Week8 Final Exam Part 2
Question
1. (TCO A) Below you will find selected information (in millions) from
Coca-Cola Co.’s 2012 Annual Report:
|
Income Taxes Payable
|
$471
|
|
Short-term Investments and
Marketable Securities
|
8,109
|
|
Cash
|
8,442
|
|
Other non-current Liabilities
|
10,449
|
|
Common Stock
|
1,760
|
|
Receivables
|
4,812
|
|
Other Current Asset
|
2,973
|
|
Long-term Investments
|
10,448
|
|
Other Non-current Assets
|
3,585
|
|
Property, Plant and Equipment
|
23,486
|
|
Trademarks
|
6,527
|
|
Other Intangible Assets
|
20,810
|
|
Allowance for Doubtful Accounts
|
53
|
|
Accumulated Depreciation
|
9,010
|
|
Accounts Payable
|
8,680
|
|
Short Term Notes Payable
|
17,874
|
|
Prepaid Expenses
|
2,781
|
|
Other Current Liabilities
|
796
|
|
Long-Term Liabilities
|
14,736
|
|
Paid-in-Capital in Excess of
Par Value
|
11,379
|
|
Retained Earnings
|
55,038
|
|
Inventories
|
3,264
|
|
Treasury Stock
|
35,009
|
Other
information taken from the Annual Report:
|
Sales Revenue for 2012
|
$48,017
|
|
Cost of Goods Sold for 2012
|
19,053
|
|
Net Income for 2012
|
9,019
|
|
Inventory Balance on 12/31/11
|
3,092
|
|
Net Accounts Receivable Balance
on 12/31/11
|
4,920
|
|
Total Assets on 12/31/11
|
79,974
|
|
Equity Balance on 12/31/11
|
31,921
|
Required:
1. Using the information provided prepare a Balance Sheet. Separate the current assets from non-current assets and provide a total for each. Also separate the current liabilities from the non-current liabilities and provide a total for each.
1. Using the information provided prepare a Balance Sheet. Separate the current assets from non-current assets and provide a total for each. Also separate the current liabilities from the non-current liabilities and provide a total for each.
2.
Using the Balance Sheet from your answer above, calculate the Current Ratioand
Return on common stockholders’ equity ratio. (Make sure to show all your work).
(Points : 36)
Question
2
(TCO
B) The following selected data was retrieved from the Walmart, Inc. financial
statements for the year ending January 31, 2013:
|
Accounts Payable
|
$38,080
|
|
Accounts Receivable
|
6,768
|
|
Cash
|
7,781
|
|
Common Stock
|
3,952
|
|
Cost of Goods Sold
|
352,488
|
|
Income Tax Expense
|
7,981
|
|
Interest Expenses
|
2,064
|
|
Membership Revenues
|
3,048
|
|
Net Sales
|
466,114
|
|
Operating, Selling and
Administrative Expenses
|
88,873
|
|
Retained Earnings
|
72,978
|
Required:
Using the information provided above:
Using the information provided above:
1.
Prepare a multiple-step income statement
2.
Calculate the Profit Margin, and Gross profit rate for the company. Be sure to
provide the formula you are using, show your calculations, and discuss your
findings/results. (Points : 36)
Question
3 (TCO C) Please review the following real-world Hewlett Packard
Statement of Cash flows and address the two questions below:
|
Cash flow from operating
activities
|
In millions
|
In millions
|
|
|
For the year ended 2012
|
For the year ended 2011
|
|
Net (loss) earnings
|
$(12,650)
|
$7,074
|
|
Depreciation and amortization
|
5,095
|
4,984
|
|
Impairment of goodwill and
purchased intangible assets
|
18,035
|
885
|
|
Stock-based compensation
expense
|
635
|
685
|
|
Provision for doubtful accounts
|
142
|
81
|
|
Provision for inventory
|
277
|
217
|
|
Restructuring charges
|
2,266
|
645
|
|
Deferred taxes on earnings
|
(711)
|
166
|
|
Excess tax benefit from
stock-based competition
|
(12)
|
(163)
|
|
Other, net
|
265
|
(46)
|
|
Accounts and financing
receivables
|
1,269
|
(227)
|
|
Inventory
|
890
|
(1,252)
|
|
Accounts payable
|
(1,414)
|
275
|
|
Taxes on earnings
|
(320)
|
610
|
|
Restructuring
|
(840)
|
(1,002)
|
|
Other assets and liabilities
|
(2,356)
|
(293)
|
|
Net cash provided by operating
activities
|
10,571
|
12,639
|
|
Cash flows from investing
activities:
|
||
|
Investment in property, plant,
and equipment
|
(3,706)
|
(4,539)
|
|
Proceeds from sale of property,
plant, and equipment
|
