Real-World Case Choice of fiscal year
Consider the following brief descriptions of four companies from different industries. Michaels Stores claims to be the largest arts and crafts specialty retailer in North America. It operates over 1,000 retail stores. In 2008 Pulte Homes built new houses in 459 communities in 25 states. Toro Company manufactures and sells professional and residential lawn care products, such as irrigation systems. Vail Resorts, Inc. operates ski resorts in Colorado, including Breckenridge Mountain and Vail Mountain Resort, the largest in the United States.
The chapter explained that companies often close their books when business is slow. Each of these companies ends its fiscal year on a different date. The closing dates, listed chronologically, are:
February 2
July 31
October 31
December 31
Required
a. Try to determine-which fiscal year-end matches which company. Write a brief explanation of the reason for your decisions.
b. Because many companies deliberately choose to prepare their financial statements at a slow time of year, try to identify problems this may present for someone trying to analyze the balance sheet for Toys R Us. Write a brief explanation of the issues you identify.
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