Tucker’s technology had the following goods available for sale in the last accounting period: Beginning inventory…………………………………..100 units @ $ 5 Purchases (in order from first to last):………..140 units @ $ 7 200 units @ $ 8 160 units @ $ 8.50 Sales for the period were 530 units. (a) Compute the inventory balance and the cost of goods sold at the end of the accounting period using average cost, FIFO, and LIFO. (b) Which method shows the highest ending inventory? (c) Which method shows the highest cost of goods sold? (d) Explain why ending inventory and cost of goods sold differ under the three methods of inventory valuation.
> Indicate whether each of the following events would cause an inflow or an outflow of cash and whether it would affect the investing (I) or financing (F) activities on the statement of cash flows. (a) repayments of long-term debt. (b) Sales of marketable
> Which inventory valuation method, FIFO or LIFO, will generally produce an ending inventory value on the balance sheet that is closest to current cost?
> What is an example of an industry that would need to spend a minimum amount on advertising to be competitive? On research and development?
> How is a common-size income statement created?
> What organization has legal authority to set accounting policies in the United States? Does this organization write most of the accounting rules in the United States? Explain.
> What are the two causes of an increasing or decreasing sales number?
> How is a common-size balance sheet created?
> What is the difference between a multiple-step and a single-step format of the earnings statement? Which format is the most useful for analysis?
> Eleanor’s Computers is a retailer of computer products. Using the financial data provided, complete the financial ratio calculations for 2016. Advise management of any ratios that indicate potential problems and provide an explanation o
> Determine the effect on the current ratio, the quick ratio, net working capital (current assets less current liabilities), and the debt ratio (total liabilities to total assets) of each of the following transactions. Consider each transaction separately
> ABC Company and XYZ Company are competitors in the manufacturing industry. The following ratios and financial information have been compiled for these two companies for the most recent year: Required: (a) Compare and evaluate the strengths and weakness
> RareMetals Inc. sells a rare metal found only in underdeveloped countries overseas. As a result of unstable governments in these countries and the rarity of the metal, the price fluctuates significantly. Financial information is given assuming the use of
> Luna Lighting, a retail firm, has experienced modest sales growth over the past three years but has had difficulty translating the expansion of sales into improved profitability. Using three years’ financial statements, you have develop
> How is the Du Pont System helpful to the analyst?
> What do liquidity ratios measure? Activity ratios? Leverage ratios? Profitability ratios? Market ratios?
> What are the limitations of financial ratios?
> Sage Inc.’s staff of accountants finished preparing the financial statements for 2016 and will meet next week with the company’s CEO as well as the Director of Investor relations and representatives from the marketing and art departments to design the cu
> Using the ratios and information given for republic Airways holdings Inc. & Subsidiaries, an airline company, analyze the capital structure, long-term solvency, and profitability of republic Airways as of 2013. Financial ratios 2013 2012 Leverag
> Using the ratios and information given for Wal-Mart Stores, Inc., a retailer, analyze the short-term liquidity and operating efficiency of the firm as of January 31, 2014. Financial ratios for the years ended January 31, 2014 2013 Liquidity Current
> Laurel Street, president of Uvalde Manufacturing Inc., is preparing a proposal to present to her board of directors regarding a planned plant expansion that will cost $10 million. At issue is whether the expansion should be financed with debt (a long-ter
> Explain how the credit analyst’s focus will differ from the investment analyst’s focus.
> Condensed financial statements for Dragoon Enterprises follow. (a) Calculate the amount of dividends Dragoon paid using the information given. (b) Prepare a statement of cash flows using the indirect method. Dragoon Enterprises Comparative Balance
> What can creditors, investors, and other users learn from an analysis of the cash flow statement?
> How does the direct method differ from the indirect method?
> Define the following terms as they relate to the statement of cash flows: cash, operating activities, investing activities, and financing activities.
> Prior to the financial recession in the late 2000s, some companies had built up significant cash balances. Since that time some companies have continued to increase their cash balances and discussions began about whether “cash hoarding” by firms was an a
> Write a short article (250 words) for a local business publication in which you explain why cash flow from operations is important information for small business owners.
