| Course | MT482 Financial Statement Analysis |
|---|---|
| Unit | Unit 2 |
| Paper type | Statement linkage exercise |
| Length | About 880 words, 6 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | BS in Business Administration |
| Updated | October 2026 |
Free sample paper for MT482 Unit 2
Every Link Proved: An MT482 Unit 2 Statement Linkage Exercise Tying a Billboard Company's 2025 Statements Together
[Student Name]
Purdue University Global
MT482: Financial Statement Analysis
Unit 2 Statement Linkage Exercise
[Instructor Name]
[Date]
Wabash Outdoor and every figure are composite; the sources cited are real.
Why Linkage Matters
The four financial statements are not separate reports. They are views of the same year, and every figure that appears on more than one must agree. An analyst who can trace net income through retained earnings and into cash can find errors, spot unusual items and understand where a company's money actually went. Penman (2013) describes the statements as an articulated system, and this exercise proves the articulation for Wabash Outdoor, the composite regional billboard operator introduced in Unit 1.
Schedule One: Retained Earnings
Retained earnings at the start of 2025 were $412.6 million. Net income for the year, from the income statement, was $50.73 million. The company declared and paid dividends of $26.4 million. Retained earnings at the end of the year are therefore $412.6 million plus $50.73 million minus $26.4 million, or $436.93 million, which matches the balance sheet.
Schedule Two: Total Equity
Total equity includes common stock, additional paid-in capital and accumulated other comprehensive income as well as retained earnings. At the start of the year it was $523.1 million. During 2025, retained earnings rose by $24.33 million, and share-based compensation of $3.1 million was added to paid-in capital, since employees earned stock awards that cost the company no cash but are an expense on the income statement. No shares were bought back or issued. Total equity at year end is $523.1 million plus $24.33 million plus $3.1 million, or $550.53 million, again matching the balance sheet.
Schedule Three: From Net Income to Operating Cash
The cash flow statement begins with the same $50.73 million of net income and adjusts it to cash. Depreciation and amortization of $57.3 million is added back, because it reduces income but uses no cash in the year; for a billboard company, it is the cost of structures built in earlier years being spread over their lives. Deferred tax of $4.1 million is added back, since that slice of the year's tax charge will be settled in later years. Accretion on asset retirement obligations, $1.2 million, the growing estimate of the cost to remove structures when leases end, is added back as a non-cash expense. Share-based compensation of $3.1 million is added back for the same reason. A $4.6 million gain on structures sold is removed, because the cash from the sale belongs in investing activities, not operations.
These adjustments bring the figure to $111.83 million. Working capital then absorbs $2.3 million, as receivables grew with revenue faster than payables, leaving cash from operations of $109.53 million.
Operating cash is more than twice net income because the largest expense, depreciation, is a charge for cash spent in earlier years.
Investing and Financing
Investing activities used $52.8 million: $38.0 million of capital spending on structures and digital conversions, $22.0 million to buy a small operator's faces in Kentucky, offset by $7.2 million received from structures sold. Financing activities used $52.4 million: $26.4 million of dividends and $26.0 million of net debt repayment.
The Cash Tie
Operating cash of $109.53 million, minus investing outflows of $52.8 million, minus financing outflows of $52.4 million, gives a net increase in cash of $4.33 million. Starting from $22.9 million, cash ends the year at $27.23 million, exactly the balance shown on the year-end balance sheet. The circle closes. Subramanyam (2014) recommends this kind of reconciliation as the first step of any analysis, because a statement set that does not tie cannot be trusted for ratios.
Checking the Structures Account
One more link confirms the investing figures. Gross structures and digital equipment began the year at $1,184.0 million. Capital spending added $38.0 million and the Kentucky purchase added about $19.5 million of structures, with the rest of its price recorded as site leases and goodwill. Structures with an original cost of $11.8 million were sold. Accumulated depreciation rose by the year's charge on structures and fell by the depreciation on the sold assets. Rebuilding the account this way shows that the gain of $4.6 million is consistent with the $7.2 million of proceeds and the assets' remaining book value of $2.6 million.
What the Linkage Shows
Beyond proving the arithmetic, the schedules reveal three things about Wabash. First, the business generates far more cash than income, which supports dividends and debt repayment. Second, the $4.6 million gain is a one-time item that inflated net income, and Unit 5 will need to account for it. Third, the company spent more on acquiring faces and building digital screens than on maintaining what it has, a sign of growth that later units examine. Fridson and Alvarez (2022) caution that items like gains on asset sales are where reported earnings can mislead, and the linkage places this one in plain view.
