Part 1,
1, Name of corporation
2,Web link where the annual report/financial statements may be accessed:
3,Financial Statement Year-end Date:
4,Exchange where common stock is traded:
5, Most recent price of common stock:
(See Wall Street Journal or an on-line portal (example: GOOGLE / YAHOO))
6,Latest annual dividend on common stock:
7, Why did you choose this particular company?
8,Read the business summaries and management’s discussion and analysis. Summarize the remarks (e.g. poor operating results / reasons, expansions / sale of divisions).
9, What kind of products and / or services does the corporation provide?
10, Which certified public accounting firm examined the financial statements? Did the auditor’s report indicate any problems or was the report “unqualified”?
Part 2,
COMPUTE THE TEN ITEMS INDICATED BELOW. WHERE DATA IS INSUFFICIENT INDICATE WHAT IS LACKING. SHOW ALL CALCULATIONS AND FORMULA USED. ALL CALCULATIONS SHOULD BE ROUNDED TO THE MOST SIGNIFICANT DIGITS:
1} Working Capital (Hint: Current Assets minus Current Liabilities)
2} Current Ratio
3} Quick Ratio
4} Gross Profit (Margin) Ratio
5} Profit Margin Ratio
6} Return on Equity
7} Earnings Per Share
8} Debt To Equity Ratio
9} Dividend Yield
10} Price / Earnings Ratio (use current price)
part 3
Part 3
Below are three ethics scenarios. Please choose TWO and write a complete response based on your own research.
ETHICS QUESTION #1
Assume that you are a cashier and your manager requires that you immediately enter each sale when it occurs. Recently, lunch hour traffic has increased and the assistant manager asks you to avoid delays by taking customers’ cash and making change without entering sales. The assistant manager says she will add up cash and enter sales after lunch. She says that, in this way, customers will be happy and the register record will always match the cash amount when the manager arrives at three o’clock. The advantage to the process proposed by the assistant manager includes improved customer service, fewer delays, and less work for you. The disadvantage is that the assistant manager could steal cash by simply recording less sales than the cash received and then pocketing the excess cash. You decide to reject her suggestion without the manager’s approval and to confront her on the ethics of her suggestion.
Required:
Propose and evaluate two other courses of action you might consider and explain why.
ETHICS QUESTION #2
Harriet Knox, Ralph Patton, and Marcia Diamond work for a family physician, Dr. Gwen Conrad, who is in private practice. Dr. Conrad is knowledgeable about office management practices and has segregated the cash receipt duties as follows. Knox opens the mail and prepares a triplicate list of money received. She sends one copy of the list to Patton, the cashier, who deposits the receipts daily in the bank. Diamond, the record keeper, receives a copy of the list and posts payments to patients’ accounts. About once a month the office clerks have an expensive lunch they pay for as follows. First, Patton endorses a patient’s check in Dr. Conrad’s name and cashes it at the bank. Knox then destroys the remittance advice accompanying the check. Finally, Diamond posts payment to the customer’s account as a miscellaneous credit. The three justify their actions by their relatively low pay and knowledge that Dr. Conrad will likely never miss the money.
Required:
Who is the best person in Dr. Conrad’s office to reconcile the bank statement?
Would a bank reconciliation uncover this office fraud?
What are some procedures to detect this type of fraud?
Suggest additional internal controls that Dr. Conrad could implement.
ETHICS QUESTION #3
Anton Blair is the manager of a medium-size company. A few years ago, Blair persuaded the owner to base a part of his compensation on the net income the company earns each year. Each December he estimates year-end financial figures in anticipation of the bonus he will receive. If the bonus is not as high as he would like, he offers several recommendations to the accountant for year-end adjustments. One of his favorite recommendations is for the controller to reduce the estimate of doubtful accounts.
Required:
What effect does lowering the estimate for doubtful accounts have on the income statement and balance sheet?
Do you believe Blair’s recommendation to adjust the allowance for doubtful accounts is within his rights as manager, or do you believe this action is an ethics violation? Justify your response.
What type of internal control(s) might be useful for this company in overseeing the manager’s recommendations for accounting changes?
