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NEW QUESTION: 1
Tobin Yoakam, CFA, is analyzing the financial performance of Konker Industries, a U.S. company which is publicly traded under the ticker KONK. Yoakam is particularly concerned about the quality of Konker's financial statements and its choices of accounting methodologies.
Below is a summary of Konker's financial statements prepared by Yoakam.
Konker has an operating lease for several of its large machining tools. The lease term expires in five years, and the annual lease payments are $2 million. The applicable interest rate on the operating lease is 9%.
Yoakam believes that the operating lease should be capitalized and treated as a finance lease. For purposes of adjusting the financial statements, Yoakam believes that the machining tools should be depreciated using straight-line depreciation with a salvage value of $3 million.
At the beginning of 20X8, Konker formed a qualified special purposes entity (QSPE) and sold a portion of its accounts receivables to the QSPE. The total amount of accounts receivables sold to the QSPE was
$13.5 million. Yoakam has noted in his research that the Financial Accounting Standards Board (FASB) is considering the elimination of qualified special purposes entities.
Konker has three major operating divisions: Konker Industrial, Konker Defense, and Konker Capital.
Yoakam has computed the EBIT margin for each division over the last three years as well as the ratio of the percentage of total capital expenditures to the percentage of total assets for each division.
Since Yoakam is concerned about the quality of Konker's earnings, he decides to analyze the accrual ratios using the balance sheet approach. The table below contains the last three years of accrual ratios for Konker and the industry average.
With respect to the balance sheet accrual ratio, which of the following, other things equal, would most likely lead to an increase in the ratio for a growing company?
A. A build-up of inventory.
B. A significant build-up of cash.
C. Extending the time the firm takes to pay its suppliers.
Answer: A
Explanation:
Explanation/Reference:
Explanation:
The balance sheet accrual ratio is the year-ovcr-year increase in net operating assets divided by average net operating assets. An increase in payables (a liability) will tend to decrease (reduce the change in) net operating assets, while an increase in inventory will tend to increase (increase the change in) net operating assets. Cash is not an operating asset and does not affect the ratio. (Study Session 7, LOS 26.e)
NEW QUESTION: 2
A company is building a new Symantec Endpoint Protection Manager and is setting the remediation actions for threats in the Virus and Spyware Protection policy. For security
risks, the first action is set to Repair and the second action is Quarantine. In this environment, Symantec Endpoint Protection 12.1 (SEP) has been deployed to a small group of clients for testing. Which condition would cause Auto-Protect to stop sending notifications and stop logging the event after three detections?
A. File System Auto Protect is malfunctioning on the SEP Client.
B. SEP services on the client are stopped.
C. A client continuously downloads the same security risk.
D. SEP is unable to read virus definitions.
Answer: C
NEW QUESTION: 3
Which statement about the usage of the debug command in a Cisco Unified Wireless Network is true?
A. Debug is available on the WLC serial console and web interface.
B. Debug is enabled until manual shut off.
C. Debug is a restricted command and is not available in the AP CLI.
D. Debug is a message logging severity 7.
Answer: D
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Feedbacks
Aalk - 2014-05-05 16:45:18
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