Based upon our readings in Block, Hirt & Danielsen (2017), we come to an understanding that the economic environment may affect a project or firm’s cash flows including interest, inflation and growth rates; and how decision trees, break-even analysis, and/or the use of hidden options (such as the option to expand, the to abandon, and the timing options) can be useful in forecasting and mitigating impacts from the projected economic environment.
Locate the 2015 Annual Report for Kimberly-Clark and go through the report and the firm’s four financial statements (Balance Sheet, Income Statement, Cash Flow Statement, and Statement of Stockholders’ Equity). Comment on how you see the accounting relations discussed in Chapter 2 were obeyed in these financials … provide an example from the 2015 financials with specific numbers. Additionally, locate one or more notes in the report that addresses how the firm handled/addressed issues related to one of the following: Inflation, Interest Rate Risk, or the firm’s Growth Rate. Be sure and reference the main paragraph or page number from the report that you are addressing in your comment.
Block, S.B., Hirt, G.A., & Danielsen, B.R. (2017). Foundations of Financial Management. 16th ed., McGraw-Hill Education, Print.