Barbara K. Thompson purchased a Sunbeam brand food hand mixer. The mixer was made by Simatelex, a company located in Hong Kong, China, marketed in the United States by Sunbeam Products, Inc., and purchased by Thompson at a Wal-Mart store. Thompson was familiar with electric hand mixers and had owned previous mixers for about 20 years before purchasing the Sunbeam mixer. The box for the Sunbeam mixer included an instruction booklet, which included the heading “IMPORTANT SAFEGUARDS” in enlarged capital letters. Under this section the booklet stated, “Unplug from outlet while not in use, before putting on or taking off parts and before cleaning.” Under the section entitled in enlarged capital letters “INSTALLING ATTACHMENTS,” the manual stated, “Make sure the speed control is in the ‘OFF’ position and unplugged from an electrical outlet. Insert attachments one at a time by placing stem end into the opening on the bottom of the mixer.” Under the section entitled in enlarged capital letters “EJECTING BEATERS,” the manual stated, “Make sure the speed control is in the ‘OFF’ position and unplugged from an electrical outlet prior to ejecting beaters.” Thompson took the mixer out of the box, inserted the beaters, and turned on the mixer. When she thought one of the beaters was loose, Thompson held the mixer in one hand and tried to push the beater back into place with her other hand while the mixer was still on. One of Thompson’s fingers was pulled into the two moving beaters. She called her husband for assistance, was taken to the hospital, and had her finger amputated. Thompson sued Simatelex, Sunbeam, and Wal-Mart for strict liability for failure to warn. Are the defendants strictly liable to Thompson? Did Thompson act ethically in this case? Thompson v. Sunbeam Products, Inc., 2012 U.S. App. Lexis 22530 (United States Court of Appeals for the Sixth Circuit, 2012)
> What is the reasoning behind using the current ratio as a measure of liquidity?
> Financial ratios don't do you much good by themselves. Explain.
> The present format for the statement of cash flows is organized according to operating activities, investing activities, and financing activities. That format has only been in use since the late 1980s. The previous format first listed all sources and t
> Outline the thinking behind ratio analysis in brief, general terms (a few lines; don't go into each ratio individually).
> What are free cash flows? Who is likely to be most interested in them? Why?
> Why don't we calculate the total difference in the equity accounts between the beginning and end of the year and consider that difference as a source or use of cash? Why do we similarly exclude the cash account?
> If a company's cash account increases from the beginning to the end of the year, there's more cash on hand so that must be a source of cash. Yet the cash account is an asset and the first cash flow rule says that an asset increase is a use of cash. Exp
> Financial analysts are generally optimists who believe what they're told. Right or wrong? Explain.
> Where do analysts get financial information about companies? What are their concerns about the information?
> Can A competent financial analyst always correctly assess a firm’s financial health from publicly available information? Explain.
> Can managers affect market value ratios?
> It can be argued that the TIE ratio doesn't make much sense. Why? How would you change the measure to be more meaningful? (Hint: Think in terms of cash flows.)
> Why do people view having too much debt as risky? If you were interested in determining whether a company had too much debt, what measure would you use? Why? How much debt do you think would generally be considered too much?
> You invested $20,000 in the stock of HiFly Inc two years ago. Since then the stock has done very well more than doubling in value. You tried analyze HiFly’s financial statements twice in the last two years, but were confused by several of the detailed
> Discuss the different definitions of debt in ratio analysis.
> A company's terms are net 30 and the ACP is 35 days. Is that cause for alarm? Why or why not?
> Why do we need the quick ratio when we have the current ratio?
> List the main user groups of financial information. What are the reasons for their interest?
> Define the term tax base and discuss common bases. What government units’ tax on each? What are these taxes commonly called?
> What is leverage and how does it work? What is the main concern about using it?
> How are capital and working capital different?
> Do the definitions of current assets and current liabilities suggest a quick way of looking at the firm's ability to meet its financial obligations (pay its bills) over the near term? (Hint: Think in terms of ratios.)
> What are the common misstatements of balance sheet figures and why do they present a problem?
> What is meant by liquidity in financial statements?
> The industry average inventory turnover ratio is 7 and your company's is 15. This could be good or bad news. Explain each possibility. How would you find out whether or not it is bad news?
> Why is EBIT an important line item in the income statement? What does EBIT show us?
> Discuss the purpose of an accounting system and financial statements in terms of the way the system represents a business.
> What is the total effective tax rate?
> Why does a financial professional working outside accounting need a knowledge of accounting principles and methods?
> Explain the reasoning behind tax loss carry backs and carry forwards.
> Why are dividends paid from one corporation to another partially tax exempt?
