New Semester
Started
Get
50% OFF
Study Help!
--h --m --s
Claim Now
Question Answers
Textbooks
Find textbooks, questions and answers
Oops, something went wrong!
Change your search query and then try again
S
Books
FREE
Study Help
Expert Questions
Accounting
General Management
Mathematics
Finance
Organizational Behaviour
Law
Physics
Operating System
Management Leadership
Sociology
Programming
Marketing
Database
Computer Network
Economics
Textbooks Solutions
Accounting
Managerial Accounting
Management Leadership
Cost Accounting
Statistics
Business Law
Corporate Finance
Finance
Economics
Auditing
Tutors
Online Tutors
Find a Tutor
Hire a Tutor
Become a Tutor
AI Tutor
AI Study Planner
NEW
Sell Books
Search
Search
Sign In
Register
study help
business
financial statement analysis
Financial Statement Analysis 10th International Edition John Wild - Solutions
1. Define and formulate some basic valuation models.
1. Apply several basic financial statement analysis techniques.
1. Analyze and interpret financial statements as a preview to more detailed analyses.
1. Identify the relevant analysis information beyond financial statements.
1. Describe the purpose of each financial statement and linkages between them.
1. Explain business activities and their relation to financial statements.
1. Describe component analyses that constitute business analysis.
1. Identify and discuss different types of business analysis.
1. Explain business analysis and its relation to financial statement analysis.
8–1. Describe the usefulness of return measures in financial statement analysis.
8–1. Explain return on invested capital and variations in its computation.
8–1. Analyze return on net operating assets and its relevance for analysis.
8–1. Describe disaggregation of return on net operating assets and the importance of its components.
8–1. Describe the relation between profit margin and asset turnover.Analyze return on common shareholders’ equity and its role in analysis.
8–1. Describe disaggregation of return on common shareholders’equity and the relevance of its components.
8–1. Explain operating and financial leverage and how to assess a company’s success in using leverage to increase returns.
8–1. Describe the importance of prospective analysis.
8–1. Explain the process of projecting the income statement, the balance sheet, and the statement of cash flows.
8–1. Discuss and illustrate the importance of sensitivity analysis.
8–1. Describe the implementation of the projection process for valuation of equity securities.
8–1. Discuss the concept of value drivers and their reversion to long-run equilibrium levels.
8–1. Explain the importance of liquidity, and describe working capital measures of liquidity and their components.
8–1. Interpret the current ratio and cash-based measures of liquidity.
8–1. Analyze operating cycle and turnover measures of liquidity and their interpretation.
8–1. Illustrate what-if analysis for evaluating changes in company conditions and policies.
8–1. Describe capital structure and its relation to solvency.
8–1. Explain financial leverage and its implications for company performance and analysis.
8–1. Analyze adjustments to accounting book values to assess capital structure.
8–1. Describe analysis tools for evaluating and interpreting capital structure composition and for assessing solvency.
8–1. Analyze asset composition and coverage for solvency analysis.
8–1. Explain earnings-coverage analysis and its relevance in evaluating solvency.
8–1. Describe capital structure risk and return and its relevance to financial statement analysis.
8–1. Interpret ratings of organizations’ debt obligations(Appendix 10A).
8–1. Describe prediction models of financial distress(Appendix 10B).
8–1. Analyze earnings persistence, its determinants, and its relevance for earnings forecasting.
8–1. Explain recasting and adjusting of earnings and earnings components for analysis.
8–1. Describe equity valuation and its relevance for financial analysis.
8–1. Analyze earning power and its usefulness for forecasting and valuation.
8–1. Explain earnings forecasting, its mechanics, and its effectiveness in assessing company performance.
8–1. Analyze interim reports and consider their value in monitoring and revising earnings estimates.
8–1. Describe the steps in analyzing financial statements.
8–1. Review the building blocks of financial statement analysis.
8–1. Explain important attributes of reporting on financial statement analysis.
8–1. Describe implications for financial statement analysis of evaluating companies in specialized industries or with unique characteristics.
8–1. Analyze in a comprehensive manner the financial statements and notes of Campbell Soup Company.
8–1. How is return on invested capital used as an internal management tool?
8–3. Why is interest, expense ignored when computing return on net operating assets (RNOA)?
8–9. What is the purpose of measuring asset turnover for different asset categories?
8–10. What factors (limitations) enter into our evaluation of return on net operating assets?
8–11. How is the equity growth rate computed? What does it measure?
8–12.a. How do return on net operating assets and return on common equity differ?b. What are the components of return on common shareholders’ equity? What do the components measure?
