Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN: 9781285190907
Author: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter 5, Problem 17PC
a.
To determine
Compute ROCE for 2012.
b.
To determine
Allocate the amount of balance sheet and income statement items to operating and financing activities:
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
The following information is provided in the 2021 annual report to shareholders of paris-perfume.com:
Required:
Compute the missing amount in the paris-perfume.com financial statement Information. (Do not round your Intermediate
calculations.)
Accounts receivable
Inventory
Other assets
Total assets
Total liabilities
Total stockholders' equity
Net sales
Cost of goods sold
Net income
Return on assets
Receivables turnover
Inventory turnover
Asset turnover
Return on equity
Profit margin on sales
December 31, 2021
million
72 million
million
million
million
million
For the year ended Dec. 31, 2021
million
million
42 million
10 %
$
$
8.0
12.0
2.7
20 %
5 %
December 31, 2020
75 million
32 million
$
S
S
S
S
$
172 million
279 million
75 million
204 million
19. Fuschia Company is a calendar year corporation. Its financial statements for the
years 2018 and 2017 contained errors as follows:
2017
P400,000 understated
200,000 overstated
350,000 overstated
2018
Ending inventory
Depreciation expense 500,000 understated
Rent income
Unearned rent income 350,000 understated
P300,000 overstated
Assume that no correcting entries were made at December 31, 2017. By how
much will 2018 profit before income taxes be overstated because of the
foregoing errors?
A. P850,000
B. P800,000
C. P750,000
D. P250,000
20.
Assume that no correcting entries were made in both 2017 and 2018. For how
much was the retained earnings understated or overstated as of December 31,
2018?
A. P600,000 overstated
B. P800,000 overstated
C. P1,050,000 overstated
D. P200,000 understated
ії. Casillas, Inc. is a calendar-year corporation. Its financial statements for the years 2011 and
2010 contained errors as follows:
201141
Ending Inventory
Depreciation Expense
2010
$3,000 overstated S8,000 overstated
$2,000 understated| $6,000 overstated
Assume that no correcting entries were made at December 31, 2010. Ignoring income taxes, by
how much will retained earnings at December 31, 2011 be overstated or understated?
a. $1,000 understated
b. $5,000 overstated
c. S5,000 understated
d. $9,000 understated
Chapter 5 Solutions
Financial Reporting, Financial Statement Analysis and Valuation
Ch. 5 - Prob. 1QECh. 5 - Prob. 2QECh. 5 - A firm has experienced an increasing current ratio...Ch. 5 - A firm has experienced a decrease in its current...Ch. 5 - Prob. 5QECh. 5 - A firm had the following values for the four debt...Ch. 5 - Prob. 7QECh. 5 - Prob. 8QECh. 5 - Prob. 9QECh. 5 - Prob. 10QE
Ch. 5 - Market equity beta measures the covariability of a...Ch. 5 - Altmans bankruptcy risk model utilizes the values...Ch. 5 - Calculating and Interpreting Risk Ratios. Refer to...Ch. 5 - Refer to the financial state-ment data for...Ch. 5 - Refer to the profitability ratios of Coca-Cola in...Ch. 5 - Delta Air Lines, Inc., is one of the largest...Ch. 5 - Prob. 17PCCh. 5 - Prob. 18PCCh. 5 - Prob. 19PCCh. 5 - Prob. 20PCCh. 5 - Prob. 21PCCh. 5 - Prob. 22PCCh. 5 - Compute the values of each of the ratios in...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- Checkpoint Systems is a leading provider of source tagging, handheld labeling systems, retail merchandising systems, and bar-code labeling systems. In a press release, Checkpoint stated the following: GAAP reported net loss for the fourth quarter of 2004 was 29.3 million, or 0.78 per diluted share, compared to net earnings of 4.5 million, or 0.13 per diluted share, for the fourth quarter 2003. Excluding impairment and restructuring charges, net of tax, the Companys net income for the fourth quarter 2004 was 0.30 per diluted share, compared to 0.27 per diluted share in the fourth quarter 2003. Calculate the amount of the impairment and restructuring charges Checkpoint reported in 2004 and 2003. Discuss why the firm reported earnings both including and excluding impairment and restructuring charges.arrow_forwardKingbird Inc. reported income from continuing operations before taxes during 2017 of $2,250,000. Additional transactions Occurring in 2017 but not considered in the $2,250,000 are as follows. A gain of $125,000 (pretax) as a result of selling securities from its investment portfolio. A$27,000 loss