I would make an investment in the company’s 5% convertible bonds. Sepracor’s ROA and ROE is above the average and showing that it is profitable; however, the company’s debt to asset ratio is above 1, which means that most of its assets are financed through debt instead of equity. Sepracor would be in trouble if its creditors were to start demanding repayment. C.) To make valid comparisons between Sepracor and Bayer, you would have to compare the rules for fair value under the U.S GAAP and iGAAP. Under IFRS, convertible bonds are separately recorded as liabilities and stockholder’s equities.
Which of the following statements is CORRECT? Answer: e. If the interest rate the companies pay on their debt is less than their earning power. (BEP), then Company HD will have the higher ROE. 4. Muscarella Inc. has the following balance sheet and income statement data: Cash $ 14,000 Accounts payable $ 42,000 Receivables 70,000 Other current liabilities 28,000 Inventories 210,000 Total CL $ 70,000 Total CA $294,000 Long-term debt 70,000 Net fixed assets 126,000 Common equity $280,000 Total Assets $420,000 Total liab.
Introduction Waltham, Inc. is a publicly traded firm that is considering the acquisition of a private firm, Artforever.com. The acquisition is being considered because there are limited investment opportunities in the core business of vintage shoe restoration at Waltham, Inc. The CEO wishes to expand the company into other growing markets. Waltham, Inc. currently has 100,000 outstanding shares of stock trading at $50 per share. The firm also has $2M market value of bonds trading at a yield to maturity of 6.2%.
Current Ratio 2011 = Current Assets / Current liabilities Gaps Current Ratio = 4,309 / 2,128 = 2.0249 This means that The Gap Inc. is capable of paying its short-term liabilities two times by selling its current assets. What was the current ratio for 2010? How did the current ratio change? Current Ratio 2010 = 3,926 / 2,095 = 1.8739 The current Ratio for The Gap Inc. Increase from 1.8739 to 2.0249 What is the implication of that change? The current ratio increased because there was a considerable increase in Cash and other current assets.
https://hwguiders.com/downloads/acct-324-final-exam-solution ACCT 324 Final Exam Solution Question 1. (TCOs 2 & 3) Evelyn sold her personal residence to Drew on March 1 for $300,000. Before the sale, Evelyn paid the real estate taxes of $3,000 for the calendar year. For income tax purposes, the real estate tax deduction is apportioned as follows: $750 to Evelyn and $2,250 to Drew. Drew’s basis in the residence is: Question 2.
ACCT 324 Final Exam Solution https://hwguiders.com/downloads/acct-324-final-exam-solution/ ACCT 324 Final Exam Solution Question 1. (TCOs 2 & 3) Evelyn sold her personal residence to Drew on March 1 for $300,000. Before the sale, Evelyn paid the real estate taxes of $3,000 for the calendar year. For income tax purposes, the real estate tax deduction is apportioned as follows: $750 to Evelyn and $2,250 to Drew. Drew’s basis in the residence is: Question 2.
Conversely, in 2011, Wal-Mart’s liabilities were just $58,603M; the reason this amount is lower is because of the number of assets made. A good way get a grasp of this information is using a personal reference and compare it to borrowing money for the purchase a new vehicle. Making payments for the vehicle on time increases the vehicle’s asset. However, if payments not made on time, the interest increases and the liability on the car increases. This is in direct result of owing more money on the balance of the loan than what the car is worth at the time of purchase.
At the beginning of the accounting period, the account held $1,700,000. It received contributions amounting to $3,290,000, bringing the balance of the account up to $4,990,000. The nature of these contributions are mostly unknown - $750,000 of the permanently restricted revenue was in the form of gains on long-term investments, but $2,540,000 may or may not be used as an investment to spur the creation of more revenue. Regardless, the large increase in this classification of net assets is heartening in regards to the fiscal health of the
This moderate policy approach for investing uses more than about one-half of the short-term debt that is left but also uses more working capital when having to finance the policy. The moderate policy approach also only uses about half the debt and only about half the assets when it comes to funding the investment. It makes somewhat of a moderate risk of not having to risk to much or for that matter to little since not that much can be lost as opposed to an aggressive policy type approach. Moderate EBIT-$6,000,000 Minus Interest-1,460,000 EBT-$4,540,000 Minus Tax Rate of 40%-1,816,000 EAT-$2,724,000 Return on Equity-6.81.00% Conservative investment policy type uses a majority of working capital and also uses little if any short-term debt. Taking about $2,691,000 and dividing it by $40,000,000 dollars would result in a return of equity of some 6.73.00%.
THE ANSWERS: QUESTION 1: On May 3, 2006, Talbots paid $ 518,320,000 to shareholders of J. Jill in cash. Talbots purchased (518,320,000/24.05 ) = 21,551,767 shares of J. Jill. The fair market value of assets that Talbots acquired from J. Jill was $ 687,572,000. Talbots was willing to pay more than the fair value of the tangible assets acquired from J. Jill, because J. Jill had intangible assets that worth some money. The liabilities assumed by Talbots in the acquisition of J. Jill were: Current liabilities 55,662,000 Deferred income taxes 95,699,000 Debt acquisition (loan) 400,000,000 Other long-term liabilities 11,820,000 Total liabilities $ 563,181,000 QUESTION 2: The Journal entries required when Talbots recorded the purchase of J. Jill: Cash 400,000,000 Debt (loan) 400,000,000 Investment in J. Jill 524,391,000 Cash 524,391,000 Cash 30,445,000 Deferred income taxes 19,475,000 Other current assets 91,837,000 Property and equipment 154,553,000 Goodwill 211,977,000 Trademarks 79,100,000 Other intangible assets 100,185,000 Current liability 55,662,000 Deferred income taxes 95,699,000 Other long-term liability 11,820,000 Investment in J. Jill 524,391,000 QUESTION 3: For Fiscal Year 2007 (ending February 3, 2007), the amortization of goodwill and other intangible assets planned by Talbots when it purchased J. Jill on May 3, 2006: Goodwill: will not be amortized and will be reviewed for impairment on an annual basis or when events indicate that the asset may be impaired.