Business Analysis And Valuation Using Financial Statements Text And Cases 2nd Edition Krishna G. Palepu, Paul M. Healy, Victor Lewis Bernard, W.Gordon Filby - Solutions

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M2-23.Determine Missing Information Using the Accounting Equation Use knowledge of accounting relations to complete the following table for Boatsman Company.Beginning retained earnings .......... .Net income (loss) .. ................ .Dividends ........................ .Ending retained earnings
M2-24. Reconcile Retained Earnings Following is financial information from J ohnson & J ohnson for the year ended December 30, 2018.Prepare the retained earnings reconciliation for Johnson & Johnson for the year ended December 30, 2018 ($ millions).Retained earnings, Dec. 31, 2017 .... $101 ,793
M2-2S. Assessing Financial Statement Effects of Adjustments Selected accounts of Portage Properties, a real estate management firm, are shown below as of January 3 1, before any accounts have been adjusted. All accounts have normal balances.Prepaid insurance . . .. . .. .. .. .. .Supplies
M2-26. Preparing Closing Journal Entries KLA-Tencor provides process control and yield management solutions for the semiconductor industry.Selected financial information for the year ended June 30, 201 8, follows .$millions Net sales ........ ..... . .. . . . .. . .... . .. . .... .... . . . . . .
M2-27. Inferring Transactions from Financial Statements Lowe's is the second-largest home improvement retailer in the world, with 2,002 stores. During its fiscal year ended in February 2019, Lowe's purchased merchandise inventory at a cost of $49,569 ($ millions).Assume all purchases were made on
M2-28. Computing and Comparing Income and Cash Flow Measures Penno Corporation recorded service revenues of $200,000 in 2020, of which $170,000 were on credit and $30,000 were for cash. Moreover, of the $170,000 credit sales for 2020, Penno collected $20,000 cash on those receivables before
M2-29. Analyzing Discontinued Operations ANALYST ADJUSTMENTS 2.2 Johnson Controls International discontinued its Power Solutions business. Johnson Controls reports the following information in its 20 19 annual report.For Year Ended September 30 ($ millions)Net income from continuing operations
E2-30. Financial Analysis Using Adj usted Account Data L01, 2, 7 Selected T-account balances for Bloomfield Company are shown below as of January 3 1, which reflect ~o ... .. ., its accounting adjustments. The firm uses a calendar-year accounting period but prepares monthly ac- •·~counting
E2-31.Inferring Transactions from Financial Statements The GAP is a global clothing retailer for men, women, children, and babies. The following information is taken from The Gap's annual report for the fiscal year ended February 2, 2019.Selected Balance Sheet Data($ millions)Merchandise inventory
E2-32.Inferring Transactions from Financial Statements Costco Wholesale Corpor ation operates membership warehouses selling food, appliances, consumer electronics, apparel, and other household goods at 762 U.S. and international locations. As of its fiscal year-end 201 8, Costco had approximately
LOS, 9 E2-33. •Preparing Financial Statements and Closing Process Beneish Company has the fo llowing account balances at December 31, the end of its fiscal year .Debit Credit Cash ................ ... . ... .. . . .. .. ... . $ 8,000 Accounts receivable ............... .. ..... . 6,500 Equipment
L06 E2-34.Analyzing and Reporting Financial Statement Effects of Transactions M. E. Carter launched Carter Company, a professional services firm on March I. The firm will prepare financial statements at each month-end. In March (its first month), Carter executed the following transactions.Enter the
L01 O E2-35. Use Information from Form 20-F CREDIT SUISSE GROUP(CS)Stock of Credit Suisse Group trades on the New York Stock Exchange as well as in various European stock markets. The company's Form 20-F reported the fo llowing.The accompanying consolidated financial statements of Credit Suisse
E2.36 Use Information from Form 20-F H&R Block reports the following information in Schedule II of its 2018 Form I 0-K. Accounts receivable represents the amount customers owe the company at year-end. The balance in the allowance for doubtful accounts is the company's best estimate of the amount
E2-37. Construct Financial Statements from Account Data L01, 2, 8 Barth Company reports the following year-end account balances at December 3 1, 2019. Prepare the 2019 l:wi income statement and the balance sheet as of D ecember 31, 2019.Accounts payable .. .. .. .. ..... .Accounts receivable .. ..
