ACCT 504- Below you will find selected information (in millions) from Coca-Cola Co.’s 2012 Annual Report.

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1. (TCO A) Below you will find selected information (in millions) from Coca-Cola Co.’s 2012 Annual Report.


Income Taxes Payable

$471

Short-term Investments and Marketable Securities

8,109

Cash

8,442

Other non-current Liabilities

10,449

Common Stock

1,760

Receivables

4,812

Other Current Assets

2,973

Long-term Investments

10,448

Other Non-current Assets

3,585

Property, Plant and Equipment

23,486

Trademarks

6,527

Other Intangible Assets

20,810

Allowance for Doubtful Accounts

53

Accumulated Depreciation

9,010

Accounts Payable

8,680

Short Term Notes Payable

17,874

Prepaid Expenses

2,781

Other Current Liabilities

796

Long-Term Liabilities

14,736

Paid-in-Capital in Excess of Par Value

11,379

Retained Earnings

55,038

Inventories

3,264

Treasury Stock

35,009

 

Other information taken from the Annual Report.


Sales Revenue for 2012

$48,017

Cost of Goods Sold for 2012

19,053

Net Income for 2012

9,019

Inventory Balance on 12/31/11

3,092

Net Accounts Receivable Balance on 12/31/11

4,920

Total Assets on 12/31/11

79,974

Equity Balance on 12/31/11

31,921

 


Required: 1: Using the information provided prepare a Balance Sheet. Separate the current assets from non-current assets and provide a total for each. Also, separate the current liabilities from the non-current liabilities and provide a total for each.
2: Using the Balance Sheet from your answer above, calculate the Current Ratio and Return on common stockholders’ equity. (Points : 36)









Question 2. 2. (TCO B) The following selected data was retrieved from the Walmart, Inc. financial statements for the year ending January 31, 2013.
















































Accounts Payable


$38,080


Accounts Receivable


6,768


Cash


7,781


Common Stock


3,952


Cost of Goods Sold


352,488


Income Tax Expense


7,981


Interest Expense


2,064


Membership Revenues


3,048


Net Sales


466,114


Operating, Selling and Administrative Expenses


88,873


Retained Earnings


72,978




Required: 1: Using the information provided above, prepare a multiple-step income statement.
2: Calculate the Profit Margin, and Gross profit rate for the company. Be sure to provide the formula you are using, show your calculations, and discuss your findings and results.
(Points : 36)




Question 3. 3. 45. (TCO C) Please review the following real-world Hewlett Packard Statement of Cash flows and address the two questions below.

Cash flow from operating activities

In millions

In millions

 

For the year ended 2012

For the year ended 2011

Net (loss) earnings

$(12,650)

$7,074

Depreciation and amortization

5,095

4,984

Impairment of goodwill and purchased intangible assets

18,035

885

Stock-based compensation expense

635

685

Provision for doubtful accounts

142

81

Provision for inventory

277

217

Restructuring charges

2,266

645

Deferred taxes on earnings

(711)

166

Excess tax benefit from stock-based competition

(12)

(163)

Other, net

265

(46)

Accounts and financing receivables

1,269

(227)

Inventory

890

(1,252)

Accounts payable

(1,414)

275

Taxes on earnings

(320)

610

Restructuring

(840)

(1,002)

Other assets and liabilities

(2,356)

(293)

Net cash provided by operating activities

10,571

12,639

Cash flows from investing activities:

 

 

Investment in property, plant, and equipment

(3,706)

(4,539)

Proceeds from sale of property, plant, and equipment

617

999

Purchases of available-for-sale securities and other investments

(972)

(96)

Maturities and sales of available-for-sale securities and other investment

662

68

Payments in connection with business acquisitions, net of cash acquired

(141)

(10,480)

Proceeds from business divestiture, net

87

89

Net cash used in investing activities

(3,453)

(13,959)

Cash flow from financing activities:

 

 

(Payments) issuance of commercial paper and notes payable, net

(2,775)

(1,270)

Issuance of debt

5,154

11,942

Payment of debt

(4,333)

(2,336)

Issuance of common stock under employee stock plans

716

896

Repurchase of common stock

(1,619)

(10,117)

Excess tax benefit from stock-based compensation

12

163

Cash dividends paid

(1,015)

(844)

Net cash used in financing activities

(3,860)

(1,566)

Increase (decrease) in cash and cash equivalents

3,258

(2,886)

Cash and cash equivalents at beginning of period

8,043

10,929

Cash and cash equivalents at end of period

$11,301

$8,043

Required: 1: Please calculate the percentage increase or decrease in cash for the total line of the operating, investing, and financing sections bolded above and explain the major reasons for the increase or decrease for each of these sections. 2: Please calculate the free cash flow for 2012 and explain the meaning of this ratio. (Points : 36)









Question 4. 4. (TCO D) You are CFO of Goforit, Inc., a wholesale distribution company specializing in emerging technologies. Your CEO is a brilliant marketer, but relies on you to explain issues and choices in accounting and finance. She has heard from other members of a CEO organization to which she belongs that a company’s net income can vary widely depending on which accounting choices are made from the “GAAP menu.”

Assuming the goal is to maximize net income, choose an accounting treatment from each of the following scenarios, and explain to your CEO why the choice will produce the desired effect on reported net income for the current year. Include in your answer the effect of the choice on both the income statement and balance sheet.

Required: 1: Goforit carries significant electronics inventory in a competitive environment