Question: Checkpoint Systems, a leading provider of source

> VF Corporation is an apparel company that owns recognizable brands like Timberland, Vans, Reef, and 7 For All Mankind. Exhibit 5.18 and 5.19 present balance sheets and income statements, respectively, for Year 1 and Year 2. (VF Corporation previously had

> Delta Air Lines, Inc., is one of the largest airlines in the United States. It has operated on the verge of bankruptcy for several years. Exhibit 5.17 presents selected financial data for Delta Air Lines for each of the five years ending December 31, 200

> Exhibit 5.16 presents risk ratios for Coca-Cola for Year 1 through Year 3. Exhibit 5.16: REQUIRED: a. Assess the changes in the short-term liquidity risk of Coca-Cola between Year 1 and Year 3. b. Assess the changes in the long-term solvency risk of C

> Refer to the financial statement data for Abercrombie & Fitch in Problem 4.25 in Chapter 4. Exhibit 5.15 presents risk ratios for Abercrombie & Fitch for fiscal Year 3 and Year 4. Financial statement in 4.25: Exhibit 5.15: REQUIRED: a. Comp

> Exhibit 5.24 presents balance sheets for Year 2 and Year 3 for Whole Foods Market, Inc.; Exhibit 5.25 presents income statements for Year 1 through Year 3. Exhibit 5.24: Exhibit 5.25: REQUIRED: a. For Year 3, prepare the standard decomposition of RO

> Nike, Inc.’s principal business activity involves the design, development, and worldwide marketing of athletic footwear, apparel, equipment, accessories, and services for serious and recreational athletes. Nike boasts that it is the largest seller of ath

> Refer to the financial statement data for Hasbro in Problem 4.24 in Chapter 4. Exhibit 5.14 presents risk ratios for Hasbro for Year 2 and Year 3. Financial statement in 4.24: Exhibit 5.14: REQUIRED: a. Calculate these ratios for Year 4. b. Assess t

> Kelly Services (Kelly) places employees at clients’ businesses on a temporary basis. It segments its services into (1) commercial, (2) professional and technical, and (3) international. Kelly recognizes revenues for the amount bille

> Selected data for The Hershey Company for Year 1 through Year 3 appear in Exhibit 4.29. Exhibit 4.29: REQUIRED: a. Compute ROA and its decomposition for Year 2 and Year 3. Assume a tax rate of 35%. b. Compute ROCE and its decomposition for Year 2 and

> In Integrative Case 10.1, we projected financial statements for Walmart Stores for Years +1 through +5. The data in Chapter 12 include the actual amounts for 2015 and the projected amounts for Year þ1 to Year þ5 for the income statements, balance sheets,

> In Integrative Case 10.1, we projected financial statements for Walmart Stores, Inc. (Walmart), for Years þ1 through þ5. The data in Chapter 12 include the actual amounts for 2015 and the projected amounts for Year þ1 to Year þ5 for the income statements

> Holmes Corporation is a leading designer and manufacturer of material handling and processing equipment for heavy industry in the United States and abroad. Its sales have more than doubled, and its earnings have increased more than six fold in the past f

> In Integrative Case 10.1, we projected financial statements for Walmart Stores, Inc. (Walmart), for Years þ1 through þ5. In this portion of the Walmart Integrative Case, we use the projected financial statements from Integra

> Since the early 1990s, woodstove sales have declined from 1,200,000 units per year to approximately 100,000 units per year. The decline has occurred because of (1) stringent new federal EPA regulations, which set maximum limits on stove emissions beginn

> Walmart Stores, Inc. (Walmart) is the largest retailing firm in the world. Building on a base of discount stores, Walmart has expanded into warehouse clubs and Supercenters, which sell traditional discount store items and grocery products. Exhibits 10.10

> Integrative Case 10.1 involves projecting financial statements for Walmart for Years þ1 through þ5. The following data for Walmart include the actual amounts for 2015 and the projected amounts for Years þ1 thr

> A sales-based ranking of software companies provided by Yahoo! Finance on November 5, 2008, places Oracle Corporation third behind sales leaders Microsoft Corporation and IBM Software. Typical of high-tech companies in the software industry, Oracle Corpo

