Alternatives: A. Recognize compensation expense at each year end and disclose swap transactions in the notes to the financial statements: Record the following entry at year end Dr. Compensation Expense XXX Cr. Paid-in Capital-Stock Options XXX This will reduce pre tax income and increase total paid-in capital B. Disclosure in notes to financial statements only IV.
In the case of our government, debt is managed primarily by selling bonds. The process is cyclical as the government has to sell new bonds to pay for older bonds that have matured. It is important to realize that debt should be judged in relation to assets. While debt is probably never a good thing, in the case of the U.S. economy it is not as bad as it seems. When we view some of the assets of the United States such as natural resources, skilled workforce, and tax revenue generating businesses, we see that our assets have enough value to sustain our current debt level
In FBN’s case, their long-term debt ratios alone are 55.7% and 81.5% in years 12 and 13, respectively (and they’ve incurred interest rate increases); and ROCE in the same two years is 15.6% and 6.4%. Just observing these ratios, managers should have been able to see that the increase in borrowing (faster than sales profits) would greatly decrease the shareholders’ earnings. The Risk Analysis also shows that FBN’s current and quick ratios declined, meaning that they do not have enough resources to pay their debts over the next 12 months.
Interest rate risk is basically the threat posed by unexpected changes in interest rates, in other words, it can be defined as the uncertainty surrounding expected returns on security, brought about by changes in interest rates. Given that a borrower uses 90-day bills under a two-year bill facility, the bills will be rolled over seven times so that the loan is repaid at the end of two years. This arrangement is a floating-rate arrangement that exposes the borrower to the risk of an unexpected rise in interest rates that will increase its cost of funds while not increasing its interest earned on the loan. The borrower faces interest rate risk throughout the period of the facility because the amount raised is determined by the spot rate each time the bills are issued. Should rates rise unexpectedly, the borrower would have to pay the higher-than-expected interest rate.
A Virginia dollar could be worth more than a South Carolina dollar, or worth less than a New England gold coin. In the table showing the “Estimated Market Value of United States Exports to Great Britain” one can see that after the Revolution, there less trade with Great Britain, which also hindered the economic situation of the United States. Politically, the Articles of Confederation was unable to maintain order. They allowed each state one vote for equality; unfortunately, many members would often fail to attend Congress, more concerned about what was going on in their state, therefore, the vote was not cast. Also among the states there were many disputes, especially about boundary lines.
In fiscal year 2008, the return on invested capital of continuing operations was 9.5% compared to fiscal year 2007’s 13.9%. The decrease reflects the decrease in operating profit that also impacts the rationalization charges. If the rationalization charges are excluded the return on invested capital for continuing operations would have been 11.4% (Phillips, Libby, Libby, 2011). The cash flow statement shows the movement of cash within a company. The cash flow statement is split into three categories: operating activities, investing activities, and financing activities.
The article refers to the various sovereign rating changes that have recently occurred. Pick any of these countries and explain the reasoning behind it. Were the rating changes justified and do they impact on the financial markets? Syndicate 2 1. What special role do CRAs play in financial markets and how successful have they been?
This wasn’t a sustainable lifestyle and was being funded by two things. Firstly it was from a growing credit culture, where people were spending money that they didn’t yet have, this included purchasing house hold luxuries and also extended to mortgages from banks for housing. The second reason that people believed they could spend so lavishly
This is an implausible trend on the Balance sheet that BDO should have investigated further, especially with Leslie Fay’s outstanding Income Statement. 2.) First of all I would want to investigate vendor and customer accounts to reconcile payable and receivable amounts. Also, I would obtain bank statements and other lines of credit since the long term debt to equity ratio shows the company being highly leveraged.
The problem with debt is there is an interest payment that must be paid. Using the above example, the country's benefit from the GDP minus the deficit was $800 billion but the interest on the national debt is $20 billion. The country loses another $20 billion from its GDP bringing the net to $780 billion. These losses affect every tax payer as more tax dollars go to pay for what the country loses in GDP dollars (The Spectrum Group,