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Question :
1. Why would a company pay to have its public debt rated by a major rating agency (such as Moody's or Standard and Poor's)? Why might a firm choose not to have its debt rated?
2. Wollongong Construction Company follows the percentage-of-completion technique for reporting long-term contract revenues. The percentage of completion is based on the cost of materials shipped to the project site as a percentage of net expected material costs (i.e. expenses are recorded during the life of the project and not at the end of the project). Wollongong's major debt agreement includes restrictions on net worth, minimum working capital and interest coverage needs. A leading analyst claims that 'the company is buying its way out of these covenants by spending cash and buying materials, even when they are not needed'.
(a) Describe how this might be possible.
(b) Consider the analyst is correct; will this behavior have any impact on the company's Z-score? Describe.
3. A leading retailer finds itself in a financial bind. It doesn't have sufficient cash flow from operations to finance its growth, and it is close to violating the maximum debt-to-assets ratio allowed by its covenants. The marketing director suggests: "We can raise cash for our expansion by selling the existing stores and leasing them back. This source of financing is cheap, since it avoids violating either the debt-to-assets or interest coverage ratios in our covenants." Do you agree with his analysis? Why or why not? As the firm's banker, how could you view this arrangement?
Prepare a seven - year forecast of net operating income for the Sated Satyr Apartments
Evaluate the total overhead applied to production during May. Determine the cost of the ending work in process inventory. Evaluate the cost of jobs completed during May. Calculate the cost of goods sold for the year ended May 31.
The current ratio for a company with current assets of $70,000, quick assets of $30,000, net assets of $150,000 current liabilities of $50,000 and net sales of $80,000 would be:
Evaluate the Income Statement
In a statement of cash flows prepared by the indirect technique, which of the subsequent events would be deducted from net income? In a statement of cash flows, which of the subsequent events would be classified as a financing activity?
Prepare an income statement for the year ended 31 st December, 20X8, by using direct costing. Prepare an income statement for the year ended 31 st December, 20X8, by using absorption costing.
Prepare the essential journal entries What is the Dollar Value of Cost of Goods Sold at January 31? What is the Dollar Value of Ending Inventory at January 31?
Since it was shipped as of 31 st December, does this represent a sale for the year ended on that date? What additional audit steps would be taken to evaluate that the sale is valid?
Evaluate the current competitive environment of Maple Hill Dairy Farm.
Example on Inventory Valuation
Determine the expected portfolio return, rp, for each of the 6 years. Evaluate the expected value of portfolio returns, rp, (line over the r) over the 6-year period
Karen is single and is an active participant in her employer retirement plan. She contributed $5,500, the maximum amount allowable, to an individual retirement account (IRA)
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