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.
J. Premium offers outstanding- Current Liability K. Discount notes payable- Current Liability L. Employee payroll deductions unremitted- Current Liability M. Current maturities of long-term debts to be paid from current assets- Current Liability N. Cash dividends declared but unpaid- Current Liability O. Dividends in arrears on preferred stock- Footnote disclosure P. Loans from officers- Current Liability 13-2. Accounts and Notes Payable * The following are selected 2012 transactions of Darby Corporation. Sept. 1 | Purchased inventory from Orion Company on account for $50,000.
P7 Solvency is when a business is able to pay is expenses as it has money available within the business. To determine solvency, businesses can use ratios such as current ratio and acid test ratio. These ratios allow businesses and potential investors to see how well that are able to meet their liabilities. Current Assets Current ratio = Current liabilities The acid test ratio shows the assets compared to liabilities, like the current ratio, but by taking out the stock figure from the current assets, it shows how well a business can meet its liabilities without having to sell stock, Current assets - stock Acid test ratio = Current liabilities Profitability Ratios can also show how profitable a business really is either as a snapshot or over time. There are three ways of working out how profitable a business really is: * Gross profit percentage – This calculation shows gross profit as a percentage of the turnover.
Questions and Problems: 1.1 Explain the key roles of the financial system. Why is it so important to the broader economy to have an efficient and effective financial system? The role of the financial system is to gather money from the suppliers of funds (SSUs) and transfer it to the demanders of funds (DSUs) in the most efficient manner possible. When the financial system is efficient and effective, the greater the results in regards to the ability of businesspeople to invest in their firms, and the flow of individual preferences for current spending and saving. 1.4 Compare and contrast debt and equity as a source of funds for financial claims.
Assumption #1 - The yield of the Publicly traded Nike debt holds for the entire debt position. Assumption #2- We can use the price of the currently traded Nike bond to determine the market value of debt, by multiplying the current price by the book value of debt. I. Single cost of capital is appropriate because of the non-divergent business segments that possess similar risk profiles. II.
Support your discussion with references in APA format. You are encouraged to use Excel or other compatible spreadsheet when computations are involved. Abstract: Managerial accounting is the ability to read and analyze financial information for internal use. Managerial accounting is not as rigid in format as financial accounting and allows reports to be tailored to support specific research. Financial Accounting, required by law is the reporting of the company’s financial position over a period such as quarterly or annually, using GAAP approved accounting methods The Difference Between Managerial and Financial Accounting Managerial Accounting Versus Financial Accounting Managerial accounting is the broadest area of accounting.
3. Explain what is meant by “ratio analysis” Ratio analysis in the interpretation of the resulting data given by the accounting ratio(s). Examples are given in next section of this assignment. 4. Discuss the advantages and the limitations of “ratio analysis” There are several advantages and limitations of accounting ratios, I will address some of the key ones in this section Advantages * Accounting ratios can be used by investors to make decisions on whether or not to invest in a company or sell existing shares.
The use of Ratios in Financial Analysis Dennis M. Pipho Sept. 23, 2014 Concordia St. Paul Cohort 2258 The use of Ratios in Financial Analysis The goal of any successful financial manager should be to maximize the value of the business for the shareholders or owners. (Droms & Wright, 2010). The way in which managers are able to determine the value of the company is through the use of financial statements. Although each financial statement focuses on a different area or length of time, the shared piece of information that in some way is depicted by every financial statement and the way the shareholder value is calculated is ultimately cash. Financial statements are simply the framework of a financial picture created over a given period of time.