AF5115 Accounting for Business Analysis

Individual Assignment

1. Summarize how NVIDIA accounts for future product purchase commitments. [5 marks]

2. NVIDIA defers the recognition of certain revenue. Assume that instead of using its current accounting policies for this deferred revenue, NVIDIA instead recognized this revenue at the time the amounts are billed to customers. Estimate the Income from Operations that NVIDIA would have reported for the fiscal year ended January 29, 2023. [4 marks]

3. Assume that instead of using its current accounting policy for ‘Research and development’ costs in page 54 of the 10-K form, NVIDIA instead capitalized these costs in the fiscal year that they are currently recorded as expenses and then amortized these costs on a straight-line basis over the subsequent two fiscal years. Estimate the Income from Operations that NVIDIA would have reported for the fiscal year ended January 29, 2023. [5 marks]

4. The NVIDIA earnings announcement in Exhibit 2 reports that for fiscal 2023, GAAP earnings per diluted share were $1.74 while non-GAAP earnings per diluted share were $3.34. Identify two major items driving the difference between these two numbers and calculate their impacts to the EPS respectively. [6 marks]

5. Compute the turnover of property, plant and equipment for NVIDIA and Intel in their fiscal years ended January 29, 2023, and December 31, 2022 respectively. [6 marks]

6. Provide one major difference between the two companies’ operations that helps to explain the difference between the two ratios that you computed above. [2 marks]

7. Calculate the operating margin for NVIDIA for both its 2023 fiscal year (year ended January 29, 2023) and the 2022 fiscal year (year ended January 30, 2022). [4 marks]

8. Identify two major reasons for the difference between the two ratios that you computed above.  [6 marks]

9. For the fiscal year ended January 29,2023, what was the main use of NVIDIA’s free cash flow?  [2 marks]