What did you do well and what could you have done better in these interactions?
> How does a 100% stock dividend or a 2-for-1 stock split affect total assets, total liabilities, and total stockholders’ equity?
> Describe the declaration date, record date, and payment date for a cash dividend.
> Explain why some companies choose not to pay cash dividends. Why do investors purchase stock in companies that do not pay cash dividends?
> How is the accounting for a purchase of a company’s own stock (treasury stock) different from the purchase of stock in another corporation?
> What would motivate a company to buy back its own stock?
> Explain why preferred stock often is said to be a mixture of attributes somewhere between common stock and bonds.
> What are the three potential features of preferred stock? Indicate whether each feature makes the preferred stock appear more like stockholders’ equity or more like long-term liabilities.
> Corporations typically do not first raise capital by issuing stock to the general public. What are the common stages of equity financing leading to an initial public offering (IPO)?
> Explain the difference in each of these terms used for bonds: a. Face amount and carrying value. b. Stated interest rate and market interest rate.
> What are convertible bonds? How do they benefit both the investor and the issuer?
> Shankar Company uses a perpetual system to record inventory transactions. The company purchases inventory on account on February 2 for $40,000, with terms 3/10, n/30. On February 10, the company pays on account for the inventory. Record the inventory pur
> Contrast the following types of bonds: a. Secured and unsecured. b. Term and serial. c. Callable and convertible.
> Why do some companies issue bonds rather than borrow money directly from a bank?
> What are bond issue costs? What is an underwriter?
> What is a lease and how does a lease affect a company’s balance sheet?
> How do interest expense and the carrying value of the note change over time for an installment note with fixed monthly loan payments?
> What are the potential risks and rewards of carrying additional debt?
> Why would a company choose to borrow money rather than issue additional stock?
> Extreme Motion issues $500,000 of 6% bonds due in 20 years with interest payable semiannually on June 30 and December 31. Calculate the issue price of the bonds assuming a market interest rate of a. 5% b. 6% c. 7%
> Extreme Motion issues $500,000 of 6% bonds due in 20 years with interest payable semiannually on June 30 and December 31. What is the amount of the cash payment for interest every six months? How many interest payments will there be?
> How do we calculate the issue price of bonds? Is it equal to the present value of the principal? Explain.
> Shankar Company uses a perpetual system to record inventory transactions. The company purchases 1,500 units of inventory on account on February 2 for $60,000 ($40 per unit) but then returns 100 defective units on February 5. Record the inventory purchase
> If bonds with a face amount of $250,000 and a carrying value of $280,000 are retired early at a cost of $330,000, is a gain or loss recorded by the issuer retiring the bonds? How does the issuer record the retirement?
> Why would a company choose to buy back bonds before their maturity date?
> Explain how each of the columns in an amortization schedule is calculated, assuming the bonds are issued at a discount. How is the amortization schedule different if bonds are issued at a premium?
> If bonds issue at a premium, what happens to the carrying value of bonds payable and the amount recorded for interest expense over time?
> If bonds issue at a discount, what happens to the carrying value of bonds payable and the amount recorded for interest expense over time?
> If bonds issue at a premium, is the stated interest rate less than, equal to, or more than the market interest rate? Explain.
> If bonds issue at a discount, is the stated interest rate less than, equal to, or more than the market interest rate? Explain.
> What is capital structure? How do the capital structures of Ford and Microsoft differ?
> Name at least four employer costs in addition to the employee’s salary. Which costs are required by law and which are voluntary?
> Name at least four items withheld from employee payroll checks. Which deductions are required by law and which are voluntary?
> Shankar Company uses a perpetual system to record inventory transactions. The company purchases inventory on account on February 2 for $40,000. In addition to the cost of inventory, the company also pays $600 for freight charges associated with the purch
> How does commercial paper differ from a normal bank loan? Why is the interest rate often less for commercial paper?
> Bank loans often are arranged under existing lines of credit. What is a line of credit? How does a line of credit work?
> Explain why we record interest in the period in which we incur it rather than in the period in which we pay it.
> Provide examples of current liabilities in the airline industry.
> Why is it important to distinguish between current and long-term liabilities?
