Acc 300 - Flower Foods - Team Presentation Outline

Team Presentation Outline

Rick Manwarren, Cleveland Gray, Dwayne Brinson, Joseph Smith, James Miller, Stephanie Kendrick

ACC/300

December 2, 2015

Dr. Margareta Moczynski

Team Presentation Outline

Flowers Foods is a global business and publicly traded corporation. We will summarize and analyze Flowers Foods financial statements. How is the corporation’s debt securities and stock investments reported on financial statements? Why does Flowers Corporation invest in debt and stock securities? What are the risk and rewards of debt verses equity securities? Define the differences between debt and equity securities. What is Flowers Foods financial health? Give examples from their financial statements.

Debt Securities Reported on Financial Statements

Stephanie

Stock Investments Reported on Financial Statements

James

Why Invest in Stock and Debt Securities

Two financial assets companies can use to finance operations are debt and equity securities. Debt securities, also known as bonds, can be negotiated, traded, or bought between two parties. When the bond is purchased, the purchaser is essentially lending money to a company (Grant, n.d.). In return for the purchase of the bond, the seller provides the purchaser a debt security in which it promises to repay the amount loaned with interest on a specific date. Although the purchaser now owns a bond, they have no ownership or stake in the company issuing the bond. Issuing a debt security also avoids giving up equity in the company to an investor in exchange for funding. On the other side there are equity securities.

An equity security is an investment in a stock issued by one company to another party (Grant, n.d.). The purchase of a stock share entitles the owner to claims of profits of the company. The owner then receives dividends based on the number of equity shares owned. Equity securities arise when companies with excess cash invest in stocks; companies wish to generate additional income from the interest in the stocks, or for strategic reasons, including horizontal or vertical mergers (Grant, n.d.). The owners of said equity securities can obtain decision-making control and part owner depending on the amount of equity security they have.

While both options assist companies in their financial operations, debt securities are legal obligations to repay borrowed funds by a specific date and interest rate. Debt securities come with terms such as interest rate and pay-off dates, while equity securities are considered investments within a company. Another difference is the ownership or stake within a company. Owners of equity securities become part owner of a company by purchasing shares of the company’s stocks. However, owners of debt securities purchase a bond or loaned money to another company in which it has a promise of repayment of the loan with interest with an assurance of no loss of control of the company. Finally, an equity security is a representation of ownership rather than a debt claim like a debt security (Grant, n.d.).