Refer to the Lufthansa example on asset depreciation estimates. What adjustments would be required if Lufthansa’s aircraft depreciation were computed using an average life of 25 years and salvage value of 5% (instead of the reported values of 12 years and15%)? Show the adjustments to the 2008 and 2009 balance sheets, and to the 2009 income statement.
Answer to relevant QuestionsIn early 2003, Bristol-Myers Squibb announced that it would have to restate its financial statements as a result of stuffing as much as $3.35 billion worth of products into wholesalers’ warehouses from 1999 through 2001. ...Joe Investor asserts, “A company cannot grow faster than its sustainable growth rate.” True or false? Explain why.John Right, an analyst with Stock Pickers Inc., claims: “It is not worth my time to develop detailed forecasts of sales growth, profit margins, et cetera, to make earnings projections. I can be almost as accurate, at ...Manufactured Earnings is a “darling” of Wall Street analysts. Its current market price is $15 per share, and its book value is $5 per share. Analysts forecast that the firm’s book value will grow by 10 percent per year ...Recalculate the forecasts in Tables 8-2 assuming that the ratio of net operating working capital to sales is 3 percent, and the ratio of net long-term assets to sales holds steady at 33.4percent for all the years from fiscal ...
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