Business: Time Value of Money and Income Statement

A company computes its accounts receivable turnover to be 20. Based on this information, find the average collection period. If the company has a credit collection period of 30 days, explain the relationship between the credit collection period and the average collection period. Average collection period is 18.25. The relationship between the credit collection period and the average collection period is very good for this company. This company will receive payments owed to them prior to them having to pay whom they owe. (http://www.cliffsnotes.com/study_guide/Ratio-Analysis.topicArticleId-21248,articleId-21213.html) (http://www.investopedia.com/terms/a/average_collection_period.asp#axzz2LMPGyktQ)

Below are financial statement captions and related amounts that will appear on the balance sheet and income statement for property and equipment and intangible assets:

Date: Name: ID: Answer the following Questions: 1. Tower Inc. owns 30% of Yale Co. and applies the equity method. During the current year, Tower bought inventory costing $66,000 and then sold it to Yale for $120,000. At year-end, only $24,000 of merchandise was still being held by Yale. What amount of inter-company inventory profit must be deferred by Tower? A. $6,480 B. $3,240 C. $10,800 D. $16,200 E. $6,610 2. All of the following statements regarding the investment account using the equity method are true except A. The investment is recorded at cost B. Dividends received are reported as revenue C. Net income of investee increases the investment account D. Dividends received reduce the investment account E.

* The control of the corporation is managed by an elected board of directors. The officers in the company normally have to be approved by the board of directors before they are offered a position to lead the company.

9. You want to purchase a business with the following cash flows. How much would you pay for this business today assuming you needed a 14% return to make this deal?

Inc. reports net income of $120,000 and pays a cash dividend of $45,000. The balance in

* Management and Control - According to law, day-to-day management of a corporation rests with the officers appointed by the board of directors, who are ultimately responsible for the management of the corporation. The board of directors is elected by the votes of the shareholders.

Comparative balance sheets, a current income statement, and certain transaction data all provide information necessary for preparation of the statement of cash flows. Comparative balance sheets indicate how assets, liabilities, and

| |financial statements related to cash and cash equivalents, receivables, and inventories. | | |

2. (TCO 2) What are the four basic financial statements? Describe the balance sheet, and explain why it is important

c. Explain what other methods you could have used to find the cost of debt for AirJet Best Parts Inc.(10 pts)

Current and historical Financial Statements (Income Statement (I/S), Balance Sheet (B/S) and Statement of Cash Flows) from the three most current years for the firm

The “financial statements are formal reports providing information on a company's financial position, cash inflows and outflows, and the results of operations” (Hermanson, p.22). There are four main components that make up a financial statement. The four parts are, balance sheet, income statements, cash flow and, statement of owner’s equity. The balance sheets role is to define the company’s assets liabilities and revenue of the business. The income statement shows the income within the company. Cash flow reviews the position of the company by cash payments and receipts. Lastly, the statement of owner’s equity shows the amount of earnings, stock and other capitals of people in the company. (Hermanson, p.34-35).

Like most multinational corporations, the shareholders own the company and they may also be the board of directors. A Chief Executive Officer (CEO) will be appointed to nominate and manage the operation of the company as a whole. A Chief Operating Officer (COO) will be managing the company’s day-to-day operations and reports them to CEO. The Chief Financial Officer (CFO) will be managing the finance and account together with the

First we need to get the present value of the annuity for the 1,500 semiannual PMTs at year 14