Question

6 CHAPTER 1 Financial Statements CASES Case 1.1 Intel Case The 2013 Intel Form 10-K can be found at the following Web site: www pearsonhighered.com/fraser. The company's annual report which includes th letters from the CEO and the chairman can be found at the company's website: ww intc.com. Using the Form 10-K and annual report, answer the following questions: (a) Describe the type of business in which Intel operates. (b) Read the letters from the CEO and the chairman and discuss any information learned from this letter that might be useful to an analyst. (c) What type of audit opinion was given for the financial statements and the (d) Read the Management Discussion and Analysis (MD&A). Discuss whether (e) After reading the MD&A, discuss the future prospects of Intel. Do you have internal financial controls of Intel? Explain the key items discussed in the audit report the items that should be addressed in the MD&A are included. Support your answer with examples from the Intel MD&A. any concerns? If so, describe those concerns.

Answer 1

Describe the type of business in which Intel operates.

Answer:

Intel sells devices (processors) for PCs and internet servers. They design and manufacture these devices but hope to expand and cover complete hardware and software products and not just the devices to support gear for others.

Intel Corporation is an American multinational semiconductor chip maker corporation headquartered in Santa Clara, California. Intel is the worlds largest and highest valued semiconductor chip maker, based on revenue.

This company is the largest maker of the semiconductor chips on the basis of the revenue. The company is into developing advanced integrated digital technology, majorly the integrated circuit as communications and computing.

The major goal of the company is to compute the solution that grows in worldwide digital economy.

Read the letters from the CEO and the chairman and discuss any information learned from this letter that might be useful to an analyst.

Answer:

The president's assertion that Intel will enter new markets seems important as it signals a new direction to increase customers but also increase competition. Traffic crossing the internet in 2010 was greater than in ALL PRIOR YEARS combined. That is pretty startling and the rate of growth is interesting to investors and analysts. Intel is the largest purchaser of green power in the U.S. An analyst may or may not notice that this likely signals that Intel is a huge power consumer and so if an analyst thinks that power costs will rise, it will impact Intel.

In the letter from the CEO, what was obvious from the First paragraph is the substantial and continuing growth of this company. What backs up this favorable move forward is the fact that many households today have more than one pc. Additionally, the demand for “instant information” has broken open the social media world - “…Part of that growth is driven by the increasingly personal" nature of PCs, which is causing a shi² from one PC per household to one or more PCs per person in many mature markets…”

What type of audit opinion was given for the financial statements and the internal financial controls of Intel? Explain the key items discussed in the audit report.

Answer:

According to the auditors financial statements were presented fairly in all respect, the consolidated financial position, consolidated operations results and statements of cash flows for each year were presented and were in according with the GAAP principles.

Also the audit opinion says that when the financial were considered as whole on relation to the financial statements then they present fairly in all respect.

The audit opinion was “Clean” meaning no exceptions. That is, the financial report are equally itemized in accordance with GAAP and the systems of controls surrounding the financial reporting are working as designed.

Read the Management Discussion and Analysis (MD&A). Discuss whether the items that should be addressed in the MD&A are included. Support your answer with examples from the Intel MD&A.

Answer:

Yes, the MD&A has the main parts needed. The MD&A comprises a synopsis of the financial results, dialogues about strategy, critical accounting estimates, investments, taxes, inventory, accounting changes, results of operation by segment and margin, and restructuring charges. The discussion contains the business outlook, the use of fair values, but I didn’t discover the section on business risk. I did not locate it after checking to see it.

The report clearly described the details in a manner which is understandable also strategy of company for past years and the coming year were detailed enough to know the future prospects of the company.

After reading the MD&A, discuss the future prospects of Intel. Do you have any concerns? If so, describe those concerns.

Answer:

After reading the MD&A report the company has high growth prospects in the coming future, as the company has been expending its business portfolio by entering in the new products of the similar typo along with maintaining the ,maximum revenue generation product that is the semi-conductor chips.

The projection look very decent. They have firm outcomes and strategy that makes clear logic given the market. The thing I don’t know about and would be concerned about is the competition.