MSAF 670 Final Exam – Spring 2015
Scholar Identify: ________________ MSAF 670 Remaining Examination – Spring 2015 1. (10 factors) Seek advice from Chapter Eight in your textual content. Recalculate the forecasts in Tables Eight-2 assuming that the ratio of internet working working capital to gross sales is Three p.c, and the ratio of internet long-term belongings to gross sales holds regular at 33.Four p.c for all of the years from fiscal 2011 to fiscal 2020. Preserve all the opposite assumptions unchanged. Present the consequences on all objects. 2. (15 factors)In early 2003, Bristol-Myers Squibb introduced that it must restate its monetary statements because of this of stuffing as a lot as $Three.35 billion value of merchandise into wholesalers' warehouses 1999 by 2001. The company’s gross sales and value of gross sales throughout this interval was as follows:200120001999Web gross sales$ 18,139$ 17,695$ 16,502Price of merchandise bought 5,454Four,729Four,458The company’s marginal tax charge in the course of the three years was 35%. What changes are required to appropriate Bristol-Myers Squibb’s steadiness sheet for December 31, 2001? What assumptions underlie your changes? How would you count on the changes to have an effect on Bristol-Myers Squibb’s efficiency within the coming few years? Three. Refer to Chapter Four. (20 factors) Seek advice from the Lufthansa instance on asset depreciation estimates. What changes can be required if Lufthansa’s plane depreciation have been computed utilizing a mean lifetime of 25 years and salvage worth of 5% (as an alternative of the reported values of 12 years and 15%)? Present the changes to the 2008 and 2009 steadiness sheets, and to the 2009 earnings assertion. Four. (10 Factors) Take into account the next two earnings forecasting fashions:Mannequin 1: Et(EPSt+1) = EPSt Mannequin 2: Et(EPSt+1) =.png"> Et(EPS) is the anticipated forecast of earnings per share for 12 months t+1, given data out there at t. Mannequin 1 is normally known as the random stroll Mannequin for earnings, whereas Mannequin 2 is named the mean-reverting mannequin. The earnings per share for Ford Motor Co. for the interval 1990 to 1994 are as follows:Yr12ThreeFour5EPS$zero.93$(2.40)$(zero.73)$2.27$Four.97a. What can be the 12 months 6 forecast for earnings per share for every of the 2 earnings forecasting fashions?b. Precise earnings per share for Ford in 12 months 6 have been $Three.58. Given this data, what can be the 12 months 7 forecast for earnings per share for every mannequin? Why do the 2 fashions generate fairly totally different forecasts? Which do you suppose would higher describe earnings per share patterns Why? 5. ?(45 factors) Use the pattern templates in Tables Four-1, Four-2, and Four-Three as a reference to recast the monetary statements for under. Step 1 is to categorise the traces appropriately, then step 2 is to mixture like objects to provide the standardizedUseful Notes: (a) achievement prices – these are seen as price of gross sales for many retailers; (b) inventory possibility prices – these are most likely for senior administration and therefore ought to most likely be categorised as SG&A; and (c) within the money stream assertion features and losses on foreign money translations (proven on the finish of the assertion are proven as working elements that suggest that money from operations within the standardized format doesn't equate to that reported by the agency.See Week Four Dialogue discussion board for instance.Revenue AssertionClassifications200220012000Web gross sales$Three,932,936$Three,122,433$2,761,983Price of gross sales2,940,3182,323,8752,106,206Gross revenue992,618798,558655,777Working bills:Success392,467374,250414,509Advertising125,383138,283179,980Know-how and content material215,617241,165269,326Normal and administrative79,zero4989,862108,962Inventory-based compensation68,927Four,63724,797Amortization of goodwill and different intangibles5,478181,033321,772Restructuring-related and different41,573181,585200,311Whole working bills$928,494$1,210,815$1,519,657Revenue (loss) from operations64,124-412,257-863,880Curiosity earnings23,68729,10340,821Curiosity