> The following cash flows were reported by Techno Inc. in 2015 and 2014. (a) Explain the difference between net income and cash flow from operating activities for Techno in 2015. (b) Analyze Techno Inc.’s cash flows for 2015 and 2014.
> The following comparative balance sheets and income statement are available for AddieMae Inc. Prepare a statement of cash flows for 2016 using the indirect method and analyze the statement. December 31, 2016 2015 $ 3,300 1,100 11,200 $15,600 Cash $
> The following income statement and balance sheet information are available for two firms, Firm A and Firm B. (a) Calculate the amount of dividends Firm A and Firm B paid using the information given. (b) Prepare a statement of cash flows for each firm usi
> Discuss the four items that are included in a company’s comprehensive income.
> Explain how a company could have a decreasing gross profit margin but an increasing operating profit margin.
> Discuss all reasons that could explain an increase or decrease in gross profit margin.
> Income statements are presented for the Elf Corporation for the years ending December 31, 2016, 2015, and 2014. Required: Write a one-paragraph analysis of Elf Corporation’s profit performance for the period. To the Student: The focus
> LA Theatres Inc. has two distinct revenue sources, ticket and concession revenues. The following information from LA Theatres Inc. income statements for the past three years is available: (a) Calculate gross profit margins for tickets and concessions f
> Income statements for Yarrick Company for the years ending December 31, 2016, 2015, and 2014 are shown below. Prepare a common-size income statement and analyze the profitability of the company. Yarrick Company Income Statements for the Years Ending
> Prepare a multiple-step income statement for Jackrabbit Inc. from the following single step statement. Net sales……………………………………………………..$1,840,000 Gain on sale of equipment……………………………………15,000 Interest income…………………………………………………..13,000
> Using the excerpt from the Moon Company’s annual report, calculate any profit measures deemed necessary and discuss the implications of the profitability of the company. Moon Company Income Statements for the Years Ended December 3
> Why is the bottom line figure, net income, not necessarily a good indicator of a firm’s financial success?
> What is the purpose of listing the account “Commitments and contingencies” on the balance sheet even though no dollar amounts appear?
> Discuss the difference between the straight-line method of depreciation and the accelerated methods. Why do companies use different depreciation methods for tax reporting and financial reporting?
> Why would a company switch to the LIFO method of inventory valuation in an inflationary period?
> Why is the valuation of inventories important in financial reporting?
> At fiscal year-end December 31, 2015, ShopWorld had the following assets and liabilities on its balance sheet (in millions): Current liabilities……………&aci
> From the following accounts, prepare a balance sheet for Chester Co. for the current calendar year. Accrued interest payable………………………………$ 1,400 Property, plant, and equipment……………………34,000 Inventory…………………………………………………….12,400 Additional paid-in capital…
> Discuss how marketable securities are valued on the balance sheet.
> Using the following amounts (in thousands) reported in Zebra technologies consolidated balance sheets and statements of income at December 31, 2013 and 2012, and the valuation schedule, analyze the accounts receivable and allowance accounts for all years
> The following information is available for Chemco Inc’s inventories as of June 30, 2015: We used the LIFO method of valuing our inventories for approximately 40% and 44% of total inventories at June 30, 2015 and 2014, respectively. (
> The F.L.A.C. Corporation sells a single product. the following is information on inventory, purchase, and sales for the current year: (a) Compute the inventory balance and the cost of goods sold expense reported at the end of the year using the followi
> Access the FaSB website: http://www.fasb.org. Locate information about projects that the FaSB and IaSB are working on related to international convergence. Write a short essay outlining the topics that the FaSB and IaSB are currently working on and the p
> Explain how treasury stock affects the stockholders’ equity section of the balance sheet and the calculation of earnings per share.
> Staff members from the marketing department of your firm are doing a splendid job selling products to customers. Many of the customers are so pleased, in fact they are also buying shares in the company’s stock, which means that they receive a copy of the
> What information is provided in a balance sheet?
> What is a proxy statement, and why is it important to the analyst?
> Why is the management discussion and analysis useful to the financial analyst?
> What causes an auditor’s report to be qualified? adverse? a disclaimer of opinion? Unqualified with explanatory language?
