Griffith AFE 3102AFE Your firm has been Approached by a Listed Company

Griffith AFE 3102AFE Your firm has been Approached by a Listed Company in $11 Only (Instant Download)Griffith AFE 3102AFE Your firm has been Approached by a Listed Company

Sample Answer is Given Below

Assignment XLS1015.docx ASSIGNMENT Your firm has been approached by a listed company, POFO Limited, and asked if you will accept appointment as auditors for the year ending 31 December 2015 (it is now late November 2015).

POFO Ltd’s Finance Director provided you with the following statement of financial position and income statement information which included actual figures for years ending 31 December 2012 to 2014, with estimated figures for 2015. POFO Ltd produces gadgets. This was once a fairly profitable industry but both the size and profitability of the industry in Australia have declined significantly in recent years due to advanced technology and replacement products (which POFO Ltd is unable to produce with its existing plant and equipment). Over recent years a number of its competitors and customers have closed down and existing tariffs, quotas and import duties on imported gadgets have been scheduled to be abolished at the beginning of 2015. POFO Ltd’s factory closed in late November, pending the resolution of an industrial dispute (factory workers demanding a 15% wage rise and reduced hours). It is unlikely that work will resume prior to the Christmas shutdown and consequently the estimated figures for 2015 are not, in the opinion of the Finance Director, expected to change.

Managerial Accounting True-False Statements III

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Managerial Accounting True-False Statements III

  1. Ending finished goods inventory appears on both the balance sheet and the income statement of a manufacturing company.
  2. The beginning work in process inventory appears on both the balance sheet and the cost of goods manufactured schedule of a manufacturing company.
  3. In calculating gross profit for a manufacturing company, the cost of goods manufactured is deducted from net sales.
  4. Finished goods inventory does not appear on a cost of goods manufactured schedule.
  5. If the ending work in process inventory is greater than the beginning work in process inventory, then the cost of goods manufactured will be less than total manufacturing costs for the period.
  6. Finished goods inventory for a manufacturing company is equivalent to merchandise inventory for a merchandising company.
  7. Raw materials inventory is not an asset until it is used to make a product.
  8. Raw materials inventory shows the cost of completed goods available for sale to customers.
  9. In preparing closing entries for a manufacturing company, all revenue and expense account balances are closed to a Manufacturing Summary account.
  10. To balance the Cost of Goods Manufactured columns of a work sheet for a manufacturing company, an entry must be made in the income statement debit column.

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Question of Quisco Systems

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Quisco Systems has 6.5 billion shares outstanding and a share price of $18. Quisco is considering developing a new networking product in house at a cost of $500 million. Alternatively, Quisco can acquire a firm that already has the technology for $900 million worth (at the current price) of Quisco stock. Suppose that absent the expense of the new technology, Quisco will have EPS of $0.80.

a. Suppose Quisco develops the product in house. What impact would the development cost have on Quisco’s EPS? Assume all costs are incurred this year and are treated as an R&D expense, Quisco’s tax rate is 35%, and the number of shares outstanding is unchanged.

b. Suppose Quisco does not develop the product in house but instead acquires the technology. What effect would the acquisition have on Quisco’s EPS this year? (Note that acquisition expenses do not appear directly on the income statement. Assume the firm was acquired at the start of the year and has no revenues or expenses of its own, so that the only effect on EPS is due to the change in the number of shares outstanding.)

c. Which method of acquiring the technology has a smaller impact on earnings? Is this method cheaper? Explain.

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Analysis of Financial Statements of Southwest Airlines Co.

Analysis of Financial Statements of Southwest Airlines Co. in $19 Only (Instant Download)

1) What 3 items of important information does the Southwest income statement reveal about the financial performance of the company over the last three years?
2) What 3 items of important information does the Southwest balance sheet reveal about the financial position of the company over the last two years?
3) Can you identify the major sources of funding for operating costs and capital expenditures used by Southwest Airlines from the information presented in the company’s annual report? If not, how could you get this information?
4) Who is responsible for: a) the issuance, and b) the content of the Southwest financial statements?
5) What assurance, if any, is there that the Southwest financial statements are in compliance with GAAP, and are free of material misstatements?
6) Of what use, if any, are the notes to the financial statements? Quantitative analysis tied to the financial statement concepts will add value to your work.
Sample Answer:
Question 2. What 3 items of important information does the Southwest balance sheet reveal about the financial position of the company over the last two years?

Answer:

Balance is another important statement of final account. It is also known as a report card of the corporation. It shows the position of the company at any particular date. The most three important information from the Southwest income statement are given below:

Improvement in current assets to current liabilities ratio

The company is able to improve its current ratio in last three years. In the year 2006 the current ratio was hovering around below one, however, it increased and touched 1.03 at the end of 2008.

Rising Debt

Debt to equity ratio increased from 0.26 in 2006 to 0.79 at the end of 2008. Debt to assets ratio also increased from 0.13 in 2006 to 0.27 at the end of 2008. In reflecting that in assets financing debt part in increasing faster than equity part.

Decrease in Total Equity

Total equity of the firm was decreased substantially in the year 2008 when it compares to 2007. In 2007 total equity was $6941 million, which fell to $4953 million by the end of 2008.

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Reeds Clothier Case Study and Questions

Reeds Clothier Case Study and Questions

Reeds Clothier Case Study and Questions

WEEK 4 – FIN 370 

“Reed’s Clothier” Case Study and Questions

Prepare a 350-700-word case study analysis of Case #16: “Reed’s Clothier” located in the Cases in Financial Management text, by Sulock and Dunkelberg. Be sure to address the following in your analysis:

Briefly summarize the case.

1) Calculate a few ratios and compare Reed’s results with industry averages. (Some industry averages are shown in Exhibit 16.4) What do these ratios indicate?

2. Why does Holmes want Reed’s to have an inventory reduction sale, and what does he think will be accomplished by it?

3. Jim Reed had adopted a very loose working capital policy with higher current assets than industry averages. If he merely tightens his working capital policy to the averages, should this affect his sales?

4. Assuming that Reed’s can improve its operations to be in line with the industry averages, construct a 1995 pro forma income statement. Assume that net sales will be reduced 5 percent to $1,938,000 but that depreciation and amortization will not change but remain at $32,000.

5. What type of inventory control system would you suggest to Jim Reed?

6. What type of accounts receivable control would you suggest to Jim Reed?

7. Is the increase in sales related to the increase in inventory?

8. What is Reed’s cost of not taking the suppliers’ discounts?

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