> How would the following transactions affect the current ratio and the acid-test ratio? (a) Purchase of inventory with cash; and (b) sale of inventory for more than its cost. Assume that prior to these transactions the current ratio and acid-test ratio a
> Explain the differences among working capital, the current ratio, and the acid-test ratio.
> Current liabilities affect a company’s liquidity. What is liquidity, and how do we evaluate it?
> Your company is the plaintiff in a lawsuit. Legal counsel advises you that your eventual victory is inevitable. “You will be awarded $2 million,” your attorney confidently asserts. Describe the appropriate accounting treatment.
> How do we define current liabilities? Long-term liabilities?
> Shankar Company uses a perpetual system to record inventory transactions. The company purchases inventory on account on February 2 for $40,000 and then sells this inventory on account on March 17 for $60,000. Record transactions for the purchase and sale
> You have recently been hired as the assistant controller for Stanton Temperton Corporation, which rents building space in major metropolitan areas. Customers are required to pay six months of rent in advance. At the end of 2021, the company’s president,
> Financial information for Buckle is presented in Appendix B at the end of the book. Required: 1. Calculate Buckle’s percentage change in total assets and percentage change in net sales for the most recent year. 2. Calculate Buckle’s percentage change in
> How do you think the work locus of control might influence your effectiveness as a manager?
> Do you think that your score accurately reflects your locus of control at work? Why or why not?
> What multicultural experiences can you seek out to enhance your global perspective?
> Do you think that you were equally able to think and act locally as you interacted with people from other cultures?
> In hindsight, what might have been done to resolve the conflict before it escalated so far?
> What did the two union leaders do to resolve their conflict?
> Why would strengths-based development increase employee engagement?
> Although the team scores in this exercise usually are higher than the average individual scores, under what conditions might individual averages exceed group scores?
> Are there differences in the average individual scores and the team scores? What are the reasons for the differences, if any?
> If you were a manager, how might you interact with employees differently if you were using strengths-based development rather than deficit-based development?
> Describe a situation in which you experienced escalation of commitment to an ineffective course of action. What did you do about it? Do you wish you had handled it differently? Why or why not?
> Recall a situation in which you made attributions and describe them using the framework supplied in Figure 4.5.
> Develop a framework whereby an instructor could use goal setting in running a class such as this one.
> Think of a person you know who seems to have positive affectivity. Think of another who has more negative affectivity. How constant are they in their expressions of mood and attitude?
> Which form of a flexible work schedule might you prefer? How do you think you would like telecommuting?
> What type of conflict(s) existed between the two leaders? Explain your answer.
> The chapter identifies four basic managerial functions. Based on your own experiences and observations, provide an example of each function.
> Identify examples from your own experience that support, and others that refute, Maslow’s hierarchy of needs theory?
> Do you think it is better to focus on assessing and developing employees’ weaknesses or to focus on their strengths? Why?
> What might you do in the next year to increase your global mindset? Identify and discuss three specific behaviors, activities, or other things that increase your global mindset.
> How do you think that having a higher global mindset will help you to be a better manager and leader? How can this characteristic help you succeed in your career?
> Do you think that your score accurately reflects your global mindset? Why or why not? What, if anything, is missing from the assessment?
> Did you notice differences in the types of information that you had available to make the raise decisions? How did you use the different sources of information?
> Is there a clear difference between the highest and lowest performer? Why or why not?
> What might you do in the next year to make your work locus of control consistent with your answer to question 3?
> What do you think is the ideal locus of control in a work setting and why?
> In what ways did your assignment of raises reflect different views of motivation?
> The ABC Corporation has a profit margin on sales below the industry average, yet its ROA is above the industry average. What does this imply about its asset turnover?
> The Crusty Pie Co., which specializes in apple turnovers, has a return on sales higher than the industry average, yet its ROA is the same as the industry average. How can you explain this?
> Use the following cash flow data for Rocket Transport to find Rocket’s: a. Net cash provided by or used in investing activities. b. Net cash provided by or used in financing activities. c. Net increase or decrease in cash for the ye
> Here are data on two firms: a. Which firm has the higher economic value added? b. Which has higher economic value added per dollar of invested capital?