> What are the tax implications of financing with debt versus equity? If financing with debt is better, why doesn't everyone finance almost entirely with debt?
> Is the corporate tax schedule progressive? Why or why not?
> Why is the tax treatment of capital gains an important financial issue?
> What tax rate is important for investment decisions? Why?
> The term "liquidity" is used in several ways. What does it mean in the context of an asset or liability such as those on the balance sheet? What does it mean when applied to an operating company? What does the similar term "liquidate" mean when applie
> Zurn Pex, Inc. and Zurn Industries, Inc. (Zurn) manufactures and markets a home plumbing system that uses Pex tubing, an alternative to traditional copper water pipes. Pex tubing systems are marketed as easier to install, cheaper, and longer lasting than
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> Richtone Design Group LLC (Richtone) is a New York limited liability company (LLC) that owns the copyright to the Pilates Teacher Training Manual and licenses fitness instructors to teach pilates exercise programs. Live Siri Art, Inc. is a California co
> In 1909, the state legislature of Illinois enacted a statute called teaexinstructhe Woman’s 10-Hour Law. The law prohibited women who were employed in factories and other manufacturing facilities from working more than 10 hours per day. The law did not
> Jon Summervold purchased a remote-controlled toy watercraft from the Wal-Mart store located in Aberdeen, South Dakota. The plaintiff sued Wal-Mart, Inc. for alleged defective design and failure to warn that arose out of the trauma he suffered when the to
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> Mighty Morphin’ Power Rangers was a phenomenal success as a television series. The Power Rangers battled to save the universe from all sorts of diabolical plots and bad guys. They were also featured in a profitable line of toys and garments bearing the P
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> Pursuant to enabling statutes, two federal administrative agencies—the Federal Trade Commission (FTC) and the Federal Communications Commission (FCC)—created the national do-not-call registry. The national do-not-call registry is a list that contains the
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> In 1975, after the war in Vietnam, the U.S. government discontinued draft registration for men in this country. In 1980, after the Soviet Union invaded Afghanistan, President Jimmy Carter asked Congress for funds to reactivate draft registration. Preside
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> Two brothers were shot and killed in their Houston home. The police found shotgun shells at the scene of the crime. Witness testimony led the police to consider Genovevo Salinas to be a person of interest. Police found Salinas at his home, where he agree
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> The U.S. Congress directed the Secretary of the Treasury to mint and sell a stated number of specially minted commemorative coins to raise funds to restore and renovate the Statue of Liberty. The U.S. Mint mailed advertising materials to persons, includi
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> Norma English made an offer to purchase a house owned by Michael and Laurie Montgomery (Montgomery) for $272,000. In her offer, English also proposed to purchase certain personal property— paving stones and a fireplace screen worth a total of $100—from M
> Al and Rosemary Mitchell owned a small secondhand store. The Mitchells attended Alexander’s Auction, where they frequently shopped to obtain merchandise for their business. While at the auction, they purchased a used safe for $50. They were told by the a
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> G. S. Adams Jr., vice president of the Washington Bank & Trust Co., met with Bruce Bickham. An agreement was reached whereby Bickham agreed to do his personal and corporate banking business with the bank, and the bank agreed to loan Bickham money at 7.5
> Selchow & Richter Company (S&R) owns the trademark to the famous board game Scrabble. Mark Landsberg wrote a book on strategy for winning at Scrabble and contracted S&R to request permission to use the Scrabble trademark. In response, S&R requested a cop
> McDonald’s Corporation owns, operates, and franchises fast-food restaurants. Over the years, McDonald’s ran promotional games such as Monopoly Game at McDonald’s, Who Wants to be a Millionaire, and other games where high-value prizes, including vehicles
> The police of the city of Indianapolis, Indiana, began to operate vehicle roadblock checkpoints on Indianapolis roads in an effort to interdict unlawful drugs. Once a car had been stopped, police questioned the driver and passengers and conducted an open
> Government agents suspected that marijuana was being grown in the home of Danny Kyllo, who lived in a triplex building in Florence, Oregon. Indoor marijuana growth typically requires high-intensity lamps. To determine whether an amount of heat was emanat