E2-38. Construct Fina ncial Statements from Transaction Data$ 36,000 80,000 8,000 160,000 500,000 3,000 6,000 40,000 Baiman Corporation commences operations at the beginning of January. It provides i ts services on credit and bills its customers $40,000 for January sales, which are unpaid at
E2-39.Ident ify and Classify Balance Sheet and Income Statement Accounts Following are selected accounts for Best Buy Inc. for the fiscal year ended February 2, 2019 ..a. I ndicate whether each account appears on the balance sheet (B) or income statement (I) .b. Using the following data, compute
L01, 2 E2-40.Ident ify and Classify Balance Sheet and Income Statement Accounts Following are selected accounts for Terex Corp for the fiscal year ended December 3 1, 2018.a. Indicate whether each account appears on the balance sheet (B) or income statement (I) .b. Using the following data, compute
L01, 2 E2-41.Compare Income Statements and Balance Sheets of Competitors Classification Following are selected income statement and balance sheet data from two retailers, Abercrombie &Fitch (clothing retailer in the high-end market) and TJX Companies (clothing retailer in the val ue-priced market),
E2-42.Compare Income Statements and Balance Sheets of Competitors Following are selected income statement and balance sheet data from two pharmaceutical companies, Pfizer and Dr. Reddy' s, for their respective 2018 fiscal years.Income Statement ($ millions) Pfizer Dr. Reddy's Sales . .. .. ...
E2-43.Compare Income Statements and Balance Sheets of Competitors Following are selected income statement and balance sheet data for two communications companies, Comcast and Verizon, for the year ended December 3 1, 2018.Income Statement ($ millions)Sales .......................... .Operating
E2-44.Compare Financial Information Across Industries Use the data and computations required in parts a and b of exercises E2-4 I and E2-42 to compare TJX Companies and Pfizer, Inc.a. Compare gross profit and net income as a percentage of sales for these two companies. How might differences in
L01, 2, 3, 4, 5 E2-45.Apply Financial Statement Linkages to Under stand Tra nsactions Consider the effects of the independent transactions, a through h, on a company's balance sheet, income statement, and statement of cash flow. Complete the table below to explain the effects and financial
P2-46. Construct and Analyze Balance Sheet Amounts from Incomplete Data L01 Selected balance sheet amounts for 3M Company, a manufacturer of consumer and business products, 3M COMPANY for three recent years follow.Long- Long-Current Term Total Current Term Total Stockholders'$millions Assets Assets
P2-47.Use Additional Information from 10-K to Analyze Financial Statements Community Health Systems operates general ac ute care hospitals in communities across the United States. The company reports the following information in Schedule II of its 2017 10-K.SCHEDULE II- VALUATION AND QUALIFYING
P2-48. Collect and Use Additional Information from 10-K Use the SEC website (www.sec.gov/edgar/searchedgar/companysearch.html) to download the 2018 10-K for Facebook Inc. and answer the fo llowing questions.a. On what date did Facebook fi le its 2018 10-K with the SEC? Compare this date to the
L01, 2 P2-49.Compare Oper ating Cha racter istics Across Industries Following are selected income statement and balance sheet data for companies in different industries .Cost of Goods Net Stockholders'$millions Sales Sold Income Assets Liabilities Equity Target. ...... . .. .. ... $75,356 $53,299 $
1-1 Explain and assess the four main business activities. Planning Operating :: Investing :: Financing
1-2 Identify and discuss the users and suppliers of financial statement information. Information Demand: Information Supply :: Global Setting
1-3 Review the four financial statements. Balance Sheet: Income Statement of Stockholders' Equity :: Statement of Cash Flows
1-4 Assess business operations within the context of a competitive environment. Competitive Environment :: Business Environment :: Competitive Advantage
1-5 Apply basic profitability analysis. Return on Assets :: Return on Equity :: Relevance of Financial Statements
1-6 Describe the financial statement forecasting process. Factors that Affect Forecasting:: Forecasting Process
1-7 Explain the role of financial information in business valuation. Information for Business Decisions :: Valuations Models :: Efficient Markets
1-8 Access and analyze financial datasets. Datasets :: www.SEC.gov : Data Analytics :: Excel :: Data Visualization
Q1-1.Firms engage in four basic types of activities. List the activities. Describe how financial statements can provide useful information for each activity. How can subsequent financial statements be used to evaluate the success of each of the activities?
