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    Accounting Analysis for Chieftain International, Inc.

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    Chieftain International, Inc. is an oil and natural gas exploration and production company. A recent balance sheet reported $208 million in assets with only $4.6 million in liabilities, all short-term accounts payable. During the year, Chieftain expanded its holdings of oil and natural gas rights, drilled 37 new wells, and invested in expensive 3-D seismic technology. The company generated $19 million cash from operating activities and paid no dividends. It had a cash balance of $102 million at the end of the year.

    Please help by discussing the advantages and disadvantages of Chieftain having no long-term debt and such a large cash balance at the end of the year.

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    The absence of a long term debt means that the company has virtually no interest rate charges. Also, the risks assumed by the firm's stockholders are minimized ...

    Solution Summary

    The solution calculates the accounting analysis for Chieftain International Inc.