Mobile Company manufactures computer technology devices. Selected financial data for Mobile is presented below, use the information to answer the following questions: $\begin{array} { l l c }\underline{ \text { Current Assets }} & \text { As of Dec. 31, 2010 } & \text { Dec. 31, 2009 } \\ \text { Cash and short-term investments } & \$ 1,267,038 & \$ 616,604 \\ \text { Accounts Receivable (net) } & 490,816 & 665,828 \\ \text { Inventories } & 338,599 & 487,505 \\ \text { Prepaid Expenses and other current assets } & \underline{292.511 }&\underline{ \$ 21.915} \\ \text { Total Current Assets } & \$ 2,388,964 & \$ 2,061,852 \\\\ \underline{\text { Current Liabilities } }& & \$ 38,108 \\ \text { Short-term borrowings } & \$ 25,190 & 210,090 \\ \text { Current portion of long-term debt } & 182,295 & 334,247 \\ \text { Accounts payable } & 296,307 & 743,999 \\ \text { Accrued liabilities } & 941,912 & 239.793 \\ \text { Income taxes payable } & \underline{203,049} &\underline{239,793} \\\text { Total Current Liabilities }&1,648,753&1,566,237\end{array}$ $\underline{\text {Selected Income Statement Data - for the year ending December 31, 2010:}}$ $\begin{array}{llcc} \text { Net Sales} &\$4,885,340 \\ \text { Cost of Goods Sold } &2,542,353\\ \text { Operating Income} &733,541\\ \text {Net Income } &230,101\\ \end{array}$ $\underline{\text {Selected Statement of Cash Flow Data - for the year ending December 31, 2010:}}$ $\begin{array}{llcc} \text { Cash Flows from Operations} &\$ 1,156,084 \\ \end{array}$ - Refer to the information for Mobile Company. Mobile's current ratio in 2010 was

A) 1.07 B) 1.45 C) 1 D) .69 A) 1.07 B) 1.45 C) 1 D) .69

Mobile Company manufactures computer technology devices. Selected financial data for Mobile is presented below, use the information to answer the following questions: $\begin{array} { l l c }\underline{ \text { Current Assets }} & \text { As of Dec. 31, 2010 } & \text { Dec. 31, 2009 } \\ \text { Cash and short-term investments } & \$ 1,267,038 & \$ 616,604 \\ \text { Accounts Receivable (net) } & 490,816 & 665,828 \\ \text { Inventories } & 338,599 & 487,505 \\ \text { Prepaid Expenses and other current assets } & \underline{292.511 }&\underline{ \$ 21.915} \\ \text { Total Current Assets } & \$ 2,388,964 & \$ 2,061,852 \\\\ \underline{\text { Current Liabilities } }& & \$ 38,108 \\ \text { Short-term borrowings } & \$ 25,190 & 210,090 \\ \text { Current portion of long-term debt } & 182,295 & 334,247 \\ \text { Accounts payable } & 296,307 & 743,999 \\ \text { Accrued liabilities } & 941,912 & 239.793 \\ \text { Income taxes payable } & \underline{203,049} &\underline{239,793} \\\text { Total Current Liabilities }&1,648,753&1,566,237\end{array}$ $\underline{\text {Selected Income Statement Data - for the year ending December 31, 2010:}}$ $\begin{array}{llcc} \text { Net Sales} &\$4,885,340 \\ \text { Cost of Goods Sold } &2,542,353\\ \text { Operating Income} &733,541\\ \text {Net Income } &230,101\\ \end{array}$ $\underline{\text {Selected Statement of Cash Flow Data - for the year ending December 31, 2010:}}$ $\begin{array}{llcc} \text { Cash Flows from Operations} &\$ 1,156,084 \\ \end{array}$ - Refer to the information for Mobile Company. Mobile's days receivables outstanding at the end of 2010 was

A) 43.20 days B) 40.50 days C) 45.25 days D) 8.50 days A) 43.20 days B) 40.50 days C) 45.25 days D) 8.50 days