Q1-2. Explain why forecasting must precede valuation in the framework for analysis and valuation.
Q1-3. Companies prepare four primary financial statements. What are those financial statements, and what information is typically conveyed by each?
Q1-4. Does a balance sheet report on a period of time or at a point in time? Explain the information conveyed in the balance sheet.
Q1-5. Does an income statement report on a period of time or at a point in time? Explain the information conveyed in the income statement.
Q1-6. Does a statement of cash flows report on a period of time or at a point in time? Explain the information and activities conveyed in the statement of cash flows.
Q1-7. Explain how a company's four primary financial statements are linked.
Q1-9. The quality of financial forecasts depends on many factors. List two and explain.
Q1-10. What are the five important forces that confront the company and determine its competitive intensity?
Q1-11. What are the components of a SWOT analysis? For each component, indicate whether it is an internal or external environmental factor.
Q1-12. Access the 2018 10-K for Seagate Technology plc at the SEC's database of financial reports (www. sec.gov). Who is the company's auditor? What specific language does the auditor use in expressing its opinion, and what responsibilities does it assume?
Q1-13. Business decision makers external to the company increasingly demand more financial information from the company. Discuss the reasons why companies have traditionally opposed the efforts of regulatory agencies like the SEC to require more disclosure.
Q1-14. Explain what is meant by "non-controlling interest."
Q1-15. True or false: A parent company owns 80% of its subsidiary's stock. Because the parent has controlling interest in the subsidiary company, the parent includes 80% of the subsidiaries revenue and expenses (line by line) in the consolidated income statement.Q1-16. In 2016, Oracle Corporation
Q1-17. Describe a decision that requires financial statement information, other than a stock investment deci- sion. How is financial statement information useful in making this decision?
Q1-19. One of Warren Buffett's acquisition criteria is to invest in businesses "earning good return on equity." The ROE formula uses both net income and stockholders' equity. Why is it important to relate net income to stockholders' equity? Why isn't it sufficient to merely concentrate on companies
Q1-20. True or False: Cash-based valuation models are more reliable because managers cannot influence cash flow. Explain.
M1-21. Understanding How the Four Business Activities Are Related In its November 2018 press release, AT&T revealed that CAPEX for fiscal 2019 (capital expenditures for additional property, plant and equipment) was expected to be in the $23 billion range. How will this planned expenditure affect
M1-22. Understanding What Information Financial Statement Users Demand Match each of the financial statement users listed to the question they are most likely to ask. Financial Statement User A. Current shareholders B. Company CEO C. Banker D. Equity analyst E. Supplier Questions 1. What is the
M1-23. Balance Sheet Equation and Financing Sources In a recent year, the total assets of Microsoft Corporation equal $258,848 million, and its equity is $82,718 million. Requireda. What is the amount of its liabilities?b. Does Microsoft receive more financing from its owners or nonowners?c. What
M1-24. Balance Sheet Equation and Financing Sources Best Buy's financial statements, dated February 2, 2019, report total assets of $12,901 million and total liabilities of $9,595 million. Requireda. Why might Best Buy have chosen February 2 as a year-end date? Select all that apply. 1. February is
M1-25. Applying the Accounting Equation and Computing Financing Proportions Use the accounting equation to compute the missing financial amounts (a), (b), and (c). Which of these companies is more owner-financed? Which of these companies is more nonowner-financed? $ millions Hewlett-Packard..
