $597 in the current year. There was no current portion of long-term debt last year however this year the amount in respect of this account has jumped to $900. Considerable amount of increase can also be observed in respect of other current liabilities which include Accrued Salaries and Benefits by $187, Accrued sales and other taxes by $13, other current liabilities by $212 and, Deferred membership fees by $869.

On a concluding note, it can be analyzed that the increase in the Total Current Liabilities by around 20% is a heavy increase. The company is advised to ensure that the current liabilities should be kept under the range of 10%, otherwise the company may be pushed into sever working capital problems.ReferencesWood, Frank. & Sangster, Alan. (2008). Frank Woods Business Accounting 1, Volume 1 (11th ed.). New York, NY: Financial Times Prent. Int.