Prior to Year 8, General Dynamics Corporation engaged in a wide variety of industries, including weapons manufacturing
Question:
Financial statements for General Dynamics for Year 9 as reported, Year 8 as restated in the Year 9 annual report for discontinued operations, and Year 8 as originally reported appear in Exhibit 9.8 (balance sheet), Exhibit 9.9 (income statement), and Exhibit 9.10 (statement of cash flows).
Required
a. Refer to the balance sheets of General Dynamics in Exhibit 9.8. Why does the restated amount for total assets for Year 8 of $4,672 million differ from the originally reported amount of $6,207 million?
b. Refer to the income statement for General Dynamics in Exhibit 9.9. Why are the originally reported and restated net income amounts for Year 8 the same (that is, $505 million) when each of the individual revenues and expenses decreased on restatement?
c. Refer to the statement of cash flows for General Dynamics in Exhibit 9.10. Why is the restated amount of cash flow from operations for Year 8 of $609 million less than the originally reported amount of $673 million?
d. If the analyst wanted to analyze changes in the structure of assets and equities between Year 8 and Year 9, which columns and amounts in Exhibit 9.8 would he or she use? Explain.
e. If the analyst wanted to analyze changes in the operating profitability between Year 8 and Year 9, which columns and amounts in Exhibit 9.9 would he or she use? Explain.
f. If the analyst wanted to use cash flow ratios to assess short-term liquidity and longterm solvency risk, which columns and amounts in Exhibit 9.10 would he or she use? Explain.
Solvency
Solvency means the ability of a business to fulfill its non-current financial liabilities. Often you have heard that the company X went insolvent, this means that the company X is no longer able to settle its noncurrent financial... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Related Book For
Financial reporting, financial statement analysis and valuation a strategic perspective
ISBN: 978-0324789416
7th Edition
Authors: James M Wahlen, Stephen P Baginskl, Mark T Bradshaw
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