> Explain the importance of the notes to the financial statements.
> Describe the financial statements that are contained in an annual report or Form 10-K.
> How can the allowance for doubtful accounts be used to assess earnings quality?
> What are the particular items an analyst should review and study in an annual report, and what material should be read with caution?
> What is the difference between an annual report and a 10-Kreport?
> What types of questions can be answered by analyzing financial statements?
> The 2013 Intel Form 10-K can be found at the following Web site: www.pearsonhighered .com/fraser. (a) Prepare a summary analysis of the Statements of Cash Flows for all three years. (b) Analyze the Consolidated Statements of Cash Flows for Intel for 2013
> This case is a continuation of Cases 2.4, 3.4, and 4.4. (a) Open the financial statement template that you have saved from the Chapter 4 hydrogenics Case. Click on the “ratios” tab at the bottom of the screen and print out this page. (b) Using all inform
> The following excerpts are from the 2013 Form 10-K of Facebook, Inc11. See Accompanying Notes to Consolidated Financial Statements. See Accompanying Notes to Consolidated Financial Statement Item 1. Business Overview Our mission is to give peopl
> Each chapter in the textbook contains a continuation of this problem. The objective is to learn how to do a comprehensive financial statement analysis in steps as the content of each chapter is learned. Using the 2013 Applied Materials Form 10-K, which c
> The 2013 Intel Annual report can be found at the following Web site: www.pearsonhighered.com/fraser. Using the annual report, answer the following questions: (a) Using the Intel Annual report, calculate key financial ratios for all years presented. (b)
> This case is a continuation of Cases 2.4 and 3.4. (a) Open the financial statement analysis template that you saved from the Chapter 3 hydrogenics Case. Click on the “Cover” tab at the bottom of the screen.
> Avnet is one of the world’s largest value-added distributors of electronic componenets, enterprise computer and storage products, IT services and embedded subsystems. Avnet creates a vital link in the technology supply chain that connec
> Using the 2013 Applied Materials Form 10-K, which can be found at www.pearsonhighered.com/fraser, complete the following requirements: (a) Open the financial statement analysis template that you saved from the Chapter 1 Applied Materials problem and inpu
> This case is a continuation of Case 2.4. (a) Open the financial statement analysis template that you saved from the Chapter 2 hydrogenics Case. Click on the “Cover” tab at the bottom of the screen. Input th
> The following excerpts are from the Logitech International S.A. Form 10-K. Item 1. business Company overview Logitech is a world leader in products that connect people to the digital experiences they care about. Spanning multiple computing, communica
> Using the 2013 Applied Materials Form 10-K, which can be found at www.pearsonhighered.com/fraser, complete the following requirements: (a) Open the financial statement analysis template that you saved from the Chapter 1 Applied Materials problem and inpu
> The 2013 Intel Form 10-K can be found at the following Web site: www.pearsonhighered .com/fraser. (a) Using the consolidated statements of operations, analyze the profitability of Intel by preparing a common-size income statement for the past three years
> The 2013 Intel Form 10-K can be found at the following Web site: www .pearsonhighered.com/fraser. the company’s annual report which includes the letters from the cEO and the chairman can be found at the company’s website: www .intc.com. Using the Form 10
> Andreka Inc. uses the direct method to allocate support department costs to production departments (fabricating and finishing). Information for June 2010 follows. a. What amounts of human resources and administration costs should be assigned to Fabricat
> The manager at Mannie’s Floor Coverings is interested in purchasing a computer and software that would allow company salespeople to demonstrate to customers how a finished carpet installation would appear. The total cost of the computer, software, and pe
> Double K Corp. has established a 12 percent target ROI for 2010 for its Jamestown Division. The following data have been gathered for the division’s operations for 2010: average total assets, $11,200,000; revenues, $30,000,000; and expenses, $28,000,000.
> On April 1, 2010, Topeka Brake Mfg. purchased new computer-based production scheduling software for $480,000. On May 15, 2010, a representative of a computerized manufacturing technology company demonstrated new software that was clearly superior to that
> Data for the three autonomous divisions of Arizona Mining, Inc. for fiscal year 2010 follow. Compute the return on investment for each division. Division 1 Division 2 Division 3 Segment income $ 220,000 $ 350,000 $ 4,500,000 Asset investment 2,500,0
> Monet’s Prints has the following revenue and cost functions: Revenue = $60 per unit Cost =$120,000 $30 per unit a. What is the break-even point in units? b. What is the break-even point in dollars?
> Memphis Jazz Company is preparing a pamphlet that will provide information on the types of jazz, jazz terminology, and biographies of some of the better-known jazz musicians. In addition, the pamphlet will include a request for funding to support the jaz
> The following financial data have been determined from analyzing the records of Tim’s Brake Co. (a one-product firm): Contribution margin per unit ………………………$ 50 Variable cost per unit …………………………………….42 Annual fixed cost ……………………………….$180,000 How does ea
> Macon Farms raises peaches that, at harvest, are separated into three grades: premium, good, and fair. Joint cost is allocated to products based on bushels of output. The $337,500 joint cost for one harvest yielded the following output quantities.
> Portsmouth Port Services creates and maintains shipping channels at various ports around the world. The company is considering the purchase of a $72,000,000 ocean-going dredge that has a 5-year life and no salvage value. The company depreciates assets on
> You have just purchased a new car, making a down payment of $8,000 and financing the balance of the purchase cost on an installment credit plan. According to the credit agreement, you will pay $600 per month for a period of 48 months. If the credit agree
> You have just invested $60,000 in a bank account that guarantees to pay you 6 percent interest, compounded annually. At the end of 5 years, how much money will have accumulated in your investment account? (Ignore taxes.)
> Brenda’s Bees is considering the purchase of new honey processing equipment. The equipment would cost $100,000, have an expected life of 7 years, and save the firm $28,000 annually in maintenance, operating, and cleanup costs. The firm’s cost of capital
> Mosbee Designs uses a job order costing system to account for the various architectural services offered to commercial clients. For each major job, architectural models of the completed structures are built for client presentations. At the completion of
> Renaissance Creations restores antique stained glass windows. All jobs generate some breakage or improper cuts. This scrap can be sold to stained glass hobbyists. Renaissance Creations expects to incur approximately 45,000 direct labor hours during 2010.
> Ramirez Tax Services is considering the installation of a new system for electronically filing tax returns. The system has an initial cost of $80,000 and an expected life of 5 years. a. If the company’s cost of capital is 10 percent, how much annual incr
> Trady’s Tree People manufactures wood statues, which yields sawdust as a by-product. Selling costs associated with the sawdust are $25 per ton sold. The company accounts for sawdust sales by deducting the sawdust’s net realizable value from the major pr
> New York Fabrics makes three clothing items: pants, shorts, and shirts. Contribution margins for the products are $4.25, $4.05, and $2.70 per unit, respectively. The company’s manager must decide what mix of clothes to make. New York Fa
> Lundholm Corp. is considering the purchase of a robotic machine that would replace a manual labor production task. This project would require an upfront cash commitment of $2,000,000 to purchase and install the equipment. The equipment would have an expe
> The variable costs for four different products are $9.30, $7.86, $8.78, and $19.44. State the objective function in equation form to minimize the variable costs.
> The contribution margins for three different products are $19.00, $8.00, and $3.50. State the objective function in equation form to maximize the contribution margin.
> For each of the following limitations of the capital project evaluation methods, indicate to which method, or methods, the limitation applies. Consider all of the following methods: payback, NPV, PI, IRR, and ARR (accounting rate of return). a. Cash flow
> Qvat Division, a subsidiary of Imogene Ltd., manufactures a product with the following costs: Direct material …………………………………..$15.00 Direct labor ………………………………………...26.25 Variable overhead ……………………………….12.75 Fixed overhead …………………………………..18.00 Total ………………
> For each of the following assumptions that underlie the capital project evaluation methods, indicate to which method, or methods, the assumption applies. Consider all of the following methods: payback, NPV, PI, IRR, and ARR (accounting rate of return). a
> Three years ago, Girston Gravel Pit purchased a material conveyor system. The company has decided to sell the system and acquire more advanced technology. Data relating to the existing system follow. Current market value …………………………………………………………..$37,000 O
