What is the relationship between at the balance sheet and a personal financial statement? Discuss the advantages and disadvantages of budgeting. What factors contribute to a successful budget?

Exercise One

The final grades in immunology at State University are recorded in the accompanying table (ranged from a possible 0 to 80; Also See Problem 13):

           29   74 51    42   55   75   74   74   79   74    43   79   55   74   25   04   69   78   74   52

           76 74   04    64   76   79   69   77   79   24    75   78   74 69   65   80   72   79   62   79

           08   66   79    43   76   72   45   73   05   79    74   74   75   38   60   02   74   78   79   73

           63   45   74    64   63   75   62   43   67   72    62   62   54   03   45   79   62   64   75   72

     From the above data (80 cases):

1. (5 pts.) construct a frequency table, include relative frequency and cumulative relative frequency.
2. (8 pts.) Construct a histogram and frequency polygon.
3. (2 pts.) Why did you select the intervals you used for your table and graphs?
4. (2 pts.) Is the above distribution skewed? Explain your answer.

(3 pts.) Define skewed. Demonstrate what that would look like graphically. Why is skewed data problematic?

(3 pts.) What is the relation between kurtosis and variability of the data?

(2 pts.) What do measures of central tendency not tell us? Demonstrate this problem graphically.

(11 pts.) Find the mean, median, and mode for all 80 cases in problem #9. Imagine that you are a graduate teaching assistant for the course. What does you tell us the professor about the students' performance in immunology? Be specific. (Note: The instructor uses a grading scale of A=72-80; B=63-71; C=54-62; D=45-53; F=44 or less.)

Case 05-9 (Spend More) Renamed to Zillionaire On January 1, 2006, Zillionaire (the Company) issued to certain employees 1,000,000 equity-settled stock option awards. The employees will vest in differing numbers of options depending on the cumulative amount of net income the Company earns over the four fiscal years1 following the date of grant, and their continued employment with the Company. The exercise price of the awards is $31.50, which was the Company’s closing share price on the NASDAQ National Market on the date of grant. The Company accounts for the stock compensation awards based on the provisions of ASC 178. The fair value of each award, which was determined based on the Black-Scholes option pricing model was $8 at the date of grant.

In order to align the employees’ performance with the performance of the Company, the Board of Directors of the Company included the following provision in each of the awards:

Subject to Section 5.2(a) of the Zillionaire 2006 Stock Option Plan, the employee will vest in the awards in various percentages (refer to vesting schedule below) based on the amount of cumulative net income earned by the Company in the succeeding four-year period:

Performance Condition .........................................Percent Vested

Greater than $15 million, up to $20 million .................25%

Greater than $20 million, up to $23 million .................50%

Greater than $23 million, up to $27 million ...................75%

Greater than $27 million............................................... 100%

Based on its most current financial forecasts, the Company believes it will earn cumulative net income greater than $20 million, but not more than $23 million in the succeeding four-year period. As a result, the Company will base its estimate of compensation cost on 50 percent of the awards vesting (assuming no forfeitures).

Required:

• Issue 1: How much compensation cost would the Company have to record for the year ended December 31, 2006, in accordance with the principles of ASC 718-compensation-stock compensation? (Citation from ASC is required.)

The first fiscal year is the year in which the stock options have been granted.

Additional Facts:

Assume the same facts in Issue 1 except that the Zilliionaire Stock Option Plan allowed employees to pay for the exercise of the stock options using the stock they will receive upon exercise of their awards, or by tendering options with an intrinsic value equal to the exercise price (net-share settlement).

• Issue 2: How much compensation cost would the Company have to record for the year ended December 31, 2006, in accordance with the principles of ASC 718-compensation-stock compensation?

Additional Facts:

Assume the same facts in Issue 1 except that the Zillionaire 2006 Stock Option Plan permits settlement of the awards in cash instead of the Company’s own shares. The Company has concluded, and its auditor has agreed, that the awards are liability awards since they will be settled in cash. The fair value of each liability award at December 31, 2006, is $12.

The awards essentially would meet the definition of a cash-settled stock appreciation right (SAR). SARs are awards enabling employees to receive cash, stock, or a combination of cash and stock, in an amount equivalent to any excess of the market value of a stated number of shares of the employer’s stock over a stated price (i.e., exercise price). If the SAR is payable only in cash, or payable in cash at the election of the employee, accrued compensation should be recorded as a liability. Since the value of the SAR is based on the market appreciation of the Company’s stock, total compensation cost is unknown for a SAR until it is exercised.

Issue 3: How much compensation cost would the Company have to record for the year ended December 31, 2006, in accordance with the principles of ASC 718-compensation-stock compensation?

