Answer: False
Explanation:
Classification shifting is a method used whereby the core earnings are manipulated by misclassifying the items in the income statement.
One way that managers make use of classification shifting is by reporting the operating expenses for the business as nonoperating expenses. This is usually done in order to inflate the operating income.
The statement in the question is false as classification shifting by managers doesn't lead to under-reporting of total expenses and over-statement of bottom-line net income rather it lead to over reporting.
Answer:
B) Total assets increased by $200.
Explanation:
If during Year 2, Chico Company earned $1,950 of cash revenue, paid $1,600 of cash expenses, and paid a $150 cash dividend to its owners. Based on this information alone:
Then it is correct that there was a net income of $350 before the payment of dividend which is gotten by 1,950 - 1,600. Cash from operating activities will also be the same amount of $350.
However it will not be correct to state that assets increased by $200 as there is no such indication.
Answer:
Share price : $ 56.23
Explanation:
CAPM
risk free = 0.05
market rate = 0.11
premium market = (market rate - risk free) 0.06
beta(non diversifiable risk) = 1.64
Ke 0.14840
Now, we solve for the present value of the future dividends:
year dividend* present value**
1 2.91 2.53
2 3.31 2.51
3 3.78 2.49
4 4.31 2.48
4 80.38 46.22
TOTAL 56.23
*Dividends will be calculate as the previous year dividends tiems the grow rate
during the first four year is 14%
then, we calcualte the present value of all the future dividends growing at 9% using the dividend grow model:
(4.31 x 1.09) / (0.1484 - 0.09) = 80.38
Then we discount eahc using the present value of a lump sum:
We discount using the CAPM COst of Capital of 14.84%
last we add them all to get the share price: $ 56.23
Answer:
2. indicates the quantities of the good that people will buy at various prices.
Explanation:
Demand refers to an individual's willingness to buy a product in consideration for a price.
The law of demand states that more of a good is demanded at a lesser price and vice versa. When price of a good changes with other factors affecting demand remaining constant, the quantity demanded for that good changes which is termed as movement along the demand curve.
A demand schedule for a good represents the tabular relationship which shows the quantity demanded by customers at different price levels.
A demand schedule when represented graphically creates a downward sloping demand curve depicting inverse relationship between price of a good and it's quantity demanded.
Answer:
$30
Explanation:
The cash flows from financing activities will include:
+ issuance of preferred stock
+ issuance of bonds
- paid off long-term bank borrowings
- repurchase of common stock
- dividends paid
cash flows from financial activities = $35 + $50 - $15 - $30 - $10 = $30
The $45 resulting from the debt retired through issuance of common stock was not a financial operation, therefore it is not included in the cash flow form financial activities.