before taxes as a result of operating the discontinued clothing division during 2017. A loss of $78,000 before taxes as a result of disposing of its clothing division. Assume that this transaction meets the criteria for discontinued operations. An uninsured $122,000 loss due to a fire. At the beginning of 2015, the corporation purchased a machine for $260,000 (salvage value of $20,000) that had a useful life of 10 years. The bookkeeper used straight-line depreciation for 2015, 2016, and 2017, but failed to deduct the salvage value in computing the depreciation base. The corporation decided to change its method of inventory pricing from average-cost to the FIFO method. The effect of this…arrow_forwardRequired: 1. Prepare revised income statements according to generally accepted accounting principles, beginning with income from continuing operations before income taxes. Ignore EPS disclosures. 2. Assume that by December 31, 2016, the division had not yet been sold but was considered held for sale. The fair value of the division’s assets on December 31 was $5,000,000. How would the presentation of discontinued operations be different from your answer to requirement 1? 3. Assume that by December 31, 2016, the division had not yet been sold but was considered held for sale. The fair value of the division’s assets on December 31 was $3,900,000. How would the presentation of discontinued operations be different from your answer to requirement 1?arrow_forward
- The Corrigan Corporation’s 2015 and 2016 financial statements follow,along with some industry average ratios.a. Assess Corrigan’s liquidity position, and determine how it compares with peers and how the liquidity position has changed over time.b. Assess Corrigan’s asset management position, and determine how it compares with peers and how its asset management efficiency has changed over time.c. Assess Corrigan’s debt management position, and determine how it compares with peers and how its debt management has changed over time.d. Assess Corrigan’s profitability ratios, and determine how they compare with peers and how its profitability position has changed over time.e. Assess Corrigan’s market value ratios, and determine how its valuation compares with peers and how it has changed over time.f. Calculate Corrigan’s ROE as well as the industry average ROE, using the DuPont equation. From this analysis, how does Corrigan’s financial position compare with the industry average numbers?g.…arrow_forwardThe following information is related to Nash Company for 2025. Retained earnings balance, January 1, 2025 Sales revenue Cost of goods sold Interest revenue Selling and administrative expenses Write-off of goodwill Income taxes for 2025 Gain on the sale of investments Loss due to flood damage. Loss on the disposition of the wholesale division (net of tax) Loss on operations of the wholesale division (net of tax) Dividends declared on common stock Dividends declared on preferred stock (a1) $901,600 23,000,000 14,720,000 Nash Company decided to discontinue its entire wholesale operations (considered a discontinued operation) and to retain its manufacturing operations. On September 15, Nash sold the wholesale operations to Rogers. Company. During 2025, there were 500,000 shares of common stock outstanding all year. + 64,400 4,324,000 754,400 1,144,480 101,200 358,800 404,800 82,800 230,000 73,600 Prepare a multiple-step income statement. (Round earnings per share to 2 decimal places, e.g.…arrow_forwardKingbird Inc. reported income from continuing operations before taxes during 2017 of $2,250,000. Additional transactions occurring in 2017 but not considered in the $2,250,000 are as follows. 1. A gain of $125,000 (pretax) as a result of selling securities from its investment portfolio. 2. A $27,000 loss before taxes as a result of operating the discontinued clothing division during 2017. 3. A loss of $78,000 before taxes as a result of disposing of its clothing division. Assume that this transaction meets the criteria for discontinued operations. 4. An uninsured $122,000 loss due to a fire. 5. At the beginning of 2015, the corporation purchased a machine for $260,000 (salvage value of $20,000) that had a useful life of 10 years. The bookkeeper used straight-line depreciation for 2015, 2016, and 2017, but failed to deduct the salvage value in computing the depreciation base. 6. The corporation decided to change its method of inventory pricing from average-cost…arrow_forward