> In its December 31, 2008, Consolidated Financial Statements, The Cola-Cola Company (Coca-Cola) reports a substantial shift in its net pension liability ($1,328 million) relative to December 31, 2007 ($85 million). REQUIRED: a. Given a portion of Coca-Co

> Exhibits 1.26–1.28 of Integrative Case 1.1 (Chapter 1) present the financial statements for Walmart for 2012–2015. In addition, the website for this text contains Walmart’s December 31, 2015, Form 10-

> In August 2009, The Walt Disney Company announced that it would acquire Marvel Entertainment, Inc., in a $4 billion cash and common stock deal. On a per-share basis, the consideration given by Disney to Marvel shareholders represents a 29% premium over M

> Walmart makes significant investments in operating capacity, primarily via investments in property, plant, and equipment, but also via investments in wholly and partially owned subsidiaries. Walmart also has significant non-U.S. operations in its Walmart

> The first decade of the 21st century witnessed a flurry of losses, bankruptcies, acquisitions, and strategic partnerships in the airline industry. The heavily levered firms in the industry are particularly susceptible to increases in fuel prices, economi

> It is common practice for retail outlets to lease their store locations and distribution centers. Walmart is no exception. Note 11 to Walmart’s consolidated financial statements for the fiscal year ending January 31, 2016 (found online at the text websit

> Assume Boeing sold a 767 aircraft to American Airlines on January 1, 2016. The sales agreement required American Airlines to pay $10 million immediately and $10 million on December 31 of each year for 20 years, beginning on December 31, 2016. Boeing and

> Explain the implications of a value to-book ratio that is greater than the market-to-book ratio. Explain the implications of a value to-book ratio that is less than the market-to-book ratio.

> Using the evidence presented in Exhibit 14.8, describe the extent to which the market is efficient with respect to quarterly earnings surprises during the 60 trading days prior to quarterly earnings announcements. Using the evidence presented in Exhibit

> Identify three economic factors that will drive a firm’s value-to-book ratio to be higher than that of other firms in the same industry. Identify three accounting factors that will drive a firm’s value-to-book ratio to be higher than that of other firms

> Explain the implications of a value to-book ratio that is exactly equal to 1. Compare the implications of a value-to-book ratio that is greater than 1 to those of a value-to-book ratio that is less than 1.

> Explain the theory behind the residual income valuation approach. Why is residual income value relevant to common equity shareholders?

> Explain residual income. How is it measured? What does residual income represent?

> Arbortech, a designer, manufacturer, and marketer of PC cards for computers, printers, telecommunications equipment, and equipment diagnostic systems, was the darling of Wall Street during Year 6. Its common stock price was the leading gainer for the yea

> Conceptually, why should you expect a valuation based on dividends, a valuation based on the free cash flows for common equity shareholders, and a valuation based on residual income to yield equivalent value estimates for a given firm?

> Explain the theory behind the free-cash-flows valuation approaches. Why are free cash flows value-relevant to common equity shareholders when they are not cash flows to those shareholders but rather are cash flows into the firm?

> The chapter describes how firms must use flexible financial accounts to maintain equality between assets and claims on assets from liabilities and equities. Chapter 1 describes how some firms progress through different life-cycle stages—from introduction

> Use the following hypothetical data for Walgreens in 2014 and 2015 to project revenues, cost of goods sold, and inventory for Year þ1. Assume that Walgreens’s Year þ1 revenue growth rate, gross profit margi

> The chapter describes how the dividends-based valuation approach measures dividends to encompass various transactions between the firm and the common shareholders. What transactions should you include in measuring dividends for the purposes of implementi

> The chapter asserts that dividends are value relevant even though the firm’s dividend policy is irrelevant. How can that be true? What is the key assumption in the theory of dividend policy irrelevance?

> Why is the dividends based valuation approach applicable to firms that do not pay periodic (quarterly or annual) dividends?

> Explain why analysts and investors use risk adjusted expected rates of return as discount rates in valuation. Why do investors expect rates of return to increase with risk?

