software and hardware and four to seven years for furniture and other office equipment. Leasehold improvements are depreciated over the shorter of the estimated life of the asset or life of the lease, or two to fifteen years (10-K). Accounts Receivable In 2009, the net accounts receivable account was $100,833,000. In 2010, the account decreased to $89,108,000, and then increased in 2011 to $97,459,000. It rose again in 2012 to $108,337,000. However, the account decreased in 2013 to $89,484,000 (10-K). The highest value in the net accounts receivable account occurred in 2012, and the increase can be attributed to a higher operating income than in other years with $28,895,000, compared to just $1,902,000 in 2013 and a loss of $129,114,000 in 2011 in operating income (10-K). In dividing receivables by total assets to account for general growth over time, the company slowed in growth from 2009 with 11.43 percent to 2010 with 10.34 percent. It then increased in 2011 to 13.75 percent and again in 2012 to 14.48 percent. However, general growth decreased in 2013 down to 11.95 percent. Revenues have been decreasing slowly since 2010; however, the year-over-year rate has remained a constant 0.98 for the past two years. Receivables have been fluctuating between increases in 2011 and 2012 and decreases in 2010 and 2013 (10-K). Year-Over-Year Change Years Receivables Revenues 2013/2012 0.83 0.98 2012/2011 1.09 0.98 2011/2010 1.11 0.96 2010/2009 0.83 1.00 Accounts Receivable Turnover Because Healthways has an accounts receivable turnover ratio of 7.41, the higher ratio means that the company collected its average receivables 7.41 times during the
paid for but not used up. should be reduced as expires. Balance Sheet Accounts Existence or Occurrence Completeness Rights and Obligations Valuation or Allocation Presentation and Disclosure Deferred tax asset Deferred tax assets can be measured by looking at previous financial statements. Deferred tax assets should include accruals and reserves, deferred compensation, share-based payments, net operating loss carry forwards, cash conversion derivative, etc. The company has a obligation to record on the income statement in order to reduce the tax later on. Deferred tax assets should reflect the net tax effects of temporary differences between the carrying amounts of assets used for financial reporting and amounts used for income tax purposes. Deferred tax assets should be appropriately stated on the balance sheet, and notes should reflect the carrying amounts of the assets used for financial reporting purposes. Property and equipment Property and equipment should be physically accounted for to make sure that they align with balance sheet accounts. The account should list the net values of all leasehold improvements, computer equipment and related software, furniture and office equipment, and capital projects in process. The company is entitled to all property and equipment, including leasehold improvements, computer equipment and related software, furniture and office equipment, and capital projects in process, Depreciation on property and equipment is recognized using the straight-line method over useful lives of three to seven years for furniture and other office equipment. Leasehold improvements are depreciated over All property and equipment accounts should be adequately disclosed less accumulated depreciation. The notes should discuss methods of depreciation for each account under property and equipment.