Winnebago Industries Inc: Disclosure analysis - Essay Example

Disclosure Analysis Paper Winnebago Industries Inc: Disclosure analysis The disclosures contained within the s of the financial ments for the year ending August 25, 2012 has been analyzed as given below. Winnebago Industries Inc is the leading manufacturer of recreation vehicles in Iowa, United States. The industry was founded in 1958 and since then has been a leading brand in the recreation vehicle industry. The company sells its products under the brand names of SunnyBrook, Winnebago, etc. The company also manufactures automobile parts which are sold to other manufacturers.

Winnebago Industries Inc runs their business of selling the manufactured vehicles, motor homes and automobile parts through independent dealers. Due to this business model, the positions of cash and cash equivalents, receivables and inventories attain significance. The financial parameters indicated in the financial statements represent the consolidated positions of the Winnebago Industries Inc and its subsidiary, Winnebago of Indiana. The transaction between the company and its subsidiary have, however, been excluded from the financial statements.

The total cash and cash equivalents held by Winnebago Industries Inc for the year ending August 25, 2012 is $62.68 million. This position of cash and cash equivalents represents a consolidated position held by the company and its subsidiaries. The total amount of cash and cash equivalents held by the company forms one-third of the total amount of current assets held by Winnebago Industries Inc for the year ended August 25, 2012. This shows that Winnebago Industries Inc holds considerable amount of cash and cash equivalents in order to service the short term needs of the group.

Winnebago Industries Inc engages into transactions with its subsidiary involving cash and cash equivalents for meeting the short terms liabilities of the group. These intra-group transactions are not reflected in the financial statements of Winnebago Industries Inc. The total cash flow during the year is mainly an effect of the consolidated cash flows of Winnebago Industries Inc from the operating activities, investment activities and financing activities. The financial statements prepared by Winnebago Industries Inc are for a period of 52 weeks ending last Saturday of the month of August every year.

The financial statements have been prepared by the group in accordance with the US Generally Accepted Accounting Principles. The consideration of the contingent assets and contingent liabilities are extremely important for the correct reporting of financial statements. The financial statements have been prepared by making closest assumptions and estimations of the contingent assets, contingent liabilities, provisional revenues and expenditures on the date of reporting. This helped to report correct figures on the cash position of the company, cash equivalents held by the group, inventories, receivables, etc.

The cash position of Winnebago Industries Inc determines the level of liquidity in the company and the cash equivalents are also highly liquid positions of the group. The cash equivalents majorly consist of components like the short term liquid investments for a short term period of three months or even less (Winnebago Industries, 2012). The cash equivalents have been approximated to the fair or intrinsic value of the short term maturities. Since the period of maturity is short, the approximations to the fair value are not likely to vary much.

Winnebago Industries Inc has an inventory level of $87.09 million as of year ended August 25, 2012. The inventories held by the group are approximately 47% of the total amount of current assets held by them. The company has current assets amounting to a total of $187.06 million. This shows that the company is heavily dependent on its inventory for servicing its current liabilities. The method of accounting used for computation of inventories of Winnebago Industries Inc is through LIFO method of inventory calculation.

The inventories have been calculated at a lower value between the cost and the market. The manufacturing cost and the overhead expenses have been considered in the valuation of inventory. The manufacturing cost included he cost of raw materials, labor and the overhead expenses. The company has a comparatively low value of receivables. The receivables of Winnebago Industries Inc amount to $22.72 million. The doubtful accounts have been excluded in the computation of receivables in order to achieve a correct estimation of the accounts receivables.

The experience on losses incurred in the past and the collection issues faced during recovery has been applied in order to identify the doubtful accounts. The charges applicable for income through receivable account have also been considered and evaluated appropriately. The receivables that are estimated to be doubtful are written off and added to the allowance on recovery. This information suggests that Winnebago Industries Inc have adhered to the principles of true disclosure of its financial statements.

Conclusion The true disclosure of financial statements by Winnebago Industries Inc is extremely important from the point of view of the internal and the external stakeholders. Apart from mentioning the amount of cash and cash equivalents, inventories and receivables in the financial statements, the company has disclosed the components of cash and equivalents. The maturity of the cash equivalents, method of valuation of inventories adopted by the company and the provision for bad debts while calculating the receivables have been disclosed in the notes to the financial statements of the company.

These disclosures are important for the shareholders, investors, customers, etc. Reference Winnebago Industries. (2012). 2012 ANNUAL REPORT. Retrieved From: http://216.139.227.101/interactive/wgo2012/wgo2012_download.pdf?print_pages=true.