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Q1 REAL-WORLD FOCUS E Purpose: Identify summary liquidity, solvency, and profitability information about companies, and compare this information across companies in the same industry. Address: http://biz.yahoo.com/i Steps 1.Type in a company name, or use the index to find a company name. Choose Profile. Choose Key Statistics. Perform instruction (a) below.2.Go back to Profile. Click on the company’s particular industry behind the heading “Industry.” Perform instructions (b), (c), and (d). Instructions Answer the following questions. (a) What is the company’s name? What was the company’s current ratio and debt to equity ratio (a variation of the debt to assets ratio)? (b) What is the company’s industry? (c) What is the name of a competitor? What is the competitor’s current ratio and its debt to equity ratio? (d) Based on these measures, which company is more liquid? Which company is more solvent?The other 2 questions are attached in work doc, please refer to attached word docs. Thank you
hw1_q1.docx

hw1_q2.docx

hw1_q3.docx

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Q1
REAL-WORLD FOCUS
E
Purpose: Identify summary liquidity, solvency, and profitability information about companies,
and compare this information across companies in the same industry.
Address: http://biz.yahoo.com/i
Steps
• 1.Type in a company name, or use the index to find a company name. Choose Profile.
Choose Key Statistics. Perform instruction (a) below.
• 2.Go back to Profile. Click on the company’s particular industry behind the heading
“Industry.” Perform instructions (b), (c), and (d).
Instructions
Answer the following questions.
(a) What is the company’s name? What was the company’s current ratio and debt to equity
ratio (a variation of the debt to assets ratio)?
(b) What is the company’s industry?
(c) What is the name of a competitor? What is the competitor’s current ratio and its debt to
equity ratio?
(d) Based on these measures, which company is more liquid? Which company is more
solvent?
Q2
Amazon.com, Inc Financial Statement are presented here
Amazon.com (year ending Dec 31, 2018), Inc. from the following webpage:
https://www.sec.gov/Archives/edgar/data/1018724/000101872419000004/amzn20181231x10k.htm
Financial Statement of Wal-Mart Stores, Inc are here
Wal-Mart Stores, Inc. (for year ending Jan 31, 2018) from the following webpage:
http://www.annualreports.com/HostedData/AnnualReports/PDF/NYSE_WMT_2018.pdf
Instruction:
a) Based on the information contained in the financial statements, determine the normal balance
of the listed accounts for each company.
Amazon
1. Interest Expense
2. Cash & Cash Equivalents
3. Accounts Payable
b) Identify the other account ordinarily involved when:
1) Account Receivable is increased
2) Interest Expense is increased
3) Salaries & Wages Payable is decreased
4) Service Revenue is increased
Wal-Mart
1) Product Revenues
2) Inventories
3) Cost of Sales
Q3
Suppose the following information is from the 2017 annual report of American Greetings Corporation
(all dollars in thousands).
Feb. 28,
2017
Feb. 28,
2016
Finished Goods
232,893.00
244,379.00
Work in process
7,068.00
10,516.00
Raw materials & supplies
49,937.00
43,861.00
289,898.00
298,756.00
86,025.00
82,085.00
Total (as reported)
203,873.00
216,671.00
Cost of goods sold
809,956.00
780,771.00
Current assets (as reported)
561,395.00
669,340.00
Current liabilities
343,405.00
432,321.00
Inventories
Less: LIFO reserve
The notes to the company’s financial statements also include the following information.
Finished products, work in process, and raw material inventories are carried at the lower-ofcost-or-market. The last0in, first-out (LIFO) cost method is used for approximately 75% of the domestic
inventories in 2017 and approximately 70% in 2016. The foreign subsidiaries principally use the first-in,
first-out (FIFO) method. Display material and factory supplies are carried at average-cost.
Instructions:
a) Define each of the following: finished goods, work in process, and raw materials.
b) What might be a possible explanation for why the company uses FIFO for its nondomestic
inventories?
c) Calculate the company’s inventory turnover and days in inventory for 2016 and 2017. (2015
inventory was $182,618). Discuss the implications of any change in the ratios.
d) What percentage of total inventory does the 2017 LIFO reserve represent? If the company used
FIFO in 2017, what would be the value of its inventory? Do you consider this difference a
“material” amount from the perspective of an analyst? Which value accurately represents the
value of the company’s inventory?
e) Calculate the company’s 2017 current ratio with the numbers as reported, then recalculate after
adjusting for the LIFO reserve.

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