Amd Financial Statements Advanced Micro Essay

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The reduction in liabilities represents a move to reduce financial leverage in a period of tightening credit and risk profiles. The cash build-up too is an assertive move to combat liquidity concerns and build structural soundness to the balance sheet. AMD management implicitly understood that their internal financial condition was threatening to unravel the company with stagnant revenues and bloated expenses. As such the repositioning of AMD to take advantage of new revenue opportunities in their fusion process technology was an important step. Add to this a streamline of operations to improve the income statement, a strengthening of the balance sheet through targeted asset increases and strategic debt reductions; and the result are 2010 financial statements which show AMD "achieved many financial milestones: increasing revenue 20% year-over-year, restructuring the balance sheet, reducing overall debt, improving gross margin and delivering positive adjusted non-GAAP free cash flow" (AMD Annual Report. 2010)

Ratios and Measuring Performance

While external and internal end users often look at the same financial information in different ways: a useful tool for comprehensive analysis are the financial ratios: liquidity, safety, profitability, and efficiency (Missouri Business.net. N.D.) which if "examined over time provide some insight as to how effectively the business is being operated" (Missouri Business.net. N.D.). The investor class may look at liquidity ratios to determine if the company can meet its short-term obligations, while a management team may look extensively at Accounts Receivable turn to ascertain their effectiveness in managing their assets. Ratio analysis takes the depth and breadth of data from the financial statements and provides workable comparison tools for period to period analysis.

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It is worth noting that executive management as well as investors will utilize certain metrics and data over others however, the common purpose is measuring performance.

AMD's decision to restructure and streamline was in part based on investor concerns of company performance highlighted by net losses and a lagging total stock return as compared to the S&P 500 (AMD Annual Report. 2009). Yet, executive management looked at the company's performance in terms of deterioration in competiveness and product innovation. As such the focus of the company on streamlining operations to reduce cost and overhead was critical in this regard; as was the introduction of a new business model designed to compete in technological innovation and distribution.

Conclusion

Invariably the investor and executive management end-users of financial information intersect at a common goal; the total return of the stock as compared with alternative investments including other individual stocks, indices, bonds, or commodities. Succinctly both parties are concerned with the return delivered to shareholders either through share price appreciation or dividend allocation. Dissemination of financial information to end-users does not change the content however, depending what each party is concerned with; the formatting and presentation of the material may change to reflect the outlook based on exogenous elements such as a weakening global economy, or endogenous elements such as increased input costs in cost of goods sold. For AMD the future will depend as it always has on managing their financial assets and liabilities to best create the mix of growth and innovation necessary to build shareholder value over time......

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