M1-26. Identifying Key Numbers from Financial Statements Access the September 30, 2018, 10-K for Starbucks Corporation at the SEC's database for financial reports (www.sec.gov). Requireda. Fill in the amounts for Starbucks for fiscal year ended September 30, 2018. Total assets $ Total liabilities
M1-27. Analyzing Retained Earnings Total equity $ Access the 2018 10-K for Symantec Corp. at the SEC's database of financial reports (www.sec.gov). Use the March 30, 2018, consolidated statement of stockholders' equity to fill in the blanks below to prepare a statement of retained earnings for the
M1-28. Identifying Financial Statement Line Items and Accounts Several line items and account titles are listed below. For each, indicate in which of the following finan- cial statement(s) we would likely find the item or account: income statement (IS), balance sheet (BS), statement of
M1-29. Identifying Ethical Issues and Accounting Choices g. Cash inflow for stock issued h. Cash outflow for dividends i. Revenue Assume you are a technology services provider and you must decide on whether to record revenue from the installation of computer software for one of your clients. Your
M1-30. Assessing the Competitive Environment For each of the following companies, briefly explain what type of competitive advantage(s) they have, if any. Select from: barriers to entry, product differentiation, cost leader, or buyer power.a. Appleb. Walmart C. Pfizerd. Ubere. American Airlinesf.
M1-31. Accessing SEC reports and Calculating Ratios Access the financial reports for the fiscal year ending in 2018 at the SEC website for Medtronic and Boston Scientific, two competitors in the medical device industry.a. Use data from the companies' balance sheets and income statements to complete
MI-32. Noncontrolling Interest ANALYST ADJUSTMENTS 1.1 Assignments reinforce the Analyst Adjustments in the module. The information below comes from the Form 10-K for MGM Resorts International for 2018. Year Ended December 31, 2018 (In thousands) Net income attributable to MGM Resorts
M1-33. Financial Ratios and Credit Ratings Following are ratios for 2018 for Illinois Tool Works. Use the ratios along with the Moody's table on page 1-30. to determine what credit rating each ratio implies using Moody's Investors Service. EBITDA/Interest expense.... 15.0 Debt/EBITDA ........ 1.91
El-35. Applying the Accounting Equation and Assessing Financial Statement Linkages The following information is available for Advanced Micro Devices (AMO) and Intel for the current year.• AMD's assets increased by $ 1,004 million and its liabilities increased by $334 million.• Intel's assets
El-36. Specifying Financial Information Users and Uses L02 Financial statements have a wide audience of interested stakeholders. Identify two or more financial statement users who are external to the company. For each user on your list, specify two questions that could be addressed with financial
El-37. Applying Financial Statement Relations to Compute Dividends L03a. Fill in the amounts for the Norfolk Southern statement of changes in retained earnings.Norfolk Southern Inc.Consolidated Statements of Changes in Retained Income Beginning Balance at Dec. 31, 2015 . ......... . .. . ... .Net
E1.38 Computing and Interpreting FinanciaJ Statement Ratios Following are selected ratios of Norfolk Southern for 2018 and 2017.Return on Assets (ROA) Component 2018 2017 Profitability (Net income/Sales) .. .... .... .Productivity (Sales/Average assets) ....... .23.3%0.318 51.2%0.299a. Was the
E1.39 Computing Return on Assets and Applying the Accounting Equation Nordstrom Inc. reports net income of $564 mill ion for its fiscal year ended February 20 19. At the beginning of that fi scal year, Nordstrom had $8, 115 million in total assets. By fiscal year ended February 2019, total assets
E1.40 Assessing the Role of Financial Statements in Society Financial statement information plays an important role in modern society and business.a. Identify two or more external stakeholders who are interested in a company's financial statements and what their particular interests are.b. What are
E1.41 Computing Return on Equity Starbucks reports net income for 2018 of $4,518.3 million. Its stockholders' equity is $5,450. l million and $ 1, 169.5 mill ion for 2017and2018, respectively .a. Compute its return on equity for 2018.b. Starbucks repurchased over $7,208.7 million of its common
E1.42 Financial Ratios and Credit Ratings In its 201 8 Form 10-K, FedEx reported the following infornrntion (in $ millions).Total debt...... .. .. .. . $17,580 EBITDA...... . . . . . . . . . 7,819 Free cash flow (FCF) ... .Interest expense . .. .... .$123 588a. Calculate the three ratios that
P1.43 Computing Return on Equity and Return on Assets The following table contains financial statement infornrntion for Walmar t Inc.$millions Total Assets Net Income Sales Equity 2018 .. . ........... $219,295 $ 6,670 $510,329 $72,496 2017 .............. 204,522 9,862 495,761 77,869 2016 .. .
