Chapter 3, Problem 25E

In an effort to analyze Clockwork Company finances, Jim realized that he was missing the company's net profits after    taxes for the current year. Find the company's net profits after taxes using the following information     Return on equity = 10.5%             Debt ratio = 35%               Total Asset Turnover = 2             Cost of Goods Sold = R110,000             Gross Profit Margin = 0.35             Sales = 161538.46

An annual report for PepsiCo contained the following information (in millions of U. S. dollars): Net earnings.. Depreciation and amortization .2,689 The decrease in trade receivables. .250 The decrease in inventories. The decrease in prepayments. Increase in trade payables.. The decrease in taxes payable .9,7 Cash dividends paid.. Repurchase of shares.. Required: 1. Compute the cash flows from operating activities for PepsiCo by using the indirect method. .$6,214 .144 .89 .548 .3,305 .3,226 2. Compute the quality of earnings ratio. 3. What were the major reasons that Pepsi's quality of earnings ratio did not equal 1.0?

A company failed to record unrealized gains of $38 million on its debt investments classified as trading securities. Its tax rate is 25%. As a result of this error, total shareholders' equity would be:

At the end of 2022, Shah Corp. underestimated its annual bad debts expense by $50,000. What is the effect of this error, if any, on total assets and total stockholders’ equity on 12/31/22? Total assets and total stockholders’ equity are both overstated by $50,000. Total assets and total stockholders’ equity are both understated by $50,000. Total assets and total stockholders’ equity are both correctly stated.

Which of the following statements is the most reasonable conclusion from the given information below of ABC Company? Liabilities: P430,000 Industry average assets: P1,500,000 Equity: P415,000 Industry average liabilities: P630,000 ABC Company's debt ratio is above the industry average, which suggests it is using less debt to finance its assets than the (A average firm in the industry. ABC Company's debt ratio is below the industry average, which suggests it is using less debt to finance its assets than the (B) average firm in the industry. ABC Company's debt ratio is below the industry average, which suggests it is using more debt to finance its assets than the average firm in the industry. ABC Company's debt ratio is above the industry average, which suggests it is using more debt to finance its assets than the average firm in the industry.

ToshIba, EY (LO 1, 2, 3) In 2015, the business press reported that Japan’s Toshiba Corp. over stated its operating profit by 151.8 billion yen ($1.22 billion) over several years through accounting irregularities involving top management. This overstatement represents approximately one-third of Toshiba’s pre-tax profits during the misstatement period. Toshiba had a corporate culture in which one could not go against the wishes of superiors. An investigation report noted that when top management presented ‘challenges’, division presidents, line managers and employees below them continually carried our inappropriate accounting practices to meet targets in line with the wishes of their superiors. Improper accounting included overstatements and booking profits early or pushing back the recording of losses or charges, and such steps often led to even higher targets being set for divisions in the following period. The report said much of the improper accounting, stretching back to fiscal year 2008, was intentional and would have been difficult for auditors to detect. The audit firm during this misstatement period was EY (Ernst & Young ShinNihon) who incurred significant reputational damage after they were accused of failing to detect the misstatement and fined $17.4 million by Japanese regulators. The investigation into Toshiba’s accounting practices was initially limited to its home country. However, in 2016 the U.S. Justice Department and the Securities and Exchange Commission began looking into the case since part of the alleged fraud involved a Toshiba unit based in the US (Westinghouse Electric Company). a. Based on this limited information, does this case represent a business failure, an audit failure, or both? b. Should auditors be held liable if their client’s business fails or if the financial statements contain a fraud that the auditors did not detect? c. Under what law would the SEC be likely to pursue this case?

9.The January 31, 2022 Statement of Financial Position of Pink Corporation follows:   Cash                                                                                                                  800,000   Accounts receivable ( net of P2,000 allowance for bad debts)                      3,800,000   Inventory        1,600,000   Property, plant and equipment (net of P6,000,000 accumulated dep'n)       4,000,000      Total assets                                                                                                10,200,000            Accounts payable                                                                                          8,250,000    Ordinary shares                                                                                             5,000,000   Retained earnings  (Deficit)                                                                         (3,050,000)      Total Liabilities and Shareholders' equity…

10. The January 31, 2022 Statement of Financial Position of Pink Corporation follows:   Cash                                                                                                                  800,000   Accounts receivable ( net of P2,000 allowance for bad debts)                      3,800,000   Inventory        1,600,000   Property, plant and equipment (net of P6,000,000 accumulated dep'n)       4,000,000      Total assets                                                                                                10,200,000            Accounts payable                                                                                          8,250,000    Ordinary shares                                                                                             5,000,000   Retained earnings  (Deficit)                                                                         (3,050,000)      Total Liabilities and Shareholders' equity…

Biggie's Burgers has a current ratio of .75 and a quick ratio of .05. Which of the following statements is most accurate? Group of answer choices a: The company's ability to pay its long term debts has been damaged b: The company's current assets (95 %) are cash. c: A large amount of the company's current assets are in the form of inventory. d: The company has no current liabilities at all (zero).