A common tactic to manage earnings is to “stuff the channels”, that is, to ship product prematurely to dealers and customers, thereby inflating sales for the period. A case in point is Bristol-Myers Squibb Co. (BMS), a multinational pharmaceutical company headquartered in New York. In August 2004, the SEC announced a $150 million penalty levied against BMS. This was part of an agreement to settle charges by the SEC that the company had engaged in a fraudulent scheme to inflate sales and earnings in order to meet analysts’ earnings forecasts.

The scheme involved recognition of revenue on pharmaceutical products shipped to its wholesalers in excess of the amounts demanded by them. These shipments amounted to $1.5 billion U.S. during 2001-2002. To persuade its wholesalers to accept this excess inventory, BMS agreed to cover their carrying costs, amounting to millions of dollars per quarter. In addition, BMS understated its accruals for rebates and discounts allowed to its large customers.

According to the SEC, the company also engaged in “cookie jar” accounting. That is, it created phony reserves for disposals of unneeded plants and divisions during high-profit quarters. These would be transferred to reduce operating expenses in low-profit quarters when BMS’s earnings still fell short of amounts needed to meet forecasts.

Required:

1. Give reasons why managers would resort to extreme earnings management tactics such as these.

[4 marks]

2. Evaluate the effectiveness of stuffing the channels as an earnings management device. Consider both from the standpoint of a single year and over a series of years.

[5 marks]

1. Evaluate the effectiveness of cookie jar accounting as an earnings management device.

Jeffery has just concluded a ratio analysis comparing its performance and position at 31 December 2006 with those at 31 December 2005. The directors are concerned to see that the current ratio and quick ratio show a considerable decline. You are required: (a) State and explain three possible causes for the decline in one or both of these ratios. (b) State and explain three ways in which the company could improve these ratios.

Describe, according to Tocqueville, what events/institutions have brought about "greater equality of conditions." Name at least three--how did they contribute to equality.

You are to examine the expected return and risk (standard deviation) of a two security portfolio. Your portfolio consists of the stock of Wolf Creek Company (WCC) and the stock of RHC Industrial. The two companies’ stocks have the following stock prices over the past 10 years, and they do not pay dividends.

WCC ($)                                   RHC ($)

2006                                                    45                                            18

2007                                                    49                                            19

2008                                                    44                                            21

2009                                                    58                                            25

2010                                                    55                                            27

2011                                                    46                                            25

2012                                                    68                                            33

2013                                                    75                                            34

2014                                                    79                                            39

2015                                                    84                                            34

2016                                                    98                                            42

2017                                                    115                                          43

2018                                                    112                                          49

2019                                                    135                                          48

(A – 13 points) calculate the annual holding period returns for each stock.

(B – 10 points ) calculate the average holding period return, the standard deviation of returns for each stock, and the correlation coefficient between the two stocks. You may use the statistical functions in Excel.

Please show all formulas so i can replicate in excel

Macroeconomic Conditions and Company Performance: RE: Walmart, Neighborhood Market

a) Describe the trends of Net Profit And Total Revenue over the past three years. (Generally Macro efects of increased net profit and revenue)

b) Analyze the relationship between Net Profit And Total Revenue (performance variables) and Unemployment, Inflation, and Interest Rates (macroeconomic variables) for the past three years. Include Any relating graphs or suggested graphing methods** 

c) Assess how the current monetary policy and fiscal policy in the United States may impact Walmanr't Neighborhood Markets financial performance in the short term (six months to one year). Justify your response.

14. Softswift, a software developer, is trying to determine if any of three potential subcontractors has better programmers in order to outsource a development project. The three subcontractors agreed to test five pro-grammers, using a standardized test provided by Softswift, as provided in the data in the Ch05Data.xlsx Excel workbook file for Prob05-14. Use the single factor ANOVA Excel tool to determine if there is a significant dif-ference between the scores of programmers at the three contractors at the 5 percent level.

The following data give the number of hours 55 students spent studying and their corresponding grades on their midterm exams.

Step 1 of 5: Calculate the sum of squared errors (SSE). Use the values b0=66.8000 and b1=2.0000 for the calculations. Round your answer to three decimal places.

Step 2 of 5: Calculate the estimated variance of errors, se2. Round your answer to three decimal places.

Step 3 of 5: Calculate the estimated variance of slope, s^2b1. Round your answer to three decimal places.

Step 4 of 5: Construct the 80% confidence interval for the slope. Round your answers to three decimal places.

Step 5 of 5: Construct the 98% confidence interval for the slope. Round your answers to three decimal places.