Share
Explore BrainMass

Intermediate financial accounting

1. Operating income versus net income Refer to the selected financial data (five-year) financial summary) of the Intel Corporation annual report.

Required:
Compare the trend of the operating income data with the trend of net income data from 2004 through 2008. Which series of data is more meaningful? Explain your answer.

SELECTED FINANCIAL DATA
(In Millions, Except Per Share Amounts) 2008 2007 2006 2005 2004

Net revenue ............................................. $ 37,586 $ 38,334 $ 35,38 2 $ 38,826 $ 34,209
Gross margin............................................. $ 20,844 $ 19,904 $ 18,218 $ 23,049 $ 19,746
Research and development...................... $ 5,722 $ 5,755 $ 5,873 $ 5,145 $ 4,778
Operating income....................................... $ 8,954 $ 8,216 $ 5,652 $ 12,090 $ 10,130
Net income.................................................. $ 5,292 $ 6,976 $ 5,044 $ 8,664 $ 7,516
Earnings per common share
Basic ..................................................... $ 0.93 $ 1.20 $ 0.87 $1.42 $1.17
Diluted................................................... $ 0.92 $ 1.18 $ 0.86 $1.40 $1.16
Weighted average diluted shares outstanding 5,748 5,936 5,880 6,178 6,494
Dividends per share
Declared.................................................. $ 0.5475 $ 0.45 $ 0.40 $ 0.32 $ 0.16
Paid ......................................................... $ 0.5475 $ 0.45 $ 0,40 $ 0.32 $ 0.16

(Dollars in Millions) Dec.27, 2008 Dec.29, 2007 Dec.30, 2006 Dec.31, 2005 Dec.25, 2004

Property, plant &equipment, net $ 17,544 $16,918 $17,602 $ 17,111 $ 15,768
Total assets................................ $ 50,715 $ 55,651 $ 48,368 $ 48,314 $ 48,143
Long-term debt......................... $ 1,886 $ 1,980 $ 1,848 $2,106 $ 703
Stockholders' equity ................. $ 39,088 $ 42,762 $ 36,752 $ 36,182 $ 38,579
Additions to property, plant &equipment $5,197 $ 5,000 $ 5,860 $ 5,871 $ 3,843
Employees (in thousands).......... 83.9 86.3 94.1 99.9 85.0
__________________________________

The ratio earnings to fixed charges for each of the five years in the period ended December 27, 2008 was as follows:
2008 2007 2006 2005 2004
51x 72x 50x 169x 107x

Fixed charges consist of interest expense, capitalized interest, and the estimated interest component of rent expense.

2. Use gross profit ratio to calculate inventory loss On April 8, 2010, a flood destroyed the warehouse of Stuco Distributing Co. From the waterlogged records of the company, management was able to determine that the firm's gross profit ratio had averaged 35% for the past several years and that the inventory at the beginning of the year was $209,600. It also was determined that during the year until the date of the flood, sales had totaled $427,200 and purchases totaled $242,920.
Required:
Calculate the amount of inventory loss from the flood.

3. Using cash flow information- The Coca Cola Company Following are comparative statements of cash flows, as reported by The Coca-Cola Company in its 2008 annual report:
Required:
a. Briefly review the consolidated statements of cash flow, and then provide an overall evaluation of the "big picture" during the three years presented for Coca-Cola. Have operating cash flows been sufficient to meet investing needs and to pay dividends?
b. Were there significant changes to any of the specific line-item details that you think would require further explanation or analysis?

THE COCA-COLA COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Year Ended December 31 (in Millions)
2008 2007 2006
operating Activities (details omitted)
Net cash provided by operating activities .................................... $ 7,571 $7,150 $5,957
Investing Activities
Acquisitions and investments, principally beverage
and bottling companies and trade marks.................................... (759) (5,653) (901)
Purchases of other investments ...................................................... (240) (99) (82)
Proceeds from disposals of bottling companies
and other investments.................................................................. 479 448 640
Purchases of property, plant, and equipment................................. (1,968) (1,648) (1,407)
Proceeds from disposals of property, plants, and equipments....... 129 239 112
Other investing activities................................................................... (4) (6) (62)
Net Cash used in investing activities............................................ (2,363 (6,719) (1,700)

Financing activities
Issuances of debt ................................................................................ 4,337 9,979 617
Payment of debt ................................................................................... (4,308) (5,638) (2,021)
Issuance of stock.................................................................................. 586 1,619 148
Purchases of stock for treasury ........................................................... (1,079) (1,838) (2,416)
Dividends.............................................................................................. (3,521) (3,149) (2,911)
Net cash provided by (used in) financing activities ..................... (3,985) 973 $(6,583)

Effect on Exchange Rate Changes On
Cash and Cash Equivalents................................................................ (615) 249 65

Cash and Cash Equivalents
Net increase (decrease) during the year ............................................. 608 1,653 (2,261)
Balance at beginning of the year ......................................................... 4,093 2,440 4,701
Balance and Cash Equivalents......................................................... $4,701 $4,093 $ 2,440

4. Calculate EPS and dividends per share before stock split For several years Orbon, Inc., has followed a policy of paying a cash dividend of $1.20 per share and having a 10% stock dividend. In the 2011 annual report, Orbon reported restated earnings per share for 2009 of $2.70.
Required:
a. Calculate the originally reported earnings per share for 2009. Round your answer to two decimal places.
b. Calculate the restated cash dividend per share for 2009 reported I the 2011 annual report for comparative purpose. Round your answer to two decimal places.

Attachments

Solution Summary

The solution explains some questions relating to EPS, inventory loss and cash flow analysis

$2.19