Peter Swap I. Issue: Will recognizing compensation expense as part of Mizri Corporation’s stock compensation plan faithfully represent the exchange? II. GAAP List: * 718-10-30-22: An equity instrument for which it is not possible to reasonably estimate fair value at the grant date shall be accounted for based on intrinsic value * 718-20-35-3: A modification of an equity award shall be treated as an exchange of the original award for a new award incurring additional compensation cost for any incremental value III. Alternatives: A.
? How does systematic risk differ from unsystematic risk? What is meant by the Capital Asset Pricing Model? Describe how it relates to expected return and risk. Find the real return on the following investments: Stock Nominal Return Inflation A 10% 3% B 15% 8% C -5% 2% ?
If subsequently resold for a sum larger than the cost, Alcoa should report for the sale of the treasury stock by debiting cash for the sale cost, crediting treasury stock for cost, and crediting additional paid-in capital from repurchased stock for the excess of the selling price over the cost. Adversely, if the stock is retired, Alcoa
The various adjustments that are made to net income in arriving at net cash flow from operating activities. 10. The different tools of financial statement analysis, and how each tool is used, as well as the different names for certain tools of analysis. 11. The different ratios, why/how those ratios are used, and which external user is interested in a certain ratio.
D. balance sheet as an item of stockholders’ equity. 44) Which of the following statements is false? A. Cash dividends should be recorded as a liability when they are declared by the board of directors. B.
The mean of the complete portfolio as a function of the proportion invested in the risky portfolio (y) is: E(rC) = (l - y)rf + yE(rP) = rf + y[E(rP) - rf] = 5.5 + y(12.88 - 5.5) Setting E(rC) = 12% ==> y = 0.8808 (88.08% in the risky portfolio) 1 - y = 0.1192 (11.92% in T-bills) From the composition of the optimal risky portfolio: Proportion of stocks in complete portfolio = 0.8808 × 0.6466 = 0.5695 Proportion of bonds in complete portfolio = 0.8808 × 0.3534 = 0.3113 12. 1. Using only the stock and bond funds to achieve a mean of 12% we solve: 12 = 15wS + 9(1 - wS) = 9 + 6wS Þ wS = 0.5 Investing 50% in stocks and 50% in bonds yields a mean of 12% and standard deviation of: sP = [(0.502 × 1024) + (0.502 × 529) + (2 × 0.50 × 0.50 × 110.4)] 1/2 =
Since debt and equity levels are closely related there is an analysis called the “DuPont model” that systematically breaks ROE into components so that each can be evaluated. ROE = NI x EBT x EBIT x Sales x Total assets EBT EBIT Sales Total assets Common equity EBT = earnings before taxes. The first ratio measures the proportion of earnings before tax that is kept by the company. EBIT = earnings before interest and taxes. The second ratio measures the effect of interest; it indicates the proportion of earnings before interest and tax that is retained after paying interest.
INTEREST ACCRUAL AND THE TIME VALUE OF MONEY* WALTER C. CLIFF" PHILIP J. LEVINE** * TABLE OF CONTENTS Introduction ................................................ I. The Accrual Method as a Distortion of Income ......... A. The Commissioner's Broad Discretion Under Section 446(b) .................................... B. Use of the Accrual Method for Reporting Interest Deductions on Long-Term Obligations Clearly Reflects Income ............................. 1.
Luisa Fernanda Treviño A01231457 Agosto/13/2015 Proyecciones Financieras Financial statement forecasts * Expected future income statements * Balance sheets * Cash flows Financial statement forecasts represent an integrated portrayal of a firm’s future operating, investing and financing activities. = Future profitability, growth, financial position, cash flows, risk. Optimistic forecasts can lead the analyst to overestimate future earnings and cash flows or underestimate risk and therefore make poor investment decisions. Conservative forecasts can lead the analyst to understate future earnings and cash flows overstate risk. Focal points of the firm’s strategy * Accounting quality * Profitability * Risk General forecasting principles
Explain the meaning of money multiplier and its role? (6) The money multiplier calculates the maximum amount of money that an initial deposit can be expanded to with a given reserve ratio. Money multiplier can also be expressed as a ratio of a change in money supply divided by a change in money base. The role of the multiplier is that it explains why output fluctuates.the money multiplier is a multiple of reserves; this multiple is the reciprocal of the reserve ratio, and it is an economic multiplier.In monetary economics, a money multiplier is one of various closely related ratios of commercial bank money to central bank money under a fractional-reserve banking system. Most often, it measures the maximum amount of commercial bank money that can be created by a given unit of central bank money.