Liquidation is a form of bankruptcy in which the debtor's exempt property is auctioned.
Answer the following statement true (T) or false (F)
False
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Fashion Trends, Inc., a regional fashion apparel retailer, wants to prepare a 2018 Pro Forma Income Statement and a 2018 Balance Sheet using the following 2017 and 2016 data:
The firm has forecasted sales of $7,100,000 and a tax rate of 40% for 2018. Cost of goods sold and S,G&A expense in 2018 are expected to be the average of their two-year proportion of sales. On the balance sheet, accounts receivable, inventory, accounts payable, and accrued expenses are expected to be at the two-year average of the proportion of these items in relation to sales. The firm has planned an investment of $500,000 in fixed assets in 2018, with an estimated life of 10 years and no salvage value. These fixed assets will be depreciated using the straight line depreciation method. All other financial statement items are expected to remain constant in 2018. Assume the firm pays 4% interest on short-term debt and 7% on long term debt. Assume that the dividends in 2018 will be the same as those paid in 2017.
a) What is the Discretionary Financing Needed (DFN) in 2018? Is this a surplus or deficit?
b) DFN will be absorbed by long-term debt. Set up an iterative worksheet to eliminate it.
c) Turn off iteration, and use the Scenario Manager to set up three scenarios:
1. Best Case — Sales are 15% higher than expected.
2. Base Case — Sales are exactly as expected.
3. Worst Case — Sales are 15% less than expected.
What is the DFN under each scenario?
Which statement represents a challenge to Evan and Freeman's defense of the stakeholder theory against the economic model of corporate social responsibility?
A. The stakeholder theory cannot answer the question as to how, exactly, a manager should go about balancing the diverse and competing claims of all parties. B. Courts and legislatures have recognized that the rights and interests of various constituencies affected by corporate decisions limit managers' fiduciary responsibility. C. There is no guarantee that when managers produce profits, they will serve the interests of either stockholders or the public. D. The law now recognizes a wide range of managerial obligations to such stakeholders as consumers, employees, competitors, the environment, and the disabled.
Which of the following is not a current reporting requirement for a statement that reports changes in cash over a period of time?
A) This statement must classify cash flows into three categories: operating, investing, and financing activities. B) Cash equivalents must be combined with cash in preparing this statement. C) Working capital may be used as a substitute for cash in preparing this statement. D) The operating activities section can be prepared using either the direct method or the indirect method.
The new office supply discounter, Paper Clips, Etc. (PCE), sells a certain type of ergonomically correct office chair that costs $300
The annual holding cost rate is 40% of the item cost, annual demand is 900 units, and the ordering cost is $20 per order. The lead time is 4 days. Because demand is variable (standard deviation of daily demand is 2.4 chairs), PCE has decided to establish a customer service level of 90%. The store is open 300 days per year. (a) What is the optimal order quantity? (b) What is the safety stock? (c) What is the reorder point?