Questions from Financial Reporting

Q: The quarterly cash flows from operations for two software companies are

The quarterly cash flows from operations for two software companies are Required: 1. Explain why Firm B has more credit risk than Firm A. 2. Suppose that Firm B’s cash flow was $20...

Q: 1. What does the phrase sustainable earnings mean? What types

1. What does the phrase sustainable earnings mean? What types of earnings are not sustainable? 2. What are abnormal earnings? 3. Briefly describe the key features of the abnormal earnings approach to...

Q: Lemon Corporation and Morley, Inc., have entered into an arrangement

Lemon Corporation and Morley, Inc., have entered into an arrangement whereby Lemon will supply materials and 1,000 hours of its scientists’ time for a project to be undertaken at Morley’s research fac...

Q: Shelter Products sells portable livestock shelters to hog producers in the Central

Shelter Products sells portable livestock shelters to hog producers in the Central and Midwest regions of the United States. The terms of sale require cash payment within 30 days, and most customers t...

Q: The price/earnings ratios of four companies from different industries are

The price/earnings ratios of four companies from different industries are: What factors might explain the difference in the P/E ratios of these companies?

Q: The price/earnings ratios of four companies from the same industry

The price/earnings ratios of four companies from the same industry are: What factors might explain the difference in the P/E ratios of these companies?

Q: 1. Why is fair value accounting so important to companies such

1. Why is fair value accounting so important to companies such as News Corporation that have substantial investments in goodwill recorded on their balance sheets? 2. News Corporation uses a discounted...

Q: 1. Define the term quality of earnings. 2.

1. Define the term quality of earnings. 2. List the techniques that management can use to improve a company’s reported earnings performance in the short run. 3. Give examples of low-quality earnings c...

Q: Halifax Products has a $1 million bank loan that comes due

Halifax Products has a $1 million bank loan that comes due next year. Management has prepared cash flow forecasts for each of the next six quarters as shown in the table below. Planned capital expendi...

Q: In October 2010, Moody’s Investors Services reduced the credit rating assigned

In October 2010, Moody’s Investors Services reduced the credit rating assigned to Greece’s government bonds from investment grade to a speculative (junk-level) rating. At the time, Greece was consider...