财务报表分析整理内容

Chapter1

75. Problem One: Information contained in Financial Statements

List ten different items you would expect to find in an average annual report to shareholders.

Problem One: Information contained in Financial Statements

Exercise 1-3 (25 minutes)

a. Current ratio:

2006:

= 1.9 to 1

2005:

= 2.5 to 1

2004:

= 2.9 to 1

b. Acid-test ratio:

2006: = 0.9 to 1

$30,800 + $88,500 + $111,500 + $9,700 $128,900 $35,625 + $62,500 + $82,500 + $9,375 $75,250 $36,800 + $49,200 + $53,000 + $4,000 $49,250 $30,800 + $88,500

$128,900

2005: = 1.3 to 1

2004: = 1.7 to 1

Analysis and Interpretation: Mixon's short-term liquidity position has

weakened over this two-year period. Both the current and acid-test ratios show declining trends. Although we do not have information about the nature of the company's business, the acid-test ratio shift from ‘1.7 to 1’ down to ‘0.9 to 1’ and the current ratio shift from ‘2.9 to 1’ down to ‘1.9 to 1’ indicate a potential liquidity problem. Still, we must recognize that industry standards may show that the 2004 ratios were too high (instead of 2006 ratios as too low).

$35,625 + $62,500

$75,250

$36,800 + $49,200

$49,250

Chapter2

70. Problem Two: Earnings Management

Earnings management can be defined as the "purposeful intervention by management in the earnings process, usually to satisfy selfish objectives" (Schipper, 1989). Earnings management techniques can be separated into those that are "cosmetic" (without cash flow consequences) and those that are "real" (with cash flow consequences).

The management of a company wishes to increase earnings this period.

List three "cosmetic" and three "real" techniques that can be used to achieve this objective and explain why they will achieve the objective.

Problem Two: Earnings Management

Cosmetic (non-cash flow) techniques would be:

● Decrease estimated bad debt expense

● Decrease estimated warrantee expense

● Increase in estimated salvage value of depreciable assets

● Increase discount rate on pension plans

● Increase expected rate of return on pension assets

● Change from accelerated depreciation to straigh t line depreciation

● Capitalize expenses such as software development and R&D

Real changes would be:

● Decrease R&D expenditures

● Decrease advertising expenditures

● Decrease maintenance spending

● Changing accounting principle from LIFO to FIFO (assumin g rising prices). Note that this will have a tax effect, as one cannot use FIFO for financial reporting purposes and LIFO for tax purposes.

● Channel loading (i.e. borrowing sales from the next period, which if repeated usually escalates in future periods)

74. Problem Six: Fair Value Accounting

ABC Co. starts its business raising $110,000 in cash; $60,000 from issuing equity and $50,000 from issuing 6% bonds at par. ABC used the whole amount of cash to buy a building, which it rents out for $10,000 per year. Given below is the opening balance sheet of ABC Co. for the first year of operations.

At the end of Year 1, the building is valued at $150,000. Also, the market value of bonds has fallen to $49,000. Assume the useful life of the building is 30 years and its salvage value is $50,000 at the end of that period. The rental income is received on the last day of the year. Interest on bonds is also paid on this day. Prepare the year-end balance sheet and income statement of ABC Co. based on Fair value. Compare the historical and fair values at year-end.

Problem Six: Fair Value Accounting

Notice that under fair value method, all assets and liabilities are considered at their market value. Fair value accounting does not consider any depreciation on fixed assets. It recognizes any unrealized gain or loss on assets or long-term debt on account of change in market value.

Chapter3

79. Problem Three: Book Value per share

The following information was taken from Wicom's financial statements as of December 31, 2006.

a. Calculate book value per share of common stock.

b. Assume that the company also had $1,000,000 worth of convertible bonds. The bonds are convertible at one $1,000 bond into 150 shares of stock. There are also stock options to buy 120,000 shares at a price of $5 per share. The stock is currently trading at $30 per share.

Recalculate your answer to part a) taking into account dilutive effects of the above.

Problem Three: Book Value per share

Exercise 3-3 (15 minutes)

a. A lessee would account for a capital lease as an asset and an

obligation at the inception of the lease. Rental payments during the year would be allocated between a reduction in the obligation and interest expense. The asset would be amortized in a manner consistent with the lessee's normal depreciation policy for owned assets, except that in some circumstances the period of amortization would be the lease term.

b. No asset or obligation would be recorded at the inception of the lease.

Normally, rental on an operating lease would be charged to expense over the lease term as it becomes payable. If rental payments are not made on a straight-line basis, rental expense nevertheless would be recognized on a straight-line basis unless another systematic or rational basis is more representative of the time pattern in which use benefit is derived from the leased property, in which case that basis would be used.

