MS In Accounting & Finance

Enterprise Value [LO1] A fi rm’s enterprise value is equal to the market value of its debt and equity, less the fi rm’s holdings of cash and cash equivalents. This fi gure is particularly relevant to potential purchasers of the fi rm. Why?

Earnings Management [LO2] Companies often try to keep accounting earnings growing at a relatively steady pace, thereby avoiding large swings in earnings from period to period. They also try to meet earnings targets. To do so, they use a variety of tactics. The simplest way is to control the timing of accounting revenues and costs, which all fi rms can do to at least some extent. For example, if earnings are looking too low this quarter, then some accounting costs can be deferred until next quart...

Building a Balance Sheet [LO1] Penguin Pucks, Inc., has current assets of $5,100, net fi xed assets of $23,800, current liabilities of $4,300, and long-term debt of $7,400. What is the value of the shareholders’ equity account for this fi rm? How much is net working capital?

Building an Income Statement [LO1] Papa Roach Exterminators, Inc., has sales of $586,000, costs of $247,000, depreciation expense of $43,000, interest expense of $32,000, and a tax rate of 35 percent. What is the net income for this fi rm?

Dividends and Retained Earnings [LO1] Suppose the fi rm in Problem 2 paid out $73,000 in cash dividends. What is the addition to retained earnings?

Per-Share Earnings and Dividends [LO1] Suppose the fi rm in Problem 3 had 85,000 shares of common stock outstanding. What is the earnings per share, or EPS, fi gure? What is the dividends per share fi gure?

Market Values and Book Values [LO1] Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $7 million. The machinery can be sold to the Romulans today for $4.9 million. Klingon’s current balance sheet shows net fi xed assets of $3.7 million, current liabilities of $1.1 million, and net working capital of $380,000. If all the current assets were liquidated today, the company would receive $1.6 million cash. What is the book value of Klingon’s assets today? What is the mar...

Calculating Taxes [LO3] The Renata Co. had $236,000 in 2009 taxable income. Using the rates from Table 2.3 in the chapter, calculate the company’s 2009 income taxes.

Tax Rates [LO3] In Problem 6, what is the average tax rate? What is the marginal tax rate?

Calculating Net Capital Spending [LO4] Earnhardt Driving School’s 2008 balance sheet showed net fi xed assets of $3.4 million, and the 2009 balance sheet showed net fi xed assets of $4.2 million. The company’s 2009 income statement showed a depreciation expense of $385,000. What was net capital spending for 2009?