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Red Corporation had a temporary cash squeeze near its balance sheet date. It needed cash badly for a seasonal dip in sales. However, a loan covenant requiring a certain debt/equity ratio would be violated if any additional money were borrowed. To remedy this,the top two officers of the Red Corporation set up another corporation,Pink,Inc. Red Corporation made a large sale of inventory to Pink, Inc. at cost. Pink, Inc. used the inventory as collateral for a three month loan from a local bank. Them money from the loan was used to pay Red Corporation for the accounts receivable resulting from the "sale" At the end of the three month period, the officers intended to have Red Corporation buy back the inventory from Pink, inc. at a price that would allow Pink to pay off the loan plus interest
a.) How would this transaction designed by the two officers enable Red Corporation to maintain its required debt/equity ratio while obtaining the cash it needed?b.) What test of controls and substantive tests would enable an auditor to detect this scheme?
XYZ Company issued common stock that had a required rate of return of 12 percent, the stocks beta is 1.75, next dividend is expected to be dollar 2.50 & the risk free rate of return is 5 percent.
Past year Mike bought 100 shares of Dallas Company common stock for dollar 53 per share. During the year he earned dividends of $1.45 per share.
Select the best option of Investment among various interest compounding and find the expected return on Siebling's common stock?
Explain how much did Gitlen Financial pay Sean for his structured settlement and find what is AFM's return on assets?
Short question based on cash budgeting - Compare Lawrence Sports' use of cash budgeting to the purpose of cash budgeting. Explain the weaknesses in Lawrence Sports' existing working capital policies that lead to their cash flow problem.
Does the essay by Wayne F. Cascio, Decency Means More than Always Low Prices: A Comparison of Costco to Wal-Mart's Sam's Club, tend to support the position of Milton Friedman or R. Edward Freeman?
Creating the rudiments of a financial plan. The questions are relative to an etiquette and image consultant, one-owner, corporation type business.
Assume that a person won the Florida lottery and was offered a choice of two prizes:
Starbucks in 2004 declared that it will increase rates at its stores before the year. Analysts expect rates to increase by 4% to 5 percent. Rates are going up to adjust for increases in dairy products & rents.
Evaluation of EOQ Decisions of college on vendor's order - What order size should Smith College acquire from the vendor? Explain Why?
Prepare a chart that shows the relationship of the bond's price to your required return and use a range of 0% to 15% with 0.5% increments in calculating the prices.
You are in a new city council person for the City of Scottsdale, Arizona. You are aware that many cities have been in the news recently for financial crises for which the council or board is being held accountable.
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