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Question :
1. Why would a company pay to have its public debt rated by a major rating agency (such as Moody's or Standard and Poor's)? Why might a firm choose not to have its debt rated?
2. Wollongong Construction Company follows the percentage-of-completion technique for reporting long-term contract revenues. The percentage of completion is based on the cost of materials shipped to the project site as a percentage of net expected material costs (i.e. expenses are recorded during the life of the project and not at the end of the project). Wollongong's major debt agreement includes restrictions on net worth, minimum working capital and interest coverage needs. A leading analyst claims that 'the company is buying its way out of these covenants by spending cash and buying materials, even when they are not needed'.
(a) Describe how this might be possible.
(b) Consider the analyst is correct; will this behavior have any impact on the company's Z-score? Describe.
3. A leading retailer finds itself in a financial bind. It doesn't have sufficient cash flow from operations to finance its growth, and it is close to violating the maximum debt-to-assets ratio allowed by its covenants. The marketing director suggests: "We can raise cash for our expansion by selling the existing stores and leasing them back. This source of financing is cheap, since it avoids violating either the debt-to-assets or interest coverage ratios in our covenants." Do you agree with his analysis? Why or why not? As the firm's banker, how could you view this arrangement?
Using the percentage-of-completion method of accounting for long-term contracts, the percentage of completion used to recognize gross profit in the first year usually is determined by measuring:
Calculation of Different Variances - Determine the following variances and indicate whether each is favorable or unfavorable.
Prepare a cash budget, by month and in total, for the three-month period and Prepare a cash Budget and a schedule of expected cash collections for the data furnished below.
Evaluate the percentage change in sales and net cash flow
What level of sales dollars is needed for a monthly profit of $59,340? For the month of July, the marina anticipates sales of $1,010,000. What is the expected level of profit?
Illustrate what conclusions can you draw concerning the relative liquidity and efficiency of this corporation? How does Target’s results compare to other companies in the same industry?
question 1your finance text book sold 50000 prints in its first year. the publishing company expects the sales to grow
Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly - The ledger of Chopin Rental Agency on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared.
Should the company continue to manufacture the part, or should it buy the part from the outside supplier? Support your answer with analyses.
What is meant by the forensic-type fieldwork phase of an audit? An AICPA Fraud Task Force suggests that if a forensic accountant is brought into an audit to conduct a separate investigation (and not an adjunct to an audit), what standards apply?
What is the companys CIK number - What is the companys Ticker Symbol and fiscal yearend?
How does this transaction affect Investment in Ricardo account that appears on DeMilo’s financial records? Investment in Ricardo should be increased by$?
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