Which of the following items is consistent with earnings being informative about current performance and informing the analystthat the level of current earnings is sustainable?A The firm recognizes an unexpected gain.BThe firm recognizes a fair value gain on a financial asset as a result of a favorable move in interest rates.The firm recognizes additional expenses this period due to pre-opening costs associated with new stores.The firm experiences a large jump in sales and earnings as a result of successful research and development of newproducts.

Detailed explanation:When a company experiences a large jump in sales and earnings as a result of…

Answered: Which of the following items is…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The firm's self-supporting growth rate is influenced by the firm's capital intensity ratio. The more assets the firm requires to achieve a certain sales level, the lower its sustainable growth rate will be. Many experts argue that it is better for an organization to grow organically or by putting the money back into the business and not taking on debt. Consider your own organization that you currently work for or have worked for in the past. What is their approach to growing the business? How would you advise your company based on what you have learned this week in terms of self-supporting growth?
Assuming that the fiscal health of the Health Company is not optimal, explain how Return on Equity (ROE) can help justify paying dividends to shareholders and increasing the company's debts. If Liver Corporation has a lower price/earnings (P/E) ratio than another firm engaged in the same business, what reasons might explain these differences? Describe at least three problems encountered in the analysis of financial indicators. Explain how the DuPont equation can help in analyzing company results.
How have the competitive, global, technological, andeconomic environments helped KlipTech to become asuccessful small business? Which of the above environments might pose the most challenges in the next fewyears, and why?
The following quote appeared in an article entitled ‘Business and society in the coming decades’, which was available on the website of McKinsey & Company (accessed in October 2015). “There are compelling reasons companies should seize the initiative to drive social and business benefits. First, in an interconnected world facing unprecedented environmental and social challenges, society will demand it. Increasingly, a basic expectation among customers, governments, and communities will be that the companies they do business with provide a significant net positive return for society at large, not just for investors. This will be part of the implicit contract or license to operate”. Now a) Explain the above statement in the context of corporate social responsibility. b) Further, do you think such a statement would impact the perceived ‘legitimacy’ of companies? Explain.
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Which one of the following is violated when a firm has a policy of accelerating the recognition of depreciation expense during good years and decreasing depreciation expense during lean years? Relevance Matching Consistency Conservatism
You are in a committee meeting with the Head of Marketing and Head of Finance and are presenting a new marketing idea on how to boost K-C's sales: extending more credit sales to customers. Based on everything that we learned in PFA... focus on how this new approach will affect different line-items in financial statements (B/S, I/S, CFS) and the economics of the business. Please provide TWO points in favor of the idea and TWO arguments against allowing higher credit sales. Be as specific as you can, one sentence each and distinctive ideas, please – higher credit sales and higher revenue is basically the same.
Give your thoughts on the prompts below Firms use market capitalization when considering the market value added. We have seen that a number of things can affect capitalization values, so is this really the best method to use? A well known company recently had a 20-1 stock split that drew a lot of attention...how does this affect their market value added? Administrative errors can have a big impact in receivables turnover and payment delay ratios, so companies should include administrative and other indirect costs in the calculations of those ratios. Agree or Disagree and defend your answer.

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