8–13.a. Equity turnover is sales divided by average shareholders’ equity. What does equity turnover measure?How is it related to return on common equity? (Hint: Look at the components of ROCE.)b. “Growth in earnings per share from an increase in equity turnover is unlikely to continue
8–14. What circumstances justify including convertible debt as equity capital when computing return on shareholders’equity?
EXERCISE 8–1 Selected financial information from Syntex Corporation is reproduced below:1. NOA turnover (average NOA equals ending NOA) is 2.2. NOPAT margin equals 5%.3. Leverage ratio (average NFO/average common equity) is 1.786, and the Spread is 4.4%.Required:a. Compute return on net operating
EXERCISE 8–1 Refer to the financial data in Case 10–5 (on page 595). In analyzing this company, you feel it is important to differentiate between operating success and financing decisions.Required:a. Explain the difference between ABEX’s ROCE in Year 5 and in Year 9. Your analysis should
EXERCISE 8–1 Selected financial information for ADAM Corporation is reproduced below:1. NOA turnover (average NOA equals ending NOA) is 3.2. NOPAT margin is 7%.3. Leverage ratio (average NFO to average common equity) is 1.667, and the Spread is 8.4%.Required:a. Compute return on net operating
EXERCISE 8–1 Rose Corporation’s condensed balance sheet for Year 2 is reproduced below:Assets Current assets................................... $ 250,000 Noncurrent assets ............................. 1,750,000 Total assets....................................... $2,000,000 Liabilities and
EXERCISE 8–1 1. Which of the following situations best correspond with a ratio of “sales to average net tangible assets”exceeding the industry norm? (Choose one answer.)a. A company expanding plant and equipment during the past three years.b. A company inefficiently using its assets.c. A
EXERCISE 8–1 2. A measure of asset utilization (turnover) is (choose one answer):a. Sales divided by average long-term operating assets.b. Return on net operating assets.c. Return on common equity.d. NOPAT divided by sales.
EXERCISE 8–1 Return on net operating assets depends on the (choose one answer):a. Interest rates and pretax profits.c. After-tax operating profit margin and NOA turnover.b. Debt to equity ratio.d. Sales and total assets.
EXERCISE 8–1 Return on net operating assets is a function of both profit margin and net operating asset turnover.Required:How do you believe that knowledge of operating profit margin and operating asset turnover would contribute to analysis of the reported return on net operating assets for the
EXERCISE 8–1 A machine that produces hockey pucks costs $20,500 and produces 10 pucks per hour. Two similar companies purchase the machine and begin producing and selling pucks. The first company, Northern Sales is located in International Falls, Minnesota. The second company, Southern Sales is
EXERCISE 8–1 A press report carried the following news item: General Motors, Ford, and Chrysler are expected to post losses on fourth-quarter operations despite sales gains. Automakers’ revenues are based on factory output rather than retail sales by dealers, and last quarter’s sales
PROBLEM 8–1 As a financial analyst at a debt-rating agency, you are asked to analyze return on invested capital and asset utilization (turnover) measures for ZETA Corporation. Selected financial information for Years 5 and 6 of ZETA Corporation are reproduced in the Comprehensive Case chapter
PROBLEM 8–1 Selected financial statement data from Texas Telecom, Inc., for Years 5 and 9 are reproduced below ($ millions):Year 5 Year 9 Income Statement Data Revenues ........................................ $542 $979 Operating income............................ 35 68 Interest
PROBLEM 8–1 Johnson Corporation sells primarily two products: (A) consumer cleaners and (B) industrial purifiers.Its gross margin and components for the past two years are:Year 7 Year 6 Sales revenue Product A............................... $60,000 $35,000 Product B ..............................
PROBLEM 8–1 Comparative income statements of Spyres Manufacturing Company for Years 9 and 8 are reproduced below:Year 9 Year 8 Net sales.................................. $600,000 $500,000 Cost of goods sold.................... 490,000 430,000 Gross margin ........................... 110,000
PROBLEM 8–1 At a meeting of your company’s Investment Policy Committee the possibility of investing in ZETA Corporation (see Case CC-2 in the Comprehensive Case chapter) is considered. During discussions, a committee member asked about the major factors explaining the change in ZETA
PROBLEM 8–1 Selected data from Kemp Corporation are reproduced below:KEMP CORPORATION Product-Line Information ($ thousands)Year 1 Year 2 Year 3 Year 4 Data communications equipment Net sales.................................................$4,616 $5,630 $4,847 $6,890 Income contribution
PROBLEM 8–1 While you are an analyst at Investment Counselors, Inc., the senior portfolio manager at your firm makes a decision to increase sporting goods apparel manufacturer stocks in the firm’s managed funds. You are assigned to recommend one stock as an initial investment to meet this
PROBLEM 8–1 Walt Disney Company (Disney) is a diversified international entertainment company with operations in three business segments. Revenue and operating income data for the three segments are shown below.Walt Disney Company BUSINESS SEGMENT DATA Years Ending September 30 YEAR 13 YEAR 9($
PROBLEM 8–1 The following data are excerpted from the annual report of Lands’ End:For the period ended Year 9 Year 8 Year 7 Year 6 Year 5 Net sales................................................... 100% 100% 100% 100% 100%Cost of sales............................................. 55.0 53.4
PROBLEM 8–1 Selected financial data for Petersen Corporation’s revenue and income (contribution) are reproduced below:Line of Business Year 1 Year 2 Year 3 Year 4 Revenue Manufactured and engineered products Engineered equipment........................................ $ 30,341 $ 29,807 $ 32,702
CASE 8–5 Wal-Mart and Sears (prior to its merger with Kmart), two Sears and Wal-Mart large retailers in the U.S., offer an interesting study in contrasts.Wal-Mart has steadily grown to become the world’s largest retail company and probably the most successful story in the history of retailing,
9–1. What are some of the uses for prospective analysis?