P1.44 Formulating Financial Statements from Raw Data and Calculating Ratios Following is selected financial information from General Mills Inc. for its fiscal year ended May 27, 2018 ($ millions).Cost of goods sold (COGS) ...... .Cash from investing activities ..... .Cash, end of year .. . ... ..
P1.45 Formulating Financial Statements from Raw Data and Calculating Ratios$ 2,841.0 30,225.0 5,477.3 21 ,812.6 24,131.6 6,492.4 Following is selected financial information from Five Below for its fiscal year ended February 2, 2019($ thousands).Noncash assets, end of year ... .Cash from investing
P1.46 Formulating Financial Statements from Raw Data and Calculating Ratios$615,094(5,582)695,708 994,478 112,669 373,278 42,162 Following is selected financial information from JM Smucker Co. for the year ended April 30, 20 18($ mill ions).Current assets, end of year ........ .Cash, end of year
P1.47 Using Historical Numbers to Forecast Financial Statement Items Abbott Laboratories reports the following revenue for fiscal years 2006 through 2019.Year Revenue in $ millions Year Revenue in $ millions 2006 .... $22,476 2013 .... $21 ,848 2007 ... . 25,914 2014 ... . 20,247 2008 .... 29,528
P1.48 Formulating a Statement of Stockholders' Equity from Raw Data Winnebago Industries Inc. reports the following selected information for its fiscal year ended August 25, 2018 ($ thousands).Contributed capital, August 26, 2017 ... .. . . .... . .. . .. . . . .. . .. . .... . .. . .Treasury
P1.49 Computing, Analyzing, and Interpreting Return on Equity and Return on Assets Following are summary financial statement data for Logitech International for 20 16 through 201 8.$thousands 2018 2017 2016 Sales ............... $2,566,863 $2,221 ,427 $2,018,100 Net income . ...... . .. 208,542
P1.50 Computing, Analyzing, and Interpreting Return on Equity and Return on Assets Following are summary financial statement data for Nordstrom Inc. for fiscal years ended 2017 through 2019.$millions Sales .. . ... . .. .. ...... . .. .. ....... .Net income ........................ .Total assets
P1.51 Comparing Ratios for Luxury and Budget Retailers Following are selected financial statement data from Capri Holdings (a retailer that owns upscale brands Michael Kors, Jimmy Choo, and Versace) and Five Below (a value-priced toy and novelty retailer).Capri Holdings ($ millions) Five Below
P1.52 Computing and Interpreting Return on Assets and Its Components McDonald's Corporation (MCD) reported the following balance sheet and income statement data for 2016 through 2018.$millions Total Assets Net Income 2018 . ............. . .......... . .2017 .......................... .2016
Pl-53. Disaggregating Return on Assets over Multiple Periods 3M COMPANY Following are selected financial statement data from 3M Company for 2015 through 2018.$millions 2015 ... ........... . .. . ..... .. .2016 ............ .. ..........•.2017 ............ .. .......... . .2018 ............. .