expense-142,925-139,232-130,921Different earnings (expense), internet5,623-1,900-10,zero58Different features (losses), internet-96,273-2,141-142,639Whole non-operating bills, internet($209,888)($114,170)($242,797)Loss earlier than fairness in losses of equity-method investees-145,764-526,427-1,106,677Fairness in losses of equity-method investees, internet-Four,169-30,327-304,596Loss earlier than change in accounting precept($149,933)($556,754)($1,411,273)Cumulative impact of change in accounting precept801-10,523Web loss($149,132)($567,277)($1,411,273)Steadiness SheetClassificationsYr Starting January 1, ($000's)20032002Present belongings:Money and money equivalents$738,254$540,282Marketable securities562,715456,303Inventories202,425143,722Accounts receivable, internet & different present belongings112,28267,613Whole present belongings$1,615,676$1,207,920Fastened belongings, internet239,398271,751Goodwill, internet70,81145,367Different intangibles, internetThree,46034,382Different fairness investments15,44228,359Different belongings45,66249,768Whole belongings$1,990,449$1,637,547LIABILITIES AND STOCKHOLDERS' DEFICITPresent liabilities:Accounts payable618,128444,748Accrued bills and different present liabilities314,935305,064Unearned income47,91687,978Curiosity payable71,66168,632Present portion of long-term debt and different13,31814,992Whole present liabilities$1,065,958$921,414Lengthy-term debt and different2,277,3052,156,133Shareholders’ deficitFrequent inventory, $zero.01 par worth: Licensed shares 5,000,000 Issued and excellent shares -- 387,906 and 373,218 shares, respectivelyThree,879Three,732Extra paid-in capital$1,649,946$1,462,769Deferred stock-based compensation-6,591-9,853Accrued different complete earnings (loss)9,662-36,zero70Accrued deficit-Three,009,710-2,860,578Whole stockholders' deficit($1,352,814)($1,440,000)Whole liabilities and stockholders' deficit1,990,4491,637,547Money Circulate AssertionClassificationsYr Ended December 31, ($000's)200220012000OPERATING ACTIVITIES:Web loss($149,132)($567,277)($1,411,273)Changes to reconcile internet loss to internet money supplied by (utilized in) working actions:Depreciation of fastened belongings and different amortization82,27484,70984,460Inventory-based compensation68,927Four,63724,797Fairness in losses of equity-method investeesFour,16930,327304,596Amortization of goodwill and different intangibles5,478181,033321,772Non-cash restructuring-related and differentThree,47073,293200,311Achieve on sale of marketable securities, internet-5,700-1,335-280Different losses (features), internet96,2732,141142,639Non-cash curiosity expense and different29,58626,62924,766Cumulative impact of change in accounting precept-80110,523Modifications in working belongings and liabilities:Inventories-51,30330,62846,083Accounts receivable, internet and different cur. belongings-32,94820,732-Eight,585Accounts payable156,542-44,43822,357Accrued bills and different present liabilitiesFour,49150,zero3193,967Unearned income95,404114,73897,818Amortization of beforehand unearned income-135,466-135,808-108,211Curiosity payableThree,027-34534,341Web money supplied by (utilized in) working actions$174,291($119,782)($130,442)Yr Ended December 31, ($000's)200220012000INVESTING ACTIVITIES:Gross sales/maturities of marketable securities and investments553,289370,377545,724Purchases of marketable securities-635,810-567,152-184,455Purchases of fastened belongings, together with internal-use software program-39,163-50,321-134,758Investments (together with in equity-method investees)-6,198-62,533Web money supplied by (utilized in) investing actions($121,684)($253,294)$163,978FINANCING ACTIVITIES:Proceeds from train of inventory choices and different121,68916,62544,697Proceeds from issuance of widespread inventory, internet of situation prices99,831Proceeds from long-term debt and different10,000681,499Compensation of capital lease obligations and different-14,795-19,575-16,927Financing prices-16,122Web money supplied by financing actions$106,894$106,881$693,147Impact of exchange-rate modifications on money and money equivalents38,471-15,958-37,557Web enhance (lower) in money and money equivalents$197,972($282,153)$689,126