> The notes to a firm’s financial statements reveal that the obligations for postretirement health care benefits at the end of 2017 total $2.1 billion. The fair value of plan assets for these benefits at the end of 2017 is reported at zero, with an unrecog

> Given the following information, compute December 31, 2017, projected benefit obligation (PBO) and fair market value (FMV) of plan assets for Lee Company. What amount of asset or liability will be reported on the balance sheet at December 31, 2017? Prio

> Citigroup Inc. (Citi) is a leading global financial services company with over 200 million customer accounts and operations in more than 140 countries. Its operating units Citicorp and Citi Holdings provide a broad range of financial products and service

> HeavyEQ produces large conveyor belt systems for heavy manufacturing. HeavyEQ signs a $2 million fixed-price contract under which it makes three promises: ● Install a conveyor belt system: fair value $1.6 million ● Service the system over a five-year per

> Bookman Co. develops digital accounting systems and provides accounting-related consulting services. a. On January 1, 2017, Bookman signs a contract with Brock Florists to install a system and provide consulting services over a two-year period ending in

> Financial reporting classifies derivatives as (a) speculative investments, (b) fair value hedges, or (c) cash flow hedges. However, firms revalue all derivatives to market value each period regardless of the firm’s reason for acquiring the derivatives

> New lease standards become effective January 1, 2019. These standards affect the accounting for operating leases. Assume Swift Company acquires a machine with a fair value of $100,000 on January 1 of Year 1 by signing a five-year lease. Swift must make p

> Assume that Circuit City owes Synovus Bank $1,000,000 on a four-year, 7% note originally issued at par. After one year of making scheduled payments, Circuit City faces financial difficulty. At the end of the second year, Circuit City owes Synovus $1,000,

> Assume that on December 31, 2017, The Coca-Cola Company borrows money from a consortium of banks by issuing a $900 million promissory note. The note matures in four years on December 31, 2021, and pays 3% interest once a year on December 31. The consorti

> Nestle ´ Group, a multinational food products firm based in Switzerland, recently issued its financial statements. The auditor’s opinion attached to the financial statements stated the following: ‘‘In our opinion, the financial statements for the year en

> Rock of Ages, Inc., a large North American integrated granite quarrier, manufacturer, and retailer of finished granite memorials, reported a net loss for 2004 of $3.2 million. In 2004, the firm reported a pretax litigation settlement loss of $6.5 million

> Valero Energy, a petroleum company, reported net income (amounts in millions) of $1,803.8 on revenues of $54,618.6 for Year 4. Interest expense totaled $359.7, and preferred dividends totaled $12.5. Average total assets for Year 4 were $17,527.9. The inc

> Exhibits 1.26–1.28 of Integrative Case 1.1 (Chapter 1) present the financial statements for Walmart for 2012 to 2015. In addition, the website for this text contains Walmart’s December 31, 2015, Form 10-K. You should r

> Firms often provide supplemental disclosures that report and discuss income figures that do not necessarily equal bottom-line net income from the income statement. For example, in Twitter’s initial public offering filings with the SEC, the company report

> iRobot designs and manufactures robots for consumer, commercial, and military use. For the fiscal year ended January 2, 2016, the company reported the following on its balance sheet and income statement (amounts in thousands): ● Accounts receivable, net

> ‘‘The ordering of the three sections of the statement of cash flows is ‘backwards’ for start-up firms, but it is more appropriate for businesses once they are up and running.’’ Explain.

> The chapter demonstrates how to prepare a statement of cash flows from information on the balance sheet and income statement. If this is possible, why are managers required to provide a statement of cash flows?

> A firm’s income tax return shows income taxes for 2017 of $35,000. The firm reports deferred tax assets before any valuation allowance of $24,600 at the beginning of 2017 and $27,200 at the end of 2017. It reports deferred tax liabilities of $18,900 at t

> A firm’s income tax return shows $50,000 of income taxes owed for 2017. For financial reporting, the firm reports deferred tax assets of $42,900 at the beginning of 2017 and $38,700 at the end of 2017. It reports deferred tax liabilities of $28,600 at th

> Apply the economic attributes framework discussed in the chapter to the specialty retailing apparel industry, which includes such firms as Gap, Limited Brands, and Abercrombie & Fitch.

