Midterm Review Questions winter 2011 REVIEW 1 As the auditor of Mother Ltd. (Mother)‚ you have been asked to draft a memorandum to the president to explain the future deductibility of loss carryovers of a wholly-owned subsidiary‚ Childco Ltd. (Childco). Mother acquired Childco on January 1‚ 2011 when Childco was experiencing financial difficulties. Childco manufactures paper products‚ whereas Mother is a wholesaler of office supplies and equipment. Both companies are Canadian-controlled
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Ch 10: 3‚ 4‚ 5‚ 7; Ch 14: 4 3. Jersey mining earns $9.50 a share‚ sells for $90‚ and pays a $6 per share dividend? The stock is split two for one and a $3 per share cash dividend is declared. (a) What will be the new price of the stock? New Price: $90/2 = $45 (b) If the firm total earning do not change‚ what is the payout ratio before and after the stock split? Before: $6/9.50 = 63.16% After: $3/4.75 = 63.16% 4. Firm A had the following selected items on its balance sheet: Cash: 28‚000‚000
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to generate enough cash from operations to pay all of its capital expenditures? d. Did the cash flow from operations cover both the capital expenditures and dividend payments‚ if any? e. If it did‚ how did it invest the excess cash? f. If not‚ the sources of cash to pay for the capital expenditures and/or dividends. g. Were the working capital (current asset and current liability) accounts other than cash and cash equivalents primarily sources of cash‚ users of cash?
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permitted to stockholders and acceptable methods for retiring stock. h. Additional Taxes – A corporation must file taxes at a federal and state level where the taxes can sometimes amount to 40%. Also‚ stockholders are required to pay taxes on cash dividends‚ once at the corporate level and again at the personal level. The last three reasons (f‚ g & h) are a disadvantage for a corporation while the first five (5) (a‚ b‚ c‚ d & e) are an advantage to a corporation. There are four steps to follow
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Question 2a: Discuss the importance of ratio analysis for inter-firm and intra-firm comparisons including circumstances responsible for its limitations .If any Answer: Ratio analysis implies the systematic use of ratios to interpret the financial statements so that the strength and weaknesses of a firm as well as its historical performance and current financial position can be determined. With the help of ratio analysis conclusion can be drawn regarding several aspects such as financial health‚
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Assignment #7 P13-7A (a) General Journal Date A/C Title Ref Debit Credit Feb 6 Cash 111‚000 Preferred Shares (1‚000 x $111) 111‚000 To record issue of 50‚000 preferred shares at $111 July 15 Preferred Shares (2‚000 x $106) 212‚000 Common Shares 212‚000 To record conversion of 2‚000 preferred shares into 16‚000 common shares at average cost of $106
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a well-known and famous stock amongst defensive investors‚ thanks to its long dividend growth history. Dividend and defensive investors like to invest in companies that have the potential to generate a steady growth in earnings and cash flows. Consequently‚ these companies usually offer increasing dividends and a steady share price appreciation. Emerson is a dividend aristocrat‚ as it has also paid increasing dividends since 1959. Albeit a long fairy tale‚ Emerson Electric has almost lost its shine
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Current‚ quick ratio - How capable is the business in meeting its short-term obligations as they fall due? 4 Stability ratios: eg. Gearing - How healthy is the business in the long-term financially? 5 Investor ratios: EPS‚ Price earning ratio‚ Dividend yield - Are the investors receiving sufficient return on their investment? Critical evaluation of the financial ratios Ratio analysis used with care‚ can reveal much about a company and its overall operations and image to stakeholders but there
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Xytech was a high-tech company that had been started by three partners in early 20X0. Their successful product designs led to rapid growth of the company‚ with resulting needs for additional capital to support the growth. This case describes the major financing transactions entered into by Xytech in its first 10 years of existence. The firm’s earnings history also is given. You are to write a journal entry for each transaction as it is described. You should be explicit about what noncurrent liability
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stock (2‚500 x $18) 45‚000 Cash paid for dividends (62‚125) Net cash used in financing activities (44‚720) Net decrease in cash ($ 22‚750) Cash balance at beginning of year 2011 76‚625 Cash balance at end of year 2011 $53‚875 Noncash investing and financing activities Purchased equipment for $96‚375 by signing a $71‚375 long-term note payable and paying $25‚000 in cash. Part 2 Kazaam Company dividend payments of $62‚125 represent 84% of the $73‚750
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