Complete the following tasks: a. Consider the following worksheet with information extracted from a financial statement: 2018 Assets Liabilities Equity Reported ($) 500 000 100 000 400 000 An analyst makes an adjustment that decreases goodwill by $100 000 and equity (profit) by $100 000. This goodwill was acquired on consolidation, hence there are no tax adjustments. Using the worksheet approach, what would be the change in the debt to assets ratio?
Complete the following tasks: a. Consider the following worksheet with information extracted from a financial statement: 2018 Assets Liabilities Equity Reported ($) 500 000 100 000 400 000 An analyst makes an adjustment that decreases goodwill by $100 000 and equity (profit) by $100 000. This goodwill was acquired on consolidation, hence there are no tax adjustments. Using the worksheet approach, what would be the change in the debt to assets ratio?
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter7: Financial Activities
Section: Chapter Questions
Problem 3AIC
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Complete the following tasks:
a. Consider the following worksheet with information extracted from a financial statement:
|
2018 |
Assets |
Liabilities |
Equity |
|
Reported ($) |
500 000 |
100 000 |
400 000 |
An analyst makes an adjustment that decreases
b. Consider the following information:
- Net
working capital /total assets = 0.9 Retained earnings /total earnings = 0.15- EBIT/total assets = 1.1
- MV of equity/BV of total liabilities = 2
- Sales/total assets = 2.5
Compute the Z-score. Is there a likelihood of financial distress?
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