Reference no: EM131784184
Questions -
Q1. Calculate basic EPS, and explain the EPS effect of convertible preferred. Thrifty Co. reported net income of $465,000 for its fiscal year ended January 31, 2011. At the beginning of that fiscal year, 200,000 shares of common stock were outstanding. On October 31, 2010, an additional 60,000 shares were issued. No other changes in common shares outstanding occurred during the year. Also during the year the company paid the annual dividend on the 25,000 shares of 7%, $40 par value preferred stock that were also outstanding the entire year.
a. Calculate basic earnings per share of common stock for the year ended January 31 2011.
b. If Thrifty Co.'s preferred stock were convertible into common stock, what additional calculation would be required?
Q2. Use gross profit ratio to calculate inventory loss. On April 8, 2010, a flood destroyed the ware house of Stuco Distributing Co. From the waterlogged records of the company, management was able to determine that the firm's gross profit ratio had averaged 35% for the past several years and that the inventory at the beginning of the year was $209,600. It also was determined that during the year until the date of the flood, sales had totaled $427,200 and purchases totaled $242,920.
a. Calculate the amount of inventory loss from the flood.
Q3. Prepare a statement of cash flows - indirect method. The financial statements of Pouchie Co. included the following information for the year ended December 31, 2010 (amounts in millions):
Depreciation and amortization expense $520
Cash dividends declared and paid 660
Purchase of equipment 1,640
Net income 768
Beginning cash balance 240
Proceeds of common stock issued 296
Proceeds from sale of building (at book value) 424
Accounts receivable increase 32
Ending cash balance 80
Inventory decrease 76
Accounts payable increase 88
a. Complete the statement of cash flows, using the direct method.
Q4. Using cash flow information - The Coca-Cola Company. Following are comparative statements of cash flows, as reported by The Coca-Cola Company in its 2008 annual report.
The Coca Cola Company and Subsidiaries Consolidated Statements of Cash Flows Year ended December 31 (in millions)
2008 2007 2006
Operating Activities (details omitted)
Net cash provided by operating activities $7,571 $7,150 $5,957
Investing Activities
Acquisitions and investments, principally beverage
and bottling companies and trademarks (759) (5,653) (901)
Purchases of other investments (240) (99) (82)
Proceeds from disposals of bottling companies
and other investments 479 448 640
Purchases of property, plant, and equipment (1,968) (1,648) (1,407)
Proceeds from disposals of property, plant and equipment 129 239 112
Other investing activities (4) (6) (62)
Net cash used I investing activities (2,363) (6,719) (1,700)
Financing Activities
Issuances of debt 4,337 9,979 617
Payments of debt (4,308) (5,638) (2,021)
Issuances of stock 586 1,619 148
Purchases of stock for treasury (1,079) (1,838) (2,416)
Dividends (3,521) (3,149) (2,911)
Net cash provided by (used) in financing activities (3,985) 973 $(6,583)
Effect of Exchange Rate Changes
Cash and Cash Equivalents (615) 249 65
Cash and Cash Equivalents
Net increase (decrease) during the year 608 1,653 (2,261)
Balance at beginning of year 4,093 2,440 4,701
Balance at end of year $4,701 $4,093 $2,440
a. Briefly review the consolidated statements of cash flows, and then provide an overall evaluation of the "big picture" during the three years presented for Coca-Cola. Have operating cash flows been sufficient to meet investing needs and to pay dividends?
b. Were there significant changes to any of the specific line-item details that you think would require further explanation or analysis?
Q5. Interpret auditors' opinion. To what extent is the auditors' opinion an indicator of a company's future financial success and future cash dividends to stockholders?
Q6. Calculate EPS and dividends per share before stock split. For several years Orbon, Inc. has followed a policy of paying a cash dividend of $1.20 per share and having a 10% stock dividend. In the 2011 annual report, Orbon reported restated earnings per share for 2009 of $2.70.
a. Calculate the originally reported earnings per share for 2009. Round your answer to two decimal places.
b. Calculate the restated cash dividend per share for 2009 reported in the 2011 annual report for comparative purposes. Round your answer to two decimal places.