9–2. What steps must usually take place before the forecasting process can begin?
9–3. In addition to recent trends, what other items of information might be brought to bear in the projection of sales?
9–4. What is the forecast horizon?
9–5. What assumption is usually made about sales growth at the end of the forecast horizon?
9–6. Describe the steps in forecasting the income statement.
9–7. Describe the two-step process of forecasting the balance sheet.
9–8. What are value drivers?
9–9. Describe the typical trend of value drivers over time.
9–10A. Why are short-term cash forecasts important for the analysis of financial statements?
9–11A. What limitations are associated with short-term cash forecasting?
9–12A. Describe the relation between inflows of cash and outflows of cash.
9–13A. It is often asserted: From an operational point of view, management focuses on cash rather than working capital. Do you agree with this statement? Why or why not?
9–14A. Describe the primary difference between “funds flow” analysis and ratio analysis. Which analysis technique is preferred and why?
9–15A. What is the usual first step in preparing cash forecasts, and what considerations are required in this step?
EXERCISE 9–1 Quarterly sales and net income data for General Electric for Year 1 through Year 9 are shown below ($ millions).Required:Use these data and any other historical information available to forecast sales and net income for each of the quarters ending September Year 9, December Year 9,
EXERCISE 9–1 Comparative income statements and balance sheets for Coca-Cola are Coca-Cola shown below ($ millions).Year 2 Year 1 Income Statement Net sales.................................................................................. $20,092 $19,889 Cost of goods
EXERCISE 9–1 Comparative income statements and balance sheets for Best Buy are shown below ($ millions).Year 2 Year 1 Income Statement Net sales ................................................................................. $15,326 $12,494 Cost of goods
EXERCISE 9–1 Comparative income statements and balance sheets for Merck ($ millions)follow:Year 2 Year 1 Income Statement Net sales ................................................................................... $47,716 $40,343 Cost of goods
EXERCISE 9–1 Following are financial statement information for Welmark Corporation as of Year 2 and Year 3.WELMARK CORPORATION Year 2 Year 3 Sales growth......................................................................................... 8.50% 10.65%Net profit margin (Net income/Sales)
PROBLEM 9–1 Telnet Corporation is a newly formed computer manufacturer. Telnet plans to begin operations on January 1, Year 2. Selected financial information is available for the preparation of Telnet’s six-month forecasted performance covering the period January 1 to June 30 of Year
PROBLEM 9–1 Refer to the following financial statements of Quaker Oats Company.INCOME STATEMENT Year ended June 30 ($ millions except per share data) Year 11 Year 10 Year 9 Net sales ............................................................................................... $5,491.2 $5,030.6
PROBLEM 9–1 Refer to the following financial statements for Kodak:INCOME STATEMENT For Year Ended December 31 (in millions) 20x6 20x5 20x4 Net sales .......................................................................................... $13,234 $13,994 $14,089 Cost of goods
PROBLEM 9–1 Miller Company is planning to construct a two-unit facility for the loading of beverage barrels onto ships. On or before January 1, Year 2, stockholders will invest $100,000 in the company’s capital stock to provide the initial working capital. To finance the construction program
PROBLEM 9–1 Royal Company has incurred substantial losses for several years and is insolvent. On March 31, Year 5, Royal petitions the court for protection from creditors and submits the following balance sheet:ROYAL COMPANY Balance Sheet March 31, Year 5 Book Value Liquidation Value Assets
10–1. Why is liquidity important in analysis of financial statements? Explain its importance from the viewpoint of more than one type of user.
Showing 3800 - 3900
of 5656
First
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
Last
Step by Step Answers
Get 50% OFF
Claim Now