Chapter4

63. Problem One: Calculating COGS and Inventory under LIFO and FIFO Donuld Company sells many products. Sol is one of its popular items. Below is an analysis of the inventory purchases and sales of Sol for the month of September. Donuld Company uses the periodic inventory system.

INSTRUCTIONS

a. Using the FIFO assumption, calculate the amount charged to cost of goods sold for September. (Show computations)

b. Using the LIFO assumption, calculate the amount assigned to the inventory on hand on September 31. (Show computations)

c. Calculate the LIFO reserve that would be reported in the company's books on September 31 if using LIFO.

Problem One: Calculating COGS and Inventory under LIFO and FIFO

66. Problem Four: Classification as Asset

Indicate which of the following items would be classified as assets on the balance sheets.

Problem Four: Classification as Asset

Chapter6

80. Problem Two: Earnings per Share

The following information was obtained from Cyber Corporation's annual report.

a. Compute weighted-average number of common shares outstanding for the year.

b. Compute basic EPS.

c. Compute diluted EPS.

Problem Two: Earnings per Share

a. Compute weighted-average number of common shares outstanding for the year.

Weighted average: 8,400,000 ? 12 = 700,000 shares

Compute basic EPS.

Basic Earnings per Share

Compute diluted EPS.

Preferred Shares—if converted

Options: Assumed exercised

Diluted Earnings per Share

88. Problem Ten: Nonrecurring Items

For each of these nonrecurring items give an example and indicate (match with) the appropriate accounting treatment.

Extraordinary item

Prior period adjustment

Change in accounting estimate

Change in accounting principle

Discontinued operation

Special items

Comprehensive income items

Change in reporting entity

SEC Enforcement Releases

A. Shown net as a separate line item between net income and comprehensive income, no restatement.

B. Income statement line items adjusted as appropriate, gross or net, prior years restated.

C. Gross amount is part of its regular income or expense line item in income from continuing operations, prior years restated.

D. Gross amount is part of its regular income or expense line item in income from continuing operations, no restatement.

E. Shown gross as a separate line item in income from continuing operations, no restatement.

F. Shown net as a separate line item between income from continuing operations and net income, prior years restated.

G. Shown cumulative net as a separate line item between income from continuing operations and net income, no restatement.

H. Shown net as a separate line item between income from continuing operations and net income, no restatement.

I. Not in income statement, opening retained earnings is changed by net amount, no restatement.

Problem Ten: Nonrecurring Items

Chapter7

75. Problem One: Cash Flow from Operations

a. Is it possible to have a positive net income and negative cash flow from operations? If your answer is no, explain fully. If your answer is yes, provide two examples when one might find this.

b. Is it possible to have a negative net income and positive cash flow from operations? If your answer is no, explain fully. If your answer is yes, provide two examples when one might find this.

Problem One: Cash Flow from Operations

a. Yes it is entirely possible to have positive net income and negative cash flow from operations. One might expect to see this with a company that is growing very fast. This type of company will have positive net income but the increase in working capital needed to sustain the growth depresses the cash flow from operations. One might also see this with a company that is having problems with their working capital management. Any increases in working capital will depress cash flow from operations, ceteris paribus.条件不变地

b. Yes, it possible to have negative net income and positive cash flows from operations. This can occur if a company has very large depreciation expenses. This was the case with cable companies when the industry was fairly young. The tremendous amount of fixed assets needed to start these companies was then depreciated over time.

You might also see this situation in declining industries. Sales are declining and net income is becoming negative (especially if there are high levels of fixed costs). However, at the same time working capital is contracting causing operating cash flows to be positive.

76. Problem Two: Preparation of Statement of Cash Flows

The following cash flow data of Signet Sales for the year ended December 31, 2005 are as follows:

a. Prepare a statement of cash flows for Signet Sales in accordance using the direct method in accordance with SFAS 95

b. Discuss, from an analyst's viewpoint, the purpose of classifying cash flows into the categories required by SFAS 95

Problem Two: Preparation of Statement of Cash Flows

a.

b. Operating cash flows provide a measure of internally generated funds that can be used to fund expansion, pay off debt, and pay dividends to shareholders. Operating cash flows are not a performance measure, but rather should be considered a liquidity measure. The larger the operating cash flows the less likely a company will need external financing to fund growth, and the less likely they are to need to liquidate assets.

Investing cash flows show us where a company is investing its cash and whether it is liquidating assets. Examination of the investing section will determine if the company is maintaining and/or growing asset base. Financing cash flows provide information about the financing of a company - whether it is raising capital to support operations, to finance growth, or whether it is decreasing or increasing leverage.

(CFA Adapted)