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> During a few weeks, Cecilia Gonzalez downloaded more than 1,300 copyrighted songs on her computer using a file-sharing network, and she kept them on her computer until she was caught. BMG Music, which owns the copyrights on many of the songs she download
> Dodger Productions, Inc. and Dodger Theatricals, Ltd. (Dodger) produced a stage musical called Jersey Boys. The musical is a historical dramatization about the American 1960s rock ’n’ roll singing group called the Four Seasons and the lives of its member
> Kraft Foods Group Brands LLC (Kraft) is a well-known manufacturer of food products sold in more than 15,000 grocery stores located throughout the United States. Many of its packaged cheeses that are sold in outlets are available under Kraft’s trademarked
> James W. Newton Jr. is an accomplished avant-garde jazz composer and flutist. Newton wrote the song “Choir,” a piece for flute and voice that incorporated elements of African American gospel music. Newton owns the copyright to the composition “Choir.” Th
> Zura Kazhiloti sold jewelry bearing the luxury brand names “Cartier” and “Van Cleef & Arpels” to jewelry stores. The retailers then sold the jewelry through their brick-and-mortar stores, through websites, and through the internet auction site eBay. The
> Bernard Bilski and Rand Warsaw filed a patent application with the U.S. Patent and Trademark Office (PTO). The application sought patent protection for a claimed invention that explains how buyers and sellers of commodities in the energy market can hedge
> Intex Recreation Corporation designed and sold the Extreme Sno-Tube II. This snow tube is ridden by a user down snow-covered hills and can reach speeds of 30 miles per hour. The snow tube has no steering device, and therefore a rider may end up spinning
> Taser International, Inc. manufactures a product commonly known as a “taser.” Tasers have prongs or cords that emit high-voltage electrical currents that when they touch a person’s body, immobilize the person. Tasers are often used by police forces to su
> Dwayne Maddox and his wife, Amanda, were driving home on a highway in their Nissan Pathfinder SUV. Dwayne, who was driving the vehicle, weighed 170 pounds, and Amanda, who was sitting in the passenger seat, weighed 240 pounds. Amanda had previously had a
> Western Manufacturing, Incorporated manufactures a mobile pump for the commercial application of stucco to buildings. The pump consists of a diesel engine, a mixer for the stucco, a batch hopper, a pumping mechanism, and a hose, all mounted on a two-whee
> Victoria Berridge, Robert Cook, Robert Walsh, and the pilot, Scott Cowan, boarded a Twin Otter airplane for a skydiving expedition. Shortly after takeoff, the right engine failed and the airplane crashed. All four persons aboard the airplane died because
> One morning, after working at night, Tim Clancy was driving a Chevrolet S-10 pickup truck on State Road 231. Clancy fell asleep at the wheel of the truck. Robert and Dianna Goad, husband and wife, were riding separate motorcycles on the other side of the
> Curtis R. Wilhelm owned beehives and kept the hives on property he owned. John Black, who operated a honeybee business, contracted to purchase some beehives from Wilhelm. Black employed Santos Flores Sr. to help him pick up the beehives from Wilhelm. Bla
> Zagat Survey, LLC publishes the famous Zagat series of dining, travel, and leisure guides for different cities and locations. The Zagat restaurant guides lists and ranks each reviewed restaurant from 0 to 30 for categories such as food, décor, and servic
> Four friends, John Bertram, Matt Norden, Scott Olson, and Tony Harvey, all residents of Ohio, traveled to the Upper Peninsula of Michigan to go snowmobiling. On their first day of snowmobiling, after going about 135 miles, the lead snowmobiler, Olson, ca
> One evening, Andrea Filer and her daughter were riding their horses along Riley Hill Road, a public highway in the Town of Salem, New York. At the same time, Megan Adams was jogging along the same road with her son in a stroller and two dogs by her side.
> Three teenagers, Sarah Mitchell, Adam Jacobs, and David Messer, were driving in Mitchell’s car at 2:30 a.m. in Indianapolis, Indiana. Mitchell was driving the car, Jacobs was in the front passenger seat, and Messer was in the back seat. Jacobs suggested
> The Greater Gulf State Fair, Inc. operated the Gulf State Fair in Mobile County, Alabama. One of the events at the fair was a mechanical bull ride, and participants paid money to ride the mechanical bull, a ride where the rider sits on a motorized device
> Fred Phelps founded the Westboro Baptist Church in Topeka, Kansas. The church’s congregation believes that God hates and punishes the United States. The church frequently communicates its views by picketing at military funerals. Lance Corporal Matthew Sn
> Eddie Howard and Shane D. Schneider worked as employees of Nitro-Lift Technologies, L.L.C. Howard and Schneider entered into a noncompetition agreement with Nitro-Lift whereby they agreed that they would not work for a competitor of Nitro-Lift’s for a st
> Facebook, Inc. filed a complaint in the U.S. district court against numerous defendants alleging that the named defendants engaged in trademark infringement, cybersquatting, and false designation of origin. Facebook seeks to enjoin the defendants from en