Exam 5: Risk Analysis

Mobile Company manufactures computer technology devices. Selected financial data for Mobile is presented below, use the information to answer the following questions: As of Dec. 31, 2010 Dec. 31, 2009 Cash and short-term investments \ 1,267,038 \ 616,604 Accounts Receivable (net) 490,816 665,828 Inventories 338,599 487,505 Prepaid Expenses and other current assets Total Current Assets \ 2,388,964 \ 2,061,852 \ 38,108 Short-term borrowings \ 25,190 210,090 Current portion of long-term debt 182,295 334,247 Accounts payable 296,307 743,999 Accrued liabilities 941,912 239.793 Income taxes payable Total Current Liabilities 1,648,753 1,566,237 $\underline{\text {Selected Income Statement Data - for the year ending December 31, 2010:}}$ Net Sales \4 ,885,340 Cost of Goods Sold 2,542,353 Operating Income 733,541 Net Income 230,101 $\underline{\text {Selected Statement of Cash Flow Data - for the year ending December 31, 2010:}}$ Cash Flows from Operations \ 1,156,084 - Refer to the information for Mobile Company. Mobile's current ratio in 2010 was

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Question 61

The source of risk related to political unrest and exchange rate changes are _________________________.

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Question 62

Market equity beta measures the covariability of a firm's returns with the return's of

(Multiple Choice)

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Question 63

Hammer Corporation wrote off $185,000 of obsolete inventory at December 31, 2011. Required: What effect did this write-off have on the company's 2011 current and quick ratios?

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Question 64

Discuss the differences between Chapter 7 and Chapter 11 bankruptcy filings?

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Question 65

Economic theory teaches that differences in market returns must relate to differences in

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Question 66

Below are various states of financial distress: 1. defaulting on a principal payment on debt 2. restructuring debt 3. liquidating a firm 4. filing for bankruptcy 5. failing to make a required interest payment on time What is the order of increasing gravity that analysts typically consider when assessing credit risk and bankruptcy risk according to a continuum of financial distress?

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Question 67

Cash flow from operations indicates the amount of cash that the firm derived from operations after funding ______________________________.

(Short Answer)

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Question 68

Bankruptcy prediction research has identified three broad factors influencing long-term solvency risk, which of the following is not one of the factors?

(Multiple Choice)

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Question 69

The beta coefficient measures the ____________________ of a firm's returns with those of all shares traded in the market (in excess of the risk-free interest rate).

(Short Answer)

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Question 70

When the excess of ROA over the after-tax cost of borrowing declines, additional ________________________________________ begins to reduce the return to common shareholders.

(Short Answer)

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Question 71

The source of risk related interest rate changes and demographic changes is ____________________.

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Question 72

When a financial analyst examines the credit risk of a company, it is common that he or she uses a set of factors that all begin with the letter "C." Each factor provides a consideration that enters into the lending decision. List and discuss how each of the factors affects a company's credit risk.

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Question 73

Below is selected information from Marker's 2012 financial statements: - Marker's 2012 Interest Coverage ratio is

(Multiple Choice)

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Question 74

In bankruptcy prediction analysis a type ____________________ error is classifying a firm as nonbankrupt when it ultimately goes bankrupt.

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Question 75

Below is selected information from Marker's 2012 financial statements: -Marker's 2012 Liabilities to Shareholders' Equity ratio is

(Multiple Choice)

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Question 76

Mobile Company manufactures computer technology devices. Selected financial data for Mobile is presented below, use the information to answer the following questions: As of Dec. 31, 2010 Dec. 31, 2009 Cash and short-term investments \ 1,267,038 \ 616,604 Accounts Receivable (net) 490,816 665,828 Inventories 338,599 487,505 Prepaid Expenses and other current assets Total Current Assets \ 2,388,964 \ 2,061,852 \ 38,108 Short-term borrowings \ 25,190 210,090 Current portion of long-term debt 182,295 334,247 Accounts payable 296,307 743,999 Accrued liabilities 941,912 239.793 Income taxes payable Total Current Liabilities 1,648,753 1,566,237 $\underline{\text {Selected Income Statement Data - for the year ending December 31, 2010:}}$ Net Sales \4 ,885,340 Cost of Goods Sold 2,542,353 Operating Income 733,541 Net Income 230,101 $\underline{\text {Selected Statement of Cash Flow Data - for the year ending December 31, 2010:}}$ Cash Flows from Operations \ 1,156,084 - Refer to the information for Mobile Company. Mobile's days receivables outstanding at the end of 2010 was

