Date of Award

Spring 2006

Document Type

Legacy Thesis

Degree Name

Bachelor of Science (BS)

Department

Accounting

College

College of Business

First Advisor

Linda R. Henderson

Abstract/Description

This paper is a comparison of the asset section, with a particular focus on cash, of a corporation's balance sheet in the present to the balance sheet of the same corporation ten years ago. More specifically, there will be an examination of a corporation's balance sheet at the end of the 1994 fiscal year and the end of the 2004 fiscal year. An analysis will be conducted to investigate whether companies are keeping more cash on their balance sheets and if so, why they are doing this. Could the increase in cash be caused by other balance sheet items? In order to determine whether or not other balance sheet items have a direct impact on the cash account, data will be extracted from cash flow statements, as a cash flow statement will document exactly how or why the cash is being spent. It should be a good comparison because the economy in 1994 is different from 2004. In 1994, the economy was booming, leaving the recession that ended in 1991 as a distant memory. However, in 2004, the economy was beginning to expand once again, but still feeling the effects of the recession that hit at the end of 2001. By analyzing the balance sheet and the statement of cash flows, three hypotheses will be tested: 1) there is an increase in the amount of cash that companies are holding on their balance sheets compared to 1994, inflation adjusted, 2) companies are holding more cash on their balance sheets because less cash is being invested in long term property, plant, and equipment assets, and 3) companies have more cash because they are spending less cash on annual taxes.

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