Chapter 24: 12Q (page 1445)
An article in the financial press entitled “Important Information in Annual Reports This Year” noted that annual reports include a management’s discussion and analysis section. What would this section contain?
Liquidity, Capital Asset, and results of operation.
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Answer each of the questions in the following unrelated situations.
a) The current ratio of a company is 5:1 and its acid-test ratio is 1:1. If the inventories and prepaid items amount to $500,000, what is the amount of current liabilities?
(Horizontal and Vertical Analysis) Presented below is the comparative balance sheet for Gilmour Company.
GILMOUR COMPANY COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2018 AND 2017 | ||
December 31 | ||
2018 | 2017 | |
Assets | ||
Cash | \( 180,000 | \) 275,000 |
Accounts receivable (net) | 220,000 | 155,000 |
Short-term investments | 270,000 | 150,000 |
Inventories | 1,060,000 | 980,000 |
Prepaid expenses | 25,000 | 25,000 |
Plant & equipment | 2,585,000 | 1,950,000 |
Accumulated depreciation | (1,000,000) | (750,000) |
\(3,340,000 | (2,785,000) | |
Liabilities and Stockholders’ Equity | ||
Accounts payable | \) 50,000 | \( 75,000 |
Accrued expenses | 170,000 | 200,000 |
Bonds payable | 450,000 | 190,000 |
Common stock | 2,100,000 | 1,770,000 |
Retained earnings | 570,000 | 550,000 |
\)3,340,000 | (2,785,000) |
Instructions
(Round to two decimal places.)
The controller for Lafayette Inc. recently commented, “If I have to disclose our segments individually, the only people who will gain are our competitors and the only people that will lose are our present stockholders.” Evaluate this comment.
What is the difference between a CPA’s unqualified opinion or “clean” opinion and a qualified one?
Olga Conrad, a financial writer, noted recently, “There are substantial arguments for including earnings projections in annual reports and the like. The most compelling is that it would give anyone interested something now available to only a relatively select few—like large stockholders, creditors, and attentive bartenders.” Identify some arguments against providing earnings projections.
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