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Question 77

Doran Corp. has a current ratio of 6. Under which of the following scenarios might this indicate a problem?

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Question 78

The best indicator for assessing a firm's long-term solvency risk is its ability to generate what over a period of years?

(Multiple Choice)

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Question 79

Selected risk ratios are presented for 2011 and 2010 for Techtron Company. Also, refer to the financial statement data for the company. Revenues to Cash Ratio Days Revenues Held in Cash Curent Ratio Quick Ratio Operating Cash Flow to Average Current Liabilities Ratio Days Accounts Receivable Days Inventory Days Accounts P ayable Net Days Working C apital Liabilities to Assets Ratio Liabilities to Shareholders' Equity Ratio Long Term Debt to Long Term Capital Ratio Long Term Debt to Shareholders' Equity Ratio Operating C ash Flow to Total Liabilities Ratio Interest Coverage Ratio 2011 5.8 54 1.5 1.1 47.3\% 58 51 47 72 0.559 1.266 0.330 0.492 0.243 5.6 2010 7.7 47 1.5 1.1 55.7\% 73 68 49 91 0.621 1.639 0.418 0.720 0.242 2.3 Financial Statements $\text { INCOML STATEMLNT (in IHbILS) }$ Fiscal year end Sales Cost of Goods Sold Selling, General \& Admin. Exp. Advertising Research and Development Royalty Expense Other Selling and Admiristrative Interest expense Income tax expense Net income 2012 \ 2,500 (387) (157) (223) (385) (32) 2011 \ 3,139 (364) (143) (248) (799) (53) 2010 \ 2,816 (297) (154) (290) (788) (78) $Selected risk ratios are presented for 2011 and 2010 for Techtron Company. Also, refer to the financial statement data for the company. \begin{array}{c} \begin{array}{|l|} \hline\\ \hline \text {Revenues to Cash Ratio}\\ \hline \text {Days Revenues Held in Cash}\\ \hline \text {Curent Ratio}\\ \hline \text {Quick Ratio}\\ \hline \text {Operating Cash Flow to Average Current Liabilities Ratio}\\ \\ \hline \text {Days Accounts Receivable}\\ \hline \text {Days Inventory}\\ \hline \text {Days Accounts P ayable}\\ \hline \text {Net Days Working C apital}\\ \hline \text {Liabilities to Assets Ratio}\\ \hline \text {Liabilities to Shareholders' Equity Ratio}\\ \hline \text {Long Term Debt to Long Term Capital Ratio}\\ \hline \text {Long Term Debt to Shareholders' Equity Ratio}\\ \hline \text {Operating C ash Flow to Total Liabilities Ratio}\\ \hline \text {Interest Coverage Ratio}\\ \hline \end{array} \begin{array}{l|} \hline 2011 \\ \hline 5.8 \\ \hline 54 \\ \hline 1.5 \\ \hline 1.1 \\ \hline\\ 47.3 \% \\ \hline 58 \\ \hline 51 \\ \hline 47 \\ \hline 72 \\ \hline 0.559 \\ \hline 1.266 \\ \hline 0.330 \\ \hline 0.492 \\ \hline 0.243 \\ \hline 5.6 \\ \hline \end{array} \begin{array}{l|} \hline 2010 \\ \hline 7.7 \\ \hline 47\\ \hline 1.5 \\ \hline 1.1 \\ \hline\\ 55.7 \% \\ \hline 73 \\ \hline 68 \\ \hline 49 \\ \hline 91 \\ \hline 0.621 \\ \hline 1.639 \\ \hline 0.418 \\ \hline 0.720 \\ \hline 0.242 \\ \hline 2.3 \\ \hline \end{array} \end{array} Financial Statements \text { INCOML STATEMLNT (in IHbILS) } \begin{array}{c} \begin{array}{lll} \text {Fiscal year end}\\ \text {Sales}\\ \text {Cost of Goods Sold}\\ \text {Selling, General \& Admin. Exp.