What are the implications for cash flow

Assignment Help Finance Basics
Reference no: EM13271507

Companies often try to keep accounting earnings growing at a relatively steady pace, thereby avoiding large savings in earnings from period to period. They also try to meet earnings targets. To do so, they use a variety of tactics. The simplest way is to control the timing of accounting revenues and costs, which all firms can do in at least some extent For example, if earnings are looking too low this quarter, then some accounting costs can be deferred until next quarter. This practice is called earnings management. It is common and it raises a lot of questions. Why do firms do it? Why are firms even allowed to do it under GAAP? Is it ethical? What are the implications for cash flow an shareholder wealth?

Reference no: EM13271507

Questions Cloud

How much would you need to invest today : You plan to place a $40,000 down payment on a lake cabin in Northern Minnesota in ten years. If you invest in a long-term CD earning an annual rate of 5.50%, how much would you need to invest today to have enough for the down payment in ten years?
What is the new length of each of its sides : A cube of side 2cm is made of material of bulk modulus 4.7\times 10^{^{5}} N/m^2. What is the new length of each of its sides
Compare to quality and cost under the fee-for-service system : Discuss managed care’s impact on the cost/affordability of health coverage and the quality of healthcare delivered. How does this compare to quality and cost under the fee-for-service system?
Obtain the current in the coil : The magnetic field 7.5 cm directly above the center of a 25-turn coil of radius 15cm is 0.80mT. obtain the current in the coil
What are the implications for cash flow : Why are firms even allowed to do it under GAAP? Is it ethical? What are the implications for cash flow an shareholder wealth?
Calculate the energy of one photon of this light : The blue line of the hydrogen emission spectrum has a wavelength of 433.9 nm. Calculate the energy of one photon of this light
Define how many grams of feso4 must be dissolved and diluted : How many grams of FeSO4.(NH4)2SO4.6H2O (MW = 392.14) must be dissolved and diluted to 250.0 mL to prepare an aqueous solution that is 10.00 ppm Fe2+ by weight (1.00 ppm = 1.00 mg/L)
What is the benefit to the firm : What is meant by saying debt is tax-favored? What is the benefit to the firm? What are the risks?
Determine poles nd zeros of filter for biomedical instrument : Design a filter for a biomedical instrument to eliminate DC (f = 0), 500 Hz tone, and its corresponding harmonics. The system sampling rate is 2,000 Hz. Place all the required poles at the origin to obtain a FIR filter.

Reviews

Write a Review

Finance Basics Questions & Answers

  Find the income per case

If Zebra's average expenses were $13.13 and the Distributors work on a 23 percent margin and the retailers work on a 20 percent margin;

  Necessity of attending the conference

Suppose that the corporation has as an integral funding strategy to their strategic plan that they will participate in an IPO in approximately twenty four months.

  What is the expected return on each stock

How may transactions costs and capital gains taxes affect your choices?

  Calculate bond selling value

A company has an issue of $1,000 par value bonds with a 12% stated interest rate outstanding. The issue pays interest annually and has ten years remaining to its maturity date.

  What is the implied annual rate of interest

1. If you can double your money in 23 years, what is the implied annual rate of interest, given that compounded in quarterly?  2. Assume interest rate of 14%. A company receives cash flows of $576 at the end of year 5, $393 at the end of year 7, and ..

  Calculate the present value

Calculate the present value of $1,000 to be received ten years from now if the required real rate of return is 3 percent compounded yearly and the expected rate of inflation is 5 percent compounded yearly?

  What is the probability that person actually has hepatitis

From a large population of which .05% of the people have hepatitis, a person is selected at random and given the test. If the test is positive, what is the probability that the person actually has hepatitis? (Round your answer to five decimal plac..

  Create a risk-free hedge portfolio can be created

Methods of using stocks and options to create a risk-free hedge portfolio can be created. Support your answer with examples of these methods being used to create a risk-free hedge portfolio.

  Determination of apr and apy

A bank loan contract calls for an interest rate equal to prime rate plus 1%. If prime rate averages 9% and non-interest-earning compensating balances equal to 10 percent.

  Select beneficial option for client

Company A currently purchase CDs from many Vendors at various rates per pack. They do not have guaranteed orders with any vendors, and are planning to make consolidated order and reduce overall price.

  Calculate the rate of return for each year

Mike is finding for a stock to include in his current stock portfolio. He is interested in Apple Corporation he has been impressed with the firm's computer products and believes Apple is an innovative market player.

  Prepare a statement of revenues and expenses

Using the deferral method, prepare a statement of revenues and expenses and a statement of changes in net assets for Wise Owls for 20X1.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd