Fsa Case Discussion Questions

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Financial Statement Analysis
Case Discussion Questions

CASE: The Case of the Unidentified Industries - 2006

The questions are in the case. However, the following information might be helpful.

1. For purposes of this case the loans of the commercial bank are classified as accounts receivable and the deposits as accounts payable.

2. Unlike most business done on a credit basis where $1 of revenue creates a $1 accounts receivable, in advertising $1 of revenue creates $1/15% = $6.67 of accounts receivable. Note that the advertising agency reports as revenue commission equal to 15% of media purchases. While commissions on media purchases account for less than 50% of the firm’s revenues, this produces a dramatic distortion in the
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What is driving the performance of these two companies during fiscal 1997?

3. What ratios are most important in assessing current and predicting future value creation for Sears? For Wal-Mart?

4. How useful are the ratios in evaluating the current performance of each of the two companies?

5. How useful are financial ratios in comparing the relative performance of these two companies?

Financial Statement Analysis
Case Discussion Questions

CASE: The Loewen Group, Inc

1. How was the Loewen Group able to grow explosively for the first half of the 1990s? What were advantages of debt financing enjoyed by the firm in this phase?

2. How did Loewen get to the position it found itself in 1999?

3. Some might describe Loewen as “financially distressed.” Is this a fair description of its problem? What are the manifestations and apparent costs of this so-called financial distress?

4. What are Loewen’s alternatives? What would you recommend to John Lacey?

Financial Statement Analysis
Case Discussion Questions

CASE: Depreciation at Delta Air Lines and Singapore Airlines (A)

1. Calculate the annual depreciation expense that Delta and Singapore would record for each $100 of gross value of aircraft put in service. a. For Delta, what was its annual depreciation expense (per $100 of gross aircraft value) prior to July 1, 1986; from July 1, 1986 through March 31, 1993; and from April 1, 1993

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