Module 07 Financial Accounting Project - Analysis, Free Cash Flow, and Cash Conversion Cycle

Module 04 -- Financial Accounting Project –

TransDigm Group Inc – Liability Analysis and Debt Ratio

Rasmussen College

Esther Tejada

Author Note

This research is being submitted on November 2, 2014, for Professor Mark Jonas

A141/ACG1033 Section 04 Financial Accounting II – 2014 Fall Quarter

The balance of short-term liabilities of the company were USD 322,500 (Amount in thousand). The short term liabilities of the company included the current potion of long term debt USD 31,045, accounts payable USD 106,768 and accrued liabilities USD 184, 678. The long term liabilities on the other hand were USD 6,162,760 hence were greater than the current liabilities. The results indicate that the company has lover liabilities falling due in the current financial year and would need to pay off a high level of liabilities over the long term.

The total stock holders’ equity of the company in the FY 2013 was USD (336,381) indicating that the stockholders equity was much lower than the total liabilities. The results indicated that the company was majorly financed using external debt and was highly leveraged. (TGD, Financial Statements, 2013)

The debt ratio of an entity can be calculated using the figure for total liabilities and total assets. The figure can be used to gauge the level of leverage that the company has. A lower ratio indicates that the company has lower dependence on debt whereas a higher ratio indicates a higher depends on debt. The debt ration of the company in the year 2013 was 1.05 (6,485,260/6,148,879). (Investopedia, Debt ratio, n.d)

References

216.139.227.101,. (2014). TransDigm Group Inc. Annual Report 2013. Retrieved 4 November 2014, from http://216.139.227.101/interactive/tdg2013/

Investopedia,. (2009). Debt Ratios: The Debt Ratio | Investopedia. Retrieved 4 November 2014, from http://www.investopedia.com/university/ratios/debt/ratio2.asp