Pl-54.Data Visualization for Insights into Financial Statements The following graphics relate to Thermo Fisher Scientific for 2009through 2018. Access the dashboard at the text MyBusinessCourse website to answer the requirements.Requireda. The graphic on the left shows balance sheet data.1. Which
PI-55.A Reading and Interpreting Audit Opinions Twitter Inc. filings at SEC include the following audit report from Pricewaterhouse Coopers.Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Twitter, Inc.Opinions on the Financial Statements and
Pl-56. Reading and Interpreting CEO Certifications Following is the CEO certification from SEC filings as required by the Sarbanes-Oxley Act and signed by Twitter CEO Jack Dorsey. Twitter's Chief Financial Officer signed a similar form.CERTIFICATIONS I, Jack Dorsey, certify that:1. I have reviewed
Pl-57. Using Compustat Data and Data Visualization Software to Interpret Financial Statement Items Consider the three data graphics for Apple at the start of the Module. Access the Excel file of Compustat data available at the MBC website and use data visualization software such as Power BI or
I1.58 Applying the Accounting Equation and Computing Financing Proportions Following is fiscal 20 18 information for three companies that report under IFRS.Requireda. Apply the accounting equation to compute the missing financial amounts (a), (b), and (c) .b. Which of the companies has the highest
I1.59 Computing Return on Equity and Return on Assets Equity(a)SEK 87,770£5,618 LOS The following table contains financial statement infomrntion for OMV Group, which is a petrochemical company headquartered in Vienna.OMV GROUP euros millions 2018 Sales .............. €22,930 Net profit (Loss)
D1-60 Strategic Financing L01, 3 You and your management team are working to develop the strategic direction of your company for the next three years. One issue you are discussing is how to finance the projected increases in operating assets.Your options are to rely more heavily on operating
Dl-61. Statement Analysis L03, 5 You are evaluating a company's recent operating performance and are trying to decide on the relative weights you should put on the income statement, the balance sheet, and the statement of cash flows. Discuss the information each of these statements provides and its
Dl-62. Analyst Relations L02 Your investor relations department reports to you that stockholders and financial analysts evaluate the quality of a company's financial reports based on their "transparency," namely, the clarity and completeness of the company's financial disclosures. Discuss the
Many consultants are advising diversified companies in emerging markets, such as India, Korea, Mexico, and Turkey, to adopt corporate strategies proven to be of val-AppendixLO1
There are very few companies that are able to be both cost leaders and differentiators.Why? Can you think of a company that has been successful at both?AppendixLO1
Explain why you agree or disagree with each of the following statements:a. It’s better to be a differentiator than a cost leader, since you can then charge premium prices.b. It’s more profitable to be in a high technology than a low technology industry.c. The reason why industries with large
What are the ways that a firm can use to create barriers to entry to deter competition in its business? What factors determine whether these barriers are likely to be enduring?AppendixLO1
In the early 1980s, United, Delta, and American Airlines each started frequent flier programs as a way to differentiate themselves in response to excess capacity in the industry. Many industry analysts, however, believe that this move had only mixed success. Use the competitive advantage concepts
Coca-Cola and Pepsi are both very profitable soft drinks. Inputs for these products include sugar, bottles/cans, and soft drink syrup. Coca-Cola and Pepsi produce the syrup themselves and purchase the other inputs. They then enter into exclusive contracts with independent bottlers to produce their
Joe Smith argues, “Your analysis of the five forces that affect industry profitability is incomplete. For example, in the banking industry, I can think of at least three other factors that are also important; namely, government regulation, demographic trends, and cultural factors.” His

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Business Analysis And Valuation Using Financial Statements Text And Cases 2nd Edition Krishna G. Palepu, Paul M. Healy, Victor Lewis Bernard, W.Gordon Filby - Solutions

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