Presented below are three different transactions related to materiality. Explain whether you would classify these transactions as material. a.    Blair Co. has reported a positive trend in earnings over the last 3 years. In the current year, it reduces its bad debt allowance to ensure another positive earnings year. The impact of this adjustment is equal to 3% of net income. b.    Hindi Co. has an unusual gain of $3.1 million on the sale of plant assets and a $3.3 million loss on the sale of investments. It decides to net the gain and loss because the net effect is considered immaterial. Hindi Co.’s income for the current year was $10 million. c.    Damon Co. expenses all capital equipment under $2,500 on the basis that it is immaterial. The company has followed this practice for a number of years.

During the year, Belyk Paving Co. had sales of $2,600,000. Cost of goods sold, administrative and selling expenses, and depreciation expense were $1,535,000, $465,000, and $520,000, respectively. In addition, the company had an interest expense of $245,000 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.) (Enter your answer as directed, but do not round intermediate calculations.) Required: (a) What is Belyk's net income? (Negative amount should be indicated by a minus sign.) Net income (b) What is Belyk's operating cash flow? Operating cash flow A

Presented is the income statement and balance sheet for PartsCo, a $1.2 billion supplier of machinery parts. The company is expected to increase revenues by 8 percent annually for the next five years. Forecast the next five years of income statements for PartsCo. Assume that the next five years’ forecast ratios are identical to this year’s ratios. Forecast depreciation as a percentage of the prior year’s property, plant, and equipment. Forecast interest as a percentage of the prior year’s total debt.

The Alabaster Corp. reported Net sales of 6.7 million,operating costs of 4.3 million, and depreciation of $480,000 in2009. Their interest charges were $325,000. They had cash, accountsreceivable and inventories of $1.8 million, $5.6 million and $4.2million, respectively, at the end of 2009. At the end of 2008,those three accounts were $1.9 million, $4.5 million, and $3.4million respectively. Accounts payable and accruals were $3.0million and $1.4 million, respectively, at the end of 2009, whileat the end of 2008 they were $2.9 million and $1.3 million,respectively. Net plant and equipment was $12.8 million at the endof 2009 and $12.2 million at the end of 2008. Calculate Alabaster’sNet Income, Free Cash Flow and Return on Invested Capital for 2009.Assume a flat tax rate of 40%. How is the Free Cash Flowinterpreted? In other words, what does it measure?

Patterson Brothers recently reported an EBITDA of $7.5 million andnet income of $2.1 million. It had $2.0 million of interest expense, and its corporate tax ratewas 30%. What was its charge for depreciation and amortization?

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Daly company's activities for the year included the following: Gross Sales Sales Discounts Cost of Good Sold Adjustment for a prior year error - understatement of depreciation expense Sales Returns and Allowance Loss on sale of plant asset Gain on discontinued operation (not adjusted for taxes) Unrealized gain on available for sale debt securities Unearned Revenue Selling and Administrative expense $616,910 $896,300 Daly company has a 30% income tax rate. What is the company's net income for the year? $624,110 $2,674,200 $90,000 1,164,300 $625,310 60,000 48,000 15,000 12,000 9,000 5,400 475,600

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Koch Engineering plc has produced the following information for its most recent financial year: (Click here to view the financial data.) Following a review of the working capital investment of the business, it was decided that liquidity could be improved if the following changes were made: 1. An decrease in the average settlement period for trade receivables to 35 days. 2. An increase in the average settlement period for trade payables to 50 days. 3. A decrease in the average inventories turnover period to 55 days. Calculate the extra cash that the business should generate by implementing each of the proposed changes. (Enter the answes in £m, round to one decimal place.) ... Trade receivables = £ m Trade payables = £m Inventories = £ m

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