Note: The Tyco case study is free online and is also available on CHEGG.

Tyco International, Ltd. . Read Litigaion Releae No. 157 that the company may have been misusing reserves-tha could hare been created at the time of the acqui- . Read extrcts from the April Zlb sitions-to increse post-aquisition for Tyco Internaiond Systems, Ltd., given below. SEC Complant ganst Tyco, given below income. Examine the financial statements of b. Tyco's Ratio of Sales to Total Assets: Caculae the trend in Tyco's raio of Tyco Internaiond for the fiscd years ended 182R given below. es to Totd Assets over the period 9B2iRnd then discuss whether investors should have been troubled by the trend in this ratio. sotoefollowing Cae Sudyestors should have been troubled Questions. Required c. Understating assets or overstat- a. This text lists a number of signals of the misuse of acquisition or merger reserves. Identify some of these sig- nds in Tyco's financid staements (given below) and expln how your findings could have indicated to users of Tyco's financia staements ing liabilities and reserves when acquiring a new company: When a new company is acquired, how does understating assets or overstating liabilities and reserves increase the reported post-acquisition income of the prent company? of 50