> Aer Lingus is an international airline based in Ireland. Exhibit 3.24 provides the statement of cash flows for Year 1 and Year 2, which includes a footnote from the financial statements. Year 2 was characterized by weakening consumer demand for air trave

> The Apollo Group is one of the largest providers of private education and runs numerous programs and services, including the University of Phoenix. Exhibit 3.23 provides statements of cash flows for 2010 through 2012. REQUIRED: Discuss the relations bet

> Montgomery Ward operates a retail department store chain. It filed for bankruptcy during the first quarter of Year 12. Exhibit 3.22 presents a statement of cash flows for Montgomery Ward for Year 7 to Year 11. Exhibit 3.22: The firm acquired Lechmere,

> Douglas C. Mather, founder, chair, and chief executive of Fly-by-Night International Group (FBN), lived the fast-paced, risk-seeking life that he tried to inject into his company. Flying the company’s Learjets, he logged 28 world speed

> The first case at the end of this chapter and numerous subsequent chapters is a series of integrative cases involving Wal-Mart Stores, Inc. (Walmart). The series of cases applies the concepts and analytical tools discussed in each chapter to Walmart&acir

> Jeff, a single individual, receives $5,000 interest income from Treasury bills and $18,000 in Social Security benefits. What is Jeff’s gross income?

> Julie wins $15 million in the lottery payable over 30 years. In years 1 through 4, she receives annual installments of $500,000. At the beginning of year 5, Julie sells her right to receive the remaining 26 payments to a third party for a lump-sum paymen

> The Board of Directors of CYZ Corporation votes to issue two shares of stock for each share held as a stock dividend to shareholders. Just prior to the dividend, Cheryl owns 100 shares of CYZ Corporation stock that she purchased for $10 per share. She re

> Carl paid $40,000 to the City of Hollywood for general revenue bonds. During the current year, he received $2,300 interest income from the bonds. Market interest rates drop, causing the value of the bonds to increase so Carl sells the bonds for $43,000.

> Jose (SSN 150-45-6789) and Rosanna (SSN 123-45-7890) Martinez are a married couple who reside at 1234 University Drive in Coral Gables, FL 33146. They have two children: Carmen, age 19 (SSN 234-65-4321), and Greg, age 10 (SSN 234-65-5432). Carmen is a fu

> Janice Morgan is 17 and in her senior year of high school. She lives with her parents at 7829 Dowry Lane, Boston, MA 02112, and they are her primary source of support and claim her as a dependent on their tax return. She is covered under their health ins

> Go to the IRS Web site (www.irs.gov) and print Form 1040 and Schedule A. Using the information in problem 70, complete these forms to the extent possible.

> George owns 1,000 shares of ABC common stock and 3,000 shares of Brightstar mutual fund. George elects to participate in Brightstar’s dividend reinvestment plan, reinvesting his annual dividends and capital gains distributions in additional Brightstar sh

> Go to the IRS Web site (www.irs.gov) and print Form 1040 and Schedule A. Using the information in problem 69, complete these forms to the extent possible.

> In January, Susan’s employer transferred her from Chicago to Houston (where she continues to work for the remainder of the year). Her expenses were: Transportation for household goods………….$2,300 Airfare from Chicago to Houston……………………200 Pre-move house-h

> Go to the IRS Web site (www.irs.gov) and print Schedule A: Itemized Deductions. Using the following information, complete this form for Simon and Ellen, both age 48 and married filing jointly, who have adjusted gross income of $60,000. They paid the foll

> Go to www.irs.gov (the IRS Web site) and click on Careers under Work at IRS. Look under Resources, then under Job Descriptions, and finally look under Accounting, Budget & Finance to learn more about Internal Revenue Agent positions. a. If you are a rec

> Go to the IRS Web site (www.irs.gov). Print the first page of Form 1040 and compute Pierre Lappin’s adjusted gross income by entering the following information: $60,000 salary, $5,000 qualified dividend income, $3,000 interest income from corporate bonds

> Go to the IRS Web site (www.irs.gov) and print Form 2106: Employee Business Expenses. Use the following information to complete this form. Carl is an employee of Intelligent Devices, Inc. in San Jose. In a typical week, Carl spends the majority of his

> Jordan (SSN 150-66-7788) and Diana (SSN 15067-4321) Diego are a married couple who reside at 111 Coral Drive in Miami, FL 33156. They have one dependent daughter, Emily (SSN 155-88-4321), age 18, who lives at home. Jordan is a manager at Big Box Corpor

> Go to the IRS Web site (www.irs.gov) and print Schedule C: Profit or Loss for Business (Sole Proprietorship), Schedule SE: Self-Employment Tax, and Form 8829: Expenses for Business Use of Your Home. Use the information in problem 47 to complete these for

> Go to the IRS Web site (www.irs.gov) and print the page of Form 1120: U.S. Corporate Income Tax Return that includes Schedule M-1. Use the information in example 6.42 to complete Schedule M-1.

