Question: In a recent year, analysts expected IBM to earn $1.32 per share. The company actually earned $1.33. Microsoft was expected to earn $.43 per share,

In a recent year, analysts expected IBM to earn $1.32 per share. The company actually earned $1.33. Microsoft was expected to earn $.43 per share, but it earned only $.41. The corporate income statements of these companies show that Microsoft had a special charge (with corresponding liability) of $660 million, or $.06 per share, based on settlement of a class-action lawsuit filed on behalf of consumers, whereas IBM had no such charge.22
Assume you work for an investment manager who has asked you to write a memorandum in one page or less that assesses these results. Specifically, who did better, Microsoft or IBM? Use quality of earnings to support your answer and comment on the effect of Microsoft's special charge on current and future cash flows.

Step by Step Solution

★★★★★

3.49 Rating (166 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Memorandum analyzing the performance of Company I and Company M in relation to quality of earni... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

987-B-C-A-P-C (518).docx

120 KBs Word File

Students Have Also Explored These Related Cost Accounting Questions!

In a recent year Ives Township acquired six police cars at a total cost of $200,000. The vehicles are expected to have a useful life of four years. 1. Prepare the journal entries that the township...

1. How has the rapid development of technology affected competition in the mobile-phone industry? 2. How does this technology affect supply and demand in the mobile-phone industry? The ascent of the...

In recent years, IBM has worked hard to reposition itself from a supplier of information technology (IT) hardware and software to a company that provides business solution services. Although IBM is...

Perform the annual journal entries for eHealth under the old and new revenue recognition standard for one Medicare Advantage policy using the information in Exhibit 7. Under the new standard, how...

Question:- KPMG Taseer Hadi & Co. as the Auditors of the Company for the year 2019, subject to Shareholders' approval at the next AGM to be held on April 09, 2019. Holding Company Through its wholly...

Question :- KPMG Taseer Hadi & Co. as the Auditors of the Company for the year 2019, subject to Shareholders' approval at the next AGM to be held on April 09,2019. Holding Company Through its wholly...

I need help with these business mathematics questions. I have provided each page number and what questions need answered on each screenshot. Please write the page number and what question the answer...

Compute the following ratios for Campbell using the information below Year 11? Liquidity ratios: Asset utilization ratios:* a. Current ratio n. Cash turnover b. Acid-test ratio o. Accounts receivable...

How would you react if one of your peers were humiliated and then fired by your common supervisor during a meeting? How can companies satisfy their employees? Should companies offer their employees...

Manor Homes plans to discontinue a segment which last year generated a contribution margin of $65,000 and incurred $40,000 in fixed costs. If the segment is discontinued, half of the fixed costs will...

Suppose the price of beef rises by 10 percent and the quantity of beef demanded falls by 20 percent. We can conclude that (A) demand for beef is price elastic and consumer spending on beef is...

What problems can you see in the way project managers were assigned in the past?

Under what conditions is goodwill recorded? What is the proper accounting treatment for amortizing goodwill ?

Often research and development costs provide companies with benefits that last a number of years. (For example, these costs can lead to the development of a patent that will increase the companys...

In 2009, Campbell Soup Company reported average total assets of $6,265 million, net sales of $7,586 million, and net income of $736 million. What was Campbell Soups return on assets ratio?

2) When it comes to restatements, why is it important to restate the income statement into the multi step format? 3) Assume you are an investor in various equity securities (stocks) and you have full...

Discuss what are the capabilities gained from mastering the linux command line interface

kindly solve this and find a way to make profit through trangular arbitrage (or the way with least losses) step by step solutions provide all outcomes if possible, thank you! Triangular Arbitrage...