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ex 24 89 forecasts recent proposals by investors and others have suggested that corp 4339724
Ex. 24-89—Forecasts.
Recent proposals by investors and others have suggested that corporations include financial forecasts in their annual reports. It further has been suggested that the CPA attest to those forecasts.
Instructions
(a)What arguments are advanced to support the publication of such forecasts?
(b)What arguments are advanced that oppose the publication of such forecasts?
Ex. 24-90—Financial statement analysis.
The condensed financial statements of Marks Company for the years 2010-2011 are presented below:
Marks Company
Comparative Balance Sheets
As of December 31, 2011 and 2010
2011 2010
Cash$ 420,000$ 120,000
Receivables (net)460,000300,000
Inventories380,000340,000
Plant and equipment1,700,0001,112,000
Accumulated depreciation (260,000) (192,000)
$2,700,000$1,680,000
Accounts payable$ 240,000$ 160,000
Dividends payable-0-40,000
Bonds payable400,000-0-
Common stock ($10 par)1,520,0001,200,000
Retained earnings 540,000 280,000
$2,700,000$1,680,000
Additional data:
Market value of stock at 12/31/11 is $80 per share.
Marks sold 32,000 shares of common stock at par on July 1, 2011.
Marks Company
Condensed Income Statement
For the Year Ended December 31, 2011
Sales$2,400,000
Cost of goods sold 1,600,000
Gross profit800,000
Administrative and selling expense 500,000
Net income$ 300,000
Instructions
Compute the following financial ratios by placing the proper amounts in the parentheses provided for numerators and denominators.
Ex. 24-90 (cont.)
a.Current ratio at 12/31/11( )
()
b.Acid test ratio at 12/31/11( )
()
c.Receivables turnover in 2011( )
()
d.Inventory turnover in 2011( )
()
e.Profit margin on sales in 2011( )
()
f.Earnings per share in 2011( )
()
g.Rate of return on common stock equity in 2011( )
()
h.Price earnings ratio at 12/31/11( )
()
i.Debt to total assets at 12/31/11( )
()
j.Book value per share at 12/31/11( )
()
