Since last year, the company has reorganized its lines of business and placed more emphasis on...
Since last year, the company has reorganized its lines of business and placed more emphasis on its traditional products while selling off some marginal businesses merged by the previous management. Total assets are 10 percent less than they were last year, but working capital has increased. Retained earnings remained the same because the disposals created no gains, and the net income after taxes is still near zero, which is the same as last year. Earnings before interest and taxes (EBIT) remained the same, a small positive EBIT. The total market value of the company’s equity has not increased, but that is better than the declines of the past several years. Proceeds from the disposals have been used to retire long-term debt. Net sales have decreased 5 percent because the sales’ decrease resulting from the disposals has not been overcome by increased sales of the traditional products. Is the discriminant Z-score of the current year higher or lower than the one of the prior year?
Please show work and the actual z-score amount.
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Since last year, the company has reorganized its lines of
business and placed more emphasis on...
Analytical Procedures: Ratio Relationships. The following situations represent errors and frauds that could occur in financial...
Analytical Procedures: Ratio Relationships. The following situations represent errors and frauds that could occur in financial statements Required State how the ratio in question would compare (higher, equal, or lower) to what the ratio should have been had the error or fraud not occurred. a. The company recorded fictitious sales with credits to sales revenue accounts and debits to accounts receivable. Inventory was reduced, and cost of goods sold was increased for the profitable "sales." Is the current ratio higher...
Over the last five years, corporation A has been consistently profitable. Its earnings before taxes were...
Over the last five years, corporation A has been consistently profitable. Its earnings before taxes were as follows: Year Earnings $1,200 $3,400 $4,400 $5,000 $4,400 a. If the corporate tax rate was 28 percent, what were the firm's income taxes for each year? Round your answers to the nearest dollar Year Taxes b. Unfortunately, in year 6 the firm experienced a major decline in sales, which resulted in a loss of $11,200. What impact will the loss have on the...
Ryan Company has as a goal that its earnings per share should increase by at least...
Ryan Company has as a goal that its earnings per share should increase by at least 3% each year; this goal has been attained every year over the past decade. As a result, the market price per share of Ryan's common stock also has increased each year. Last year (2012), Ryan's earnings per share was $3. This year, however, is a different story. Because of decreasing sales, preliminary computations at the end of 2013 show that earnings per share will...
C 16-9 Ethics and EPS Adjustment Ryan Company has as a goal that its earnings per...
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One Product Corporation (OPC) incorporated at the beginning of last year. The balances on its post-closing...
One Product Corporation (OPC) incorporated at the beginning of last year. The balances on its post-closing trial balance prepared on December 31, at the end of its first year of operations, were: Cash 20,080 Accounts Receivable 8,240 Allowance for Doubtful Accounts 955 Inventory 12,600 Prepaid Rent 1,740 Equipment 33,400 Accumulated Depreciation 3,240 Accounts Payable 0 Sales Tax Payable 500 FICA Payable 600 Withheld Income Taxes Payable 500 Salaries and Wages Payable 1,600 Unemployment Tax Payable 300 Deferred Revenue 4,500 Interest...
One Product Corporation (OPC) incorporated at the beginning of last year. The balances on its post-closing...
One Product Corporation (OPC) incorporated at the beginning of last year. The balances on its post-closing trial balance prepared on December 31, at the end of its first year of operations, were: Cash 21,980 Accounts Receivable 8,310 Allowance for Doubtful Accounts 1,065 Inventory 12,420 Prepaid Rent 1,960 Equipment 46,600 Accumulated Depreciation 4,560 Accounts Payable 0 Sales Tax Payable 500 FICA Payable 600 Withheld Income Taxes Payable 500 Salaries and Wages Payable 1,600 Unemployment Tax Payable 300 Deferred Revenue 4,500 Interest...
BLADES, INC. CASE Consideration of Direct Foreign Investment For the last year, Blades, Inc., has been...
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For nearly 20 years, Specialized Coatings has provided painting and galvanizing services for manufacturers in its...
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Hank started a new business, Hank's Donut World (HW for short), in June of last year....
Hank started a new business, Hank's Donut World (HW for short), in June of last year. He has requested your advice on the following specific tax matters associated with HW's first year of operations. Hank has estimated HW's income for the first year as follows: (Do not round intermediate calculations.) Revenue: Donut sales Catering revenues $ 256,000 73,710 329,710 Expenditures: Donut supplies Catering expense Salaries to shop employees Rent expense Accident insurance premiums Other business expenditures $126,760 28,930 53,500 40,910...
Problem 8-7 The management of Indigo Company has asked its accounting department to describe the effect...
Problem 8-7
The management of Indigo Company has asked its accounting
department to describe the effect upon the company’s financial
position and its income statements of accounting for inventories on
the LIFO rather than the FIFO basis during 2017 and 2018. The
accounting department is to assume that the change to LIFO would
have been effective on January 1, 2017, and that the initial LIFO
base would have been the inventory value on December 31, 2016. The
following are the...
Analytical Procedures: Ratio Relationships. The following situations represent errors and frauds that could occur in financial statements Required State how the ratio in question would compare (higher, equal, or lower) to what the ratio should have been had the error or fraud not occurred. a. The company recorded fictitious sales with credits to sales revenue accounts and debits to accounts receivable. Inventory was reduced, and cost of goods sold was increased for the profitable "sales." Is the current ratio higher...
Over the last five years, corporation A has been consistently profitable. Its earnings before taxes were as follows: Year Earnings $1,200 $3,400 $4,400 $5,000 $4,400 a. If the corporate tax rate was 28 percent, what were the firm's income taxes for each year? Round your answers to the nearest dollar Year Taxes b. Unfortunately, in year 6 the firm experienced a major decline in sales, which resulted in a loss of $11,200. What impact will the loss have on the...
Hank started a new business, Hank's Donut World (HW for short), in June of last year. He has requested your advice on the following specific tax matters associated with HW's first year of operations. Hank has estimated HW's income for the first year as follows: (Do not round intermediate calculations.) Revenue: Donut sales Catering revenues $ 256,000 73,710 329,710 Expenditures: Donut supplies Catering expense Salaries to shop employees Rent expense Accident insurance premiums Other business expenditures $126,760 28,930 53,500 40,910...
Problem 8-7
The management of Indigo Company has asked its accounting
department to describe the effect upon the company’s financial
position and its income statements of accounting for inventories on
the LIFO rather than the FIFO basis during 2017 and 2018. The
accounting department is to assume that the change to LIFO would
have been effective on January 1, 2017, and that the initial LIFO
base would have been the inventory value on December 31, 2016. The
following are the...
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