}\\ \text {Advertising}\\ \text {Research and Development}\\ \text {Royalty Expense}\\ \text {Other Selling and Admiristrative}\\ \text {Interest expense}\\ \text {Income tax expense}\\ \text {Net income} \end{array} \begin{array}{lll} 2012\\ \$ 2,500 \\ \underline{(1,252) }\\ \\ (387)\\ (157)\\ (223)\\ (385)\\ (32)\\ \underline{(64)}\\ \underline{\$196} \end{array} \begin{array}{l} 2011 \\ \$ 3,139 \\ \underline{(1,288) }\\ \\ (364) \\ (143) \\ (248) \\ (799) \\ (53) \\ \underline{(69)}\\ \underline{\$175} \end{array} \begin{array}{l} 2010 \\ \$ 2,81 6\\ \underline{(1,099) }\\ \\ (297) \\ (154) \\ (290) \\ (788) \\ (78) \\ \underline{(29)}\\ \underline{\$75} \end{array} \end{array} Required: a. Calculate the amounts of these ratios for 2012. b. Assess the changes in the short-term liquidity risk of Techtron between 2010 and 2012 and the level of that risk at the end of 2012. c. Assess the changes in the long-term solvency risk of Techtron between 2010 and 2012 and the level of that risk at the end of 2012.$ $Selected risk ratios are presented for 2011 and 2010 for Techtron Company. Also, refer to the financial statement data for the company. \begin{array}{c} \begin{array}{|l|} \hline\\ \hline \text {Revenues to Cash Ratio}\\ \hline \text {Days Revenues Held in Cash}\\ \hline \text {Curent Ratio}\\ \hline \text {Quick Ratio}\\ \hline \text {Operating Cash Flow to Average Current Liabilities Ratio}\\ \\ \hline \text {Days Accounts Receivable}\\ \hline \text {Days Inventory}\\ \hline \text {Days Accounts P ayable}\\ \hline \text {Net Days Working C apital}\\ \hline \text {Liabilities to Assets Ratio}\\ \hline \text {Liabilities to Shareholders' Equity Ratio}\\ \hline \text {Long Term Debt to Long Term Capital Ratio}\\ \hline \text {Long Term Debt to Shareholders' Equity Ratio}\\ \hline \text {Operating C ash Flow to Total Liabilities Ratio}\\ \hline \text {Interest Coverage Ratio}\\ \hline \end{array} \begin{array}{l|} \hline 2011 \\ \hline 5.8 \\ \hline 54 \\ \hline 1.5 \\ \hline 1.1 \\ \hline\\ 47.3 \% \\ \hline 58 \\ \hline 51 \\ \hline 47 \\ \hline 72 \\ \hline 0.559 \\ \hline 1.266 \\ \hline 0.330 \\ \hline 0.492 \\ \hline 0.243 \\ \hline 5.6 \\ \hline \end{array} \begin{array}{l|} \hline 2010 \\ \hline 7.7 \\ \hline 47\\ \hline 1.5 \\ \hline 1.1 \\ \hline\\ 55.7 \% \\ \hline 73 \\ \hline 68 \\ \hline 49 \\ \hline 91 \\ \hline 0.621 \\ \hline 1.639 \\ \hline 0.418 \\ \hline 0.720 \\ \hline 0.242 \\ \hline 2.3 \\ \hline \end{array} \end{array} Financial Statements \text { INCOML STATEMLNT (in IHbILS) } \begin{array}{c} \begin{array}{lll} \text {Fiscal year end}\\ \text {Sales}\\ \text {Cost of Goods Sold}\\ \text {Selling, General \& Admin. Exp.}\\ \text {Advertising}\\ \text {Research and Development}\\ \text {Royalty Expense}\\ \text {Other Selling and Admiristrative}\\ \text {Interest expense}\\ \text {Income tax expense}\\ \text {Net income} \end{array} \begin{array}{lll} 2012\\ \$ 2,500 \\ \underline{(1,252) }\\ \\ (387)\\ (157)\\ (223)\\ (385)\\ (32)\\ \underline{(64)}\\ \underline{\$196} \end{array} \begin{array}{l} 2011 \\ \$ 3,139 \\ \underline{(1,288) }\\ \\ (364) \\ (143) \\ (248) \\ (799) \\ (53) \\ \underline{(69)}\\ \underline{\$175} \end{array} \begin{array}{l} 2010 \\ \$ 2,81 6\\ \underline{(1,099) }\\ \\ (297) \\ (154) \\ (290) \\ (788) \\ (78) \\ \underline{(29)}\\ \underline{\$75} \end{array} \end{array} Required: a. Calculate the amounts of these ratios for 2012. b. Assess the changes in the short-term liquidity risk of Techtron between 2010 and 2012 and the level of that risk at the end of 2012. c. Assess the changes in the long-term solvency risk of Techtron between 2010 and 2012 and the level of that risk at the end of 2012.$ Required: a. Calculate the amounts of these ratios for 2012. b. Assess the changes in the short-term liquidity risk of Techtron between 2010 and 2012 and the level of that risk at the end of 2012. c. Assess the changes in the long-term solvency risk of Techtron between 2010 and 2012 and the level of that risk at the end of 2012.

(Essay)

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Question 80

Showing 61 - 80 of 81

The source of risk related to political unrest and exchange rate changes are _________________________.

Market equity beta measures the covariability of a firm's returns with the return's of

Hammer Corporation wrote off $185,000 of obsolete inventory at December 31, 2011. Required: What effect did this write-off have on the company's 2011 current and quick ratios?

Discuss the differences between Chapter 7 and Chapter 11 bankruptcy filings?

Economic theory teaches that differences in market returns must relate to differences in

Cash flow from operations indicates the amount of cash that the firm derived from operations after funding ______________________________.

Bankruptcy prediction research has identified three broad factors influencing long-term solvency risk, which of the following is not one of the factors?

The beta coefficient measures the ____________________ of a firm's returns with those of all shares traded in the market (in excess of the risk-free interest rate).

When the excess of ROA over the after-tax cost of borrowing declines, additional ________________________________________ begins to reduce the return to common shareholders.

The source of risk related interest rate changes and demographic changes is ____________________.

When a financial analyst examines the credit risk of a company, it is common that he or she uses a set of factors that all begin with the letter "C." Each factor provides a consideration that enters into the lending decision. List and discuss how each of the factors affects a company's credit risk.

Below is selected information from Marker's 2012 financial statements: - Marker's 2012 Interest Coverage ratio is

In bankruptcy prediction analysis a type ____________________ error is classifying a firm as nonbankrupt when it ultimately goes bankrupt.

Below is selected information from Marker's 2012 financial statements: -Marker's 2012 Liabilities to Shareholders' Equity ratio is

Doran Corp. has a current ratio of 6. Under which of the following scenarios might this indicate a problem?

The best indicator for assessing a firm's long-term solvency risk is its ability to generate what over a period of years?

Overview of Financial Reporting, Financial Statement Analysis, and Valuation

Asset and Liability Valuation and Income Measurement

Income Flows Versus Cash Flows: Understanding the Statement of Cash Flows

Profitability Analysis

Financing Activities

Investing Activities

Operating Activities

Accounting Quality

Forecasting Financial Statements

Risk-Adjusted Expected Rates of Return and the Dividends Valuation Approach

Valuation: Cash-Flow-Based Approaches

Valuation: Earnings-Based Approaches

Valuation: Market-Based Approaches

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