617
|
999
|
|
Purchases of available-for-sale
securities and other investments
|
(972)
|
(96)
|
|
Maturities and sales of
available-for-sale securities and other investment
|
662
|
68
|
|
Payments in connection with
business acquisitions, net of cash acquired
|
(141)
|
(10,480)
|
|
Proceeds from business
divestiture, net
|
87
|
89
|
|
Net cash used in investing
activities
|
(3,453)
|
(13,959)
|
|
Cash flow from financing
activities:
|
||
|
(Payments) issuance of
commercial paper and notes payable, net
|
(2,775)
|
(1,270)
|
|
Issuance of debt
|
5,154
|
11,942
|
|
Payment of debt
|
(4,333)
|
(2,336)
|
|
Issuance of common stock under
employee stock plans
|
716
|
896
|
|
Repurchase of common stock
|
(1,619)
|
(10,117)
|
|
Excess tax benefit from
stock-based compensation
|
12
|
163
|
|
Cash dividends paid
|
(1,015)
|
(844)
|
|
Net cash used in financing
activities
|
(3,860)
|
(1,566)
|
|
Increase (decrease) in cash and
cash equivalents
|
3,258
|
(2,886)
|
|
Cash and cash equivalents at
beginning of period
|
8,043
|
10,929
|
|
Cash and cash equivalents at
end of period
|
$11,301
|
$8,043
|
Required:
1)
Please calculate the percentage increase or decrease in cash for the total line
of the operating, investing, and financing sections bolded above and explain
the major reasons for the increase or decrease for each of these sections.
2)
Please calculate the free cash flow for 2012 and explain the meaning of this
ratio. (Points
: 36)
Question
4 (TCO D) You are CFO of Goforit, Inc., a wholesale distribution company
specializing in emerging technologies. Your CEO is a brilliant marketer, but
relies on you to explain issues and choices in accounting and finance. She has
heard from other members of a CEO organization to which she belongs that a
company’s net income can vary widely depending on which accounting choices are
made from the “GAAP menu.”
Assuming
the goal is to maximize net income, choose
an accounting treatment from each of the following scenarios, and explain to
your CEO why the choice will produce the desired effect on reported Net Income
for the current year. Include in your answer the effect of the choice on both
the income statement and balance sheet.
Required:
a.
Goforit carries significant electronics inventory in a competitive environment
in which prices are actually falling. Which inventory valuation method would
you choose—LIFO, FIFO, or average cost? Assume that unit purchases exceed unit
sales.
b.
Goforit has a large investment in warehouse equipment, including conveyor
belts, forklifts, and automated packaging systems. Which depreciation method
would you choose: straight line (SL) or double declining balance (DDB)? (Points : 36)
Question
5. 5. (TCO F) Please review the following real-world ratios for Johnson
& Johnson and Pfizer for the year ended 2012 and address the 2 questions
below.
|
Ratio Name
|
Johnson & Johnson
|
Pfizer
|
|
Profit margin
|
16.1%
|
24.7%
|
|
Inventory turnover ratio
|
3.1
|
1.7
|
|
Average collection period
|
59.4 days
|
69.1 days
|
|
Cash debt coverage ratio
|
.27
|
.16
|
|
Debt to Total assets
|
46.6%
|
127.5%
|
Required:
1)
Please explain the meaning of each of the Pfizer ratios above.
2)
Please state which company performed better for each ratio. (Points : 36)
|
Ratio
Name
|
Johnson
& Johnson
|
Pfizer
|
|
|
|
|
|
Profit
margin
|
16.1%
|
24.7%
|
|
Inventory
turnover ratio
|
3.1
|
1.7
|
|
Average
collection period
|
59.4
days
|
69.1
days
|
|
Cash
debt coverage ratio
|
.27
|
.16
|
|
Debt
to Total assets
|
46.6%
|
127.5%
|
TUTORIAL
PREVIEW
1. Using the
information provided prepare a Balance Sheet. Separate the current assets from
non-current assets and provide a total for each. Also separate the current
liabilities from the non-current liabilities and provide a total for each.
Coca Cola Co.
Balance Sheet
|
Assets:
|
|||
|
Current Assets
|
|||
|
Cash
|
8,442
|
||
|
Receivables
|
4,812
|
||
|
Allowance for Doubtful
Accounts
|
-53
|
||
|
Net Receivables
|
4,759
|