Limits
The exercise uses the company's own classifications. Lease payments, which under current United States accounting run through operating cash flow for operating leases, are not adjusted here, though some analysts would treat part of them as financing. Unit 7 returns to that choice.
References
Fridson, M. S., & Alvarez, F. (2022). Financial statement analysis: A practitioner's guide (5th ed.). Wiley.
Penman, S. H. (2013). Financial statement analysis and security valuation (5th ed.). McGraw-Hill Education.
Subramanyam, K. R. (2014). Financial statement analysis (11th ed.). McGraw-Hill Education.
MT482 Unit 2 instructions, in plain terms
MT482 Unit 2 asks you to show how a company's financial statements link together. Trace net income into retained earnings, adding or subtracting dividends and other items to reach the year-end balance. Roll forward total equity, including items such as share-based compensation. Then reconcile net income to cash from operations, explaining each adjustment, and add investing and financing flows to reach the change in cash. Check that every figure ties to the balance sheet. Where possible, rebuild one asset account, such as property or structures, to confirm the investing figures. Close with what the linkage reveals about the company. Present each link as a schedule a classmate could follow. About four pages built around three linked schedules is common, and every total should match the statements to the stated precision.
Inside the MT482 Unit 2 example
Wabash's exercise explains why linkage matters, citing Penman on articulated statements. The retained earnings schedule adds income and subtracts dividends. The equity schedule adds share-based compensation. The cash schedule starts from net income and explains each adjustment, from depreciation to the gain on structures sold, under a highlighted line on why operating cash is twice income. Investing and financing outflows are itemized, and the cash tie closes the circle, with Subramanyam on reconciliation as the first step of analysis. A structures account is rebuilt to confirm the gain. A section on what the linkage shows notes strong cash, a one-time gain and growth spending, citing Fridson and Alvarez on gains that can mislead, and the limits note how lease payments are classified.
Where the points sit in the MT482 Unit 2 rubric
Linkage exercises are graded on exact ties and clear explanations. Instructors credit schedules that reach the balance sheet figures to the stated precision, because an analysis built on statements that do not tie cannot be trusted. Explaining why each cash flow adjustment exists, rather than listing it, shows understanding. Correct treatment of non-cash items, such as share-based compensation, deferred tax and gains on asset sales, is a frequent marking point. Rebuilding an asset account to confirm investing flows shows unusual care. Drawing conclusions from the linkage, such as identifying one-time items, turns the exercise into analysis. Clear, consistent schedules make grading quick. Sources on financial statement articulation should support the method.
MT482 Unit 2 help: mistakes that cost points
The commonest Unit 2 error is a cash reconciliation that does not end at the balance sheet's cash figure, with the difference left unexplained. Another is adding a gain on asset sales to operating cash instead of removing it. Students often forget share-based compensation in either the equity roll or the cash flow. Deferred taxes are commonly misunderstood. Many exercises stop at the arithmetic and never say what the links reveal. Before submitting, check each schedule's ending figure against the balance sheet. If any is off, the residual tells you something was missed; find it rather than plugging it. Then write one sentence on what the linkage shows that a single statement would not.
Get an MT482 Unit 2 example written to your instructions
Upload the statements your Unit 2 assignment supplies, or name the company whose filings you are using, with the instructions and rubric. The returned exercise traces net income through retained earnings, equity and cash, reconciling every account without a plug. We write the first custom sample at no charge, usually in 24-48h. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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MT482 Unit 2 questions, answered
Why is operating cash flow more than twice net income?
Because the company's biggest expense, depreciation and amortization of 57.3 million on structures and permits, uses no cash in the year it is charged. The structures were paid for when built or bought. Add deferred taxes and share-based pay, and operating cash reaches 2.16 times net income, a ratio the cash flow unit later interprets in more depth.
Where do operating leases appear in the linkage?
On the balance sheet as right-of-use assets and lease liabilities, both rising by 9.8 million here because new site leases were signed. Signing a lease moves no cash, so the exercise shows it as a noncash change. Lease payments themselves run through operating cash flow, since the company's site leases are classified as operating leases.
What if my statements do not balance after the linkage?
Then something has been missed, and the residual's size is a clue: a figure matching a single line, such as a gain or a dividend, usually points to that line. The sample's reconciliation table exists for this reason. Rubrics generally reward an honest residual explained in a sentence over a plug hidden inside another account.
Where can I find a free MT482 Unit 2 sample paper?
This page carries the complete MT482 Unit 2 exercise tying a composite billboard company's 2025 statements together from net income to year-end cash.
Why is operating cash more than twice net income in the MT482 Unit 2 sample?
Depreciation of $57.3 million on structures built in earlier years reduces income but uses no cash in the year.