Two days after you provide the ratios and data

This preview shows page 88 - 90 out of 93 pages.

We have textbook solutions for you!
The document you are viewing contains questions related to this textbook.
Intermediate Financial Management
The document you are viewing contains questions related to this textbook.
Chapter 21 / Exercise 01
Intermediate Financial Management
Brigham/Daves
Expert Verified
Two days after you provide the ratios and data requested, Steven Verlin, the public relations director of Schonhardt, asks you to prove the accuracy of the financial and operating data contained in the press release written by the president and edited by Steven. In the press release, the president highlights the sales increase of 25% over last year's first quarter and the positive change in the current ratio from 1.5:1 last year to 3:1 this year. He also emphasizes that production was up 50% over the prior year's first quarter. You note that the press release contains only positive or improved ratios and none of the negative or deteriorated ratios. For instance, no mention is made that the debt to assets ratio has increased from 35% to 55%, that inventories are up 89%, and that while the current ratio improved, the acid-test ratio fell from 1:1 to 0.5:1. Nor is there any mention that the reported profit for the quarter would have been a loss had not the estimated lives of Schonhardt's plant and machinery been increased by 30%. Steven emphasizes, “The prez wants this release by early this afternoon.” Instructions (a) Who are the stakeholders in this situation? (b) Is there anything unethical in president Schonhardt's actions? (c) Should you as controller remain silent? Does Steven have any responsibility? All About You
We have textbook solutions for you!
The document you are viewing contains questions related to this textbook.
Intermediate Financial Management
The document you are viewing contains questions related to this textbook.
Chapter 21 / Exercise 01
Intermediate Financial Management
Brigham/Daves
Expert Verified
BYP14-8 In this chapter, you learned how to use many tools for performing a financial analysis of a company. When making personal investments, however, it is most likely that you won't be buying stocks and bonds in individual companies. Instead, when most people want to invest in stock, they buy mutual funds. By investing in a mutual fund, you reduce your risk because the fund diversifies by buying the stock of a variety of different companies, bonds, and other investments, depending on the stated goals of the fund. Before you invest in a fund, you will need to decide what type of fund you want. For example, do you want a fund that has the potential of high growth (but also high risk), or are you looking for lower risk and a steady stream of income? Do you want a fund that invests only in U.S. companies, or do you want one that invests globally? Many resources are available to help you with these types of decisions. Instructions Go to mdl.htm and complete the investment allocation questionnaire. Add up your total points to determine the type of investment fund that would be appropriate for you. FASB Codification Activity BYP14-9 If your school has a subscription to the FASB Codification, go to to log in and prepare responses to the following. Use the Master Glossary for determining the proper definitions. (a) Discontinued operations. (b) Extraordinary items.

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture