statements prepared on a cash basis with those prepared on an accrual basis” To compare the advantages and limitations of different financial statements begins with first understanding what financial statements are and what different purposes they can be used for‚ as well as the differentiation between cash and accrual accounting. The cash and accrual methods of accounting are the two principle ways of keeping track of businesses takings and expenses and in the majority of cases it is possible to decide
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Dr. Maddah ENMG 602 Intro. to Financial Eng’g 11/03/08 Using the Accounting Framework: AOL (Chapter 5‚ Antle) • AOL’s business environment America Online was the leader in providing internet connections in 1997 with 8.6 million subscribers. AOL had two sources of revenue (i) online service revenue generated from customer subscription to online service‚ and (ii) other revenues from e-commerce and advertising. Rapid changes occurred in the manner in which subscription revenue was generated
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Interco Case Study Interco’s financial performance was moderately successful for the 1988 fiscal year. Interco’s current ratio (3.6 to 1) and debt-to-capitalization rate (19.3%) indicate that the company is financially flexible. Furthermore‚ both overall sales and net income increased from the previous year (1987) due largely to the strong performance of Interco’s furniture and footwear divisions. Sales in 1988 increased by 14.7% in the furniture division and 34.2% in the footwear division.
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Home Depot Questions for Case Discussion 1. Look at page 16 of the case (Selected Financial Data). Note that fiscal 1985 ends on February 2‚ 1986 (there is a typo on this page; the far left numbers column should be February 2‚ 1986 instead of February 2‚ 1985). Evaluate Home Depot ’s performance in the following areas: • Growth in Sales • Growth in Total Assets • Change in Net Income • Growth in Long-term Debt 2. Look at page 17 of the case (Management Discussion). Compare 1985 to 1983
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Cost Analysis for Decision Making 4-61. (continued) Incremental Cash Flow – Alternative A Make Containers and Perform Maintenance Year of Operation 2 3 0 Buy GHL Tax savings on purchase Cash flow on purchase Other materials Labor: Supervisor Labor: Workers Rent: Warehouse Maintenance Other expenses Manager’s salary Total costs Tax savings Cash flow due to costs Tax effects of depreciation Tax effect of GHL costs Total cash flow Discount rate factor (10%) Present value NPV 1 4 $(500‚000)
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Macadams Case Study Gearing Ratios 1994 1995 1996 Debt Ratio 25% 9% 12% Debt Equity Ratio 51% 16% 23% Debt to EBITDA 1.49 0.32 0.41 Interest Cover 3.54 8.01 8.22 Liquidity Ratios 1994 1995 1996 Current Ratio 3.23 2.65 2.48 Quick Ratio 1.31 1.02 1.16 Acid Test Ratio 1.31 1.02 1.16 Profitability Ratios 1994 1995 1996 EBITDA margin 8.5% 11.9% 15.9% Operating margin 7.2% 10.8% 14.9% Net Profit margin 4.9% 7.4% 8.5% Return on Total Assets 9.9% 19% 21.4% Return on Equity
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American Home Products Corporation 1. How much business risk does American Home Products face? How much financial risk would American Home Products face at each of the proposed levels of debt shown in case Exhibit 3? How much potential value‚ if any can American Home Products create for its shareholders at each of the proposed levels of debt? A combination of business risk and financial risk shows the risk of an organization’s future return on equity. Business risk is related to make a firm’s
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problem-acquisition and cash flow‚ financial frauds and aggressive accounting methods‚ financial ratios analysis and exhibit used to help analyze. Our report will detail: 1) The Game of Acquisition & Its "roll-up" Strategy. The millions of "value creation" imbedded in EBIX’s valuation are likely to collapse given the myriad of issues the company currently faces. 2) Consolidated Statement of Cash Flow or No Lasting Cash Flow? Investors have a distorted view of the company’s cash flow. "Our cash-generating
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plans for the future. To attempt the risk of possible exposure of Disney to future fluctuations in the Yen/Dollar sport rate‚ the company can choose to hedge its Yen royalties cash flows. This can be done by using financial instruments to reduce or even entirely eliminate the impact of exchange rates on the cash flows of the Yen royalties. These financial instruments include for example forward contracts‚ futures contracts‚ swaps and options. Besides reducing the risk and impact of exchange
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A CASE STUDY ON MINISCRIBE CORPORATION July 6‚ 2012 EXECUTIVE SUMMARY The case subject revolves around MiniScribe‚ a manufacturer of disk storage products that is under the watch list for rumors directed to the firm’s problems with cash flow and inventory. The objective of the report is to come up with a BUY OR DON’T BUY recommendation for Alexander & Ferris using the available financial and qualitative information. The analysis was conducted by deriving additional information from
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