> An analyst gathers the following information about Meyer, Inc.: Meyer has 1,000 shares of 8% cumulative preferred stock outstanding, with a par value of $100 and liquidation value of $110. Meyer has 20,000 shares of common stock outstanding, with a par v
> A firm has a tax burden ratio of 0.75, a leverage ratio of 1.25, an interest burden of 0.6, and a return on sales of 10%. The firm generates $2.40 in sales per dollar of assets. What is the firm’s ROE?
> . A firm has an ROE of 3%, a debt/equity ratio of 0.5, and a tax rate of 20%, and pays an interest rate of 6% on its debt. What is its operating ROA?
> Use the DuPont system and the following data to find return on equity. Leverage ratio 2.2 Total asset turnover 2.0 Net profit margin 5.5% Dividend payout ratio 31.8%
> Hatfield Industries is a large manufacturing conglomerate based in the United States with annual sales in excess of $300 million. Hatfield is currently under investigation by the Securities and Exchange Commission (SEC) for accounting irregularities and
> Hatfield Industries is a large manufacturing conglomerate based in the United States with annual sales in excess of $300 million. Hatfield is currently under investigation by the Securities and Exchange Commission (SEC) for accounting irregularities and
> You are the manager for the bond portfolio of a pension fund. The policies of the fund allow for the use of active strategies in managing the bond portfolio. It appears that the economic cycle is beginning to mature, inflation is expected to accelerate,
> Use the following financial statements of Heifer Sports Inc. in Table 14.14 to find Heifer’s: a. Inventory turnover ratio. b. Debt/equity ratio. c. Cash flow from operating activities. d. Average collection period. e. Asset turnove
> The market capitalization rate for Admiral Motors Company is 8%. Its expected ROE is 10% and its expected EPS is $5. If the firm’s plowback ratio is 60%, what will be its P/E ratio?
> A firm has current assets that could be sold for their book value of $10 million. The book value of its fixed assets is $60 million, but they could be sold for $90 million today. The firm has total debt with a book value of $40 million, but interest rate
> Tri-coat Paints has a current market value of $41 per share with earnings of $3.64. What is the present value of its growth opportunities (PVGO) if the required return is 9%?
> A firm pays a current dividend of $1, which is expected to grow at a rate of 5% indefinitely. If the current value of the firm’s shares is $35, what is the required return applicable to the investment based on the constant-growth dividend discount model
> Mrs. Mary Atkins, age 66, has been your firm’s client for five years, since the death of her husband, Dr. Charles Atkins. Dr. Atkins had built a successful newspaper business that he sold two years before his death to Merit Enterprises, a publishing and
> You are a portfolio manager and senior executive vice president of Advisory Securities Selection, Inc. Your firm has been invited to meet with the trustees of the Wood Museum Endowment Funds. Wood Museum is a privately endowed charitable institution that
> Which of the following statements reflects the importance of the asset allocation decision to the investment process? The asset allocation decision: a. Helps the investor decide on realistic investment goals. b. Identifies the specific securities to in
> Under the provisions of a typical corporate defined benefit pension plan, the employer is responsible for: a. Paying benefits to retired employees. b. Investing in conservative fixed-income assets. c. Counseling employees in the selection of asset cla
> The investment policy statement of an institution must be concerned with all of the following except: a. Its obligations to its clients. b. The level of the market. c. Legal regulations. d. Taxation.
> The ability to immunize a bond portfolio is very desirable for bond portfolio managers in some instances. a. Discuss the components of interest rate risk—that is, assuming a change in interest rates over time, explain the two risks faced by the holder o
> A clearly written investment policy statement is critical for: a. Mutual funds. b. Individuals. c. Pension funds. d. All investors.
> The aspect least likely to be included in the investment policy statement is: a. Identifying an investor’s objectives, constraints, and preferences. b. Organizing the management process itself. c. Implementing strategies regarding the choice of assets
> Your client says, “With the unrealized gains in my portfolio, I have almost saved enough money for my daughter to go to college in eight years, but educational costs keep going up.” Based on this statement alone, which one of the following appears to be
> You have been named as investment adviser to a foundation established by Dr. Walter Jones with an original contribution consisting entirely of the common stock of Jomedco, Inc. Founded by Dr. Jones, Jomedco manufactures and markets medical devices invent
> Several discussion meetings have provided the following information about one of your firm’s new advisory clients, a charitable endowment fund recently created by means of a one-time $10 million gift: Objectives Return requirement. Planning is based on a