- Tatoo Inc. reported a net capital loss of $13,200 in 2018. The company had a net capital gain of $4,500 in 2016 and $3,200 in 2015. In 2017, although the company suffered a net operating loss, it had net capital gains of $1,200. What is the amount of Tatoo's capital loss carryover remaining after it applies the carryback? Multiple Choice $5,500. $8,700. $13,200. $4,300.arrow_forwardTamarisk Inc. reported income from continuing operations before taxes during 2017 of $2,200,000. Additional transactions occurring in 2017 but not considered in the $2,200,000 are as follows. 1. A gain of $120,000 (pretax) as a result of selling securities from its investment portfolio. 2. A $21,000 loss before taxes as a result of operating the discontinued clothing division during 2017. 3. A loss of $86,000 before taxes as a result of disposing of its clothing division. Assume that this transaction meets the criteria for discontinued operations. 4. An uninsured $126,000 loss due to a fire. 5. At the beginning of 2015, the corporation purchased a machine for $250,000 (salvage value of $30,000) that had a useful life of 10 years. The bookkeeper used straight-line depreciation for 2015, 2016, and 2017, but failed to deduct the salvage value in computing the depreciation base. 6. The corporation decided to change its method of inventory pricing from average-cost…arrow_forwardPresented below is information related to Swifty Corporation at December 31, 2017, the end of its first year of operations. Sales revenue Cost of goods sold Interest expense Selling and administrative expenses Dividends declared and paid Loss on sale of investments Allocation to non-controlling interest Unrealized gain on available-for-sale financial assets Gain on discontinued operations Compute the following: Ignore tax effects. Income from operations Net income Comprehensive income $534,000 361,000 Retained earnings balance at December 31, 2017 29,300 111,100 9,500 5,500 23,500 16,600 Net income attributable to Swifty Corporation controlling shareholders 18,900 $ LA $ LA $arrow_forward
- Complete the following tasks: a. Consider the following worksheet with information extracted from a financial statement: 2018 Assets Liabilities Equity Reported ($) 500 000 100 000 400 000 An analyst makes an adjustment that decreases goodwill by $100 000 and equity (profit) by $100 000. This goodwill was acquired on consolidation, hence there are no tax adjustments. Using the worksheet approach, what would be the change in the debt to assets ratio? b. Consider the following information: Net working capital/total assets = 0.9 Retained earnings/total earnings = 0.15 EBIT/total assets = 1.1 MV of equity/BV of total liabilities = 2 Sales/total assets = 2.5 Compute the Z-score. Is there a likelihood of financial distress?arrow_forwardBruceton Farms Equipment Company had goodwill valued at $80 million on its balance sheet at year-end.A review of the goodwill by the company’s CFO indicated that the goodwill was impaired and was now only worth $50 million.What is the financial statement effect of the goodwill impairment? (Enter the amount of the change, using negative numbers when appropriate.) Assets change by million Liabilities change by million Equity changes by million Net income changes by millionarrow_forwardBotticelli Inc. was organized in late 2018 to manufacture and sell hosiery. At the end of its fourth year of operation, the company has been fairly successful, as indicated by the following reported net incomes. 2018 $140,000a 2020 $205,000 2019 160,000b 2021 276,000 a Includes a $10,000 increase because of change in bad debt experience rate. b Includes a gain of $30,000. The company has decided to expand operations and has applied for a sizable bank loan. The bank officer has indicated that the records should be audited and presented in comparative statements to facilitate analysis by the bank. Botticelli Inc. therefore hired the auditing firm of Check & Doublecheck Co. and has provided the following additional information. 1. In early 2019, Botticelli Inc. changed its estimate from 2% of receivables to 1% on the amount of bad debt expense to be charged to operations. Bad debt expense for 2018, if a 1% rate had been used, would have been…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...
Finance
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:Cengage Learning
Financial ratio analysis; Author: The Finance Storyteller;https://www.youtube.com/watch?v=MTq7HuvoGck;License: Standard Youtube License