> Go to the IRS Web site (www.irs.gov) and print Schedule E: Supplemental Income and Loss. Use the following information to complete this form. Gillian Martin rented her vacation home in Telluride, Colorado for 60 days during the year receiving $6,900 in

> Carolyn has a 50 percent interest in a general partnership that has a $14,000 loss for the year. She materially participates in the partnership. Her basis in the partnership is $10,000. She also has salary from other employment of $46,000. If she is sing

> Go to www.irs.gov and print Form 1040 and Schedule SE. Complete the first page of Form 1040 and Schedule SE for Angelina Carlyle who is single. She reports $195,000 of net profit on her Schedule C from her sole proprietorship and $2,000 of taxable intere

> Kondex, a cash-basis corporation, is considering paying $50,000 of expenses at the end of this year rather than waiting until next year. Kondex’s marginal tax rate for the current year is 25 percent but it expects to be in the 34 percent marginal tax bra

> On December 1, year 1, Peak Advertising (a calendar-year, accrual-basis taxpayer) received a $24,000 retainer fee for a two-year service contract. a. How much income should Peak report in year 1 for tax and financial accounting? b. How much income shoul

> Sorbon Corporation pays federal income tax at a 34 percent rate. In year 1, Sorbon deducts $80,000 as bad debt expense in computing its book income but deducts only $70,000 for bad debt expense on its tax return. a. What is the difference between Sorbon

> Noah, a single parent, estimated his income tax liability would be $8,000. He made estimated tax payments of $6,900 during the year. Noah also determined that he is entitled to claim a child tax credit of $1,000. What is Noah’s tax due?

> Diana, a single individual, has regular taxable income of $220,000 and alternative minimum taxable income of $350,000. a. What is Diana’s tentative minimum tax? b. What is Diana’s AMT?

> Lenora and Sam are married and file a joint tax return. Lenora has $180,000 in salary and Sam has $190,000 in self-employment income in 2017. How much must they pay for their additional Medicare surtax?

> Andrew, a single individual, has $220,000 in salary and $60,000 in self-employment income in 2017. How much must he pay for his additional Medicare surtax?

> Roland worked for Sorbonne Company for the first four months of 2017 and earned $40,000 from which his employer withheld $3,060 for payroll taxes. In May, Roland accepted a job with Lyon Company. During the last eight months of the year, Roland earned $9

> June is a single individual with AGI of $45,000 for the year. June has a five-year-old son in day care while she works. a. What is her dependent care credit if she spends $5,000 for child care during the year? b. What is her dependent care credit if sh

> Hunter Corporation has $250,000 in gross income, $125,000 in deductible business expenses, and a $12,000 business tax credit. Determine the corporation’s net tax liability.

> Doris is a single individual with modified AGI of $57,000. During the year, she paid $11,000 tuition for a master’s in taxation program. How much can Doris claim for the lifetime learning credit?

> Greg and Barbara, a married couple with an AGI of $80,000, have three children who are full-time college students. They pay $6,000 for tuition annually for each child. One son is a sophomore in college and the other son is a senior. Their daughter is a

> Cindy files as head of household and has three dependent children ages 12, 14, and 16. Her AGI is $80,000. How much can Cindy claim for the child tax credit?

> Kevin is an employee of One Hour Dry Cleaners, Inc. All employees of One Hour are eligible for a 40 percent discount on their dry cleaning. During the year, Kevin paid $300 for cleaning that normally would have cost $500. Does Kevin have any taxable inco

> Elena is single but her mother, Maria, lives with her. Maria’s sole income is $7,000 in Social Security (which she saves for unexpected medical expenses) and $500 of interest income on that account. Elena provided a room in her home for Maria that could

> Scott is 15 years old and qualifies as a dependent on his parents’ tax return. During 2017 he earns $2,500 from a part-time job and also receives $800 of dividend income on stock given to him by his aunt. What is Scott’s taxable income?