Management accounting reports
A) are primarily used by parties inside the organization.
B) must be prepared on a periodic basis.
C) are generally publicly available.
D) are based on generally accepted accounting principles.
A
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Understanding a company's relationships with financial institutions and bondholders is important because:
a. it can indicate the extent to which the company is leveraged. b. it can reveal whether significant short selling of the company's stock has occurred. c. it can uncover the fraudulent transactions from special purpose entities. d. it may help in raising additional funds from the financial institutions.
Mayweather reports net income of $305,000 for the year ended December 31. It also reports $93,700 depreciation expense and a $10,000 loss on the sale of equipment. Its comparative balance sheet reveals a $40,200 increase in accounts receivable, a $10,200 decrease in prepaid expenses, a $15,200 increase in accounts payable, a $12,500 decrease in wages payable, a $75,000 increase in equipment, and a $100,000 decrease in notes payable. Calculate the net increase in cash for the year.
A. $381,400. B. $206,400. C. $281,400. D. $216,400. E. $406,400.
When Sony came out with PlayStation®4, it created a website specifically for the new product. This is an example of a microsite.
Answer the following statement true (T) or false (F)
A firm's CFO is considering increasing the target debt ratio, which would also increase the company's interest expense. New bonds would be issued and the proceeds would be used to buy back shares of common stock. Neither total assets nor operating income would change, but expected earnings per share (EPS) would increase. Assuming the CFO's estimates are correct, which of the following statements is CORRECT?
A. Since the proposed plan increases the firm's financial risk, the stock price might fall even if EPS increases. B. If the plan reduces the WACC, the stock price is likely to decline. C. Since the plan is expected to increase EPS, this implies that net income is also expected to increase. D. If the plan does increase the EPS, the stock price will automatically increase at the same rate. E. Under the plan there will be more bonds outstanding, and that will increase their liquidity and thus lower the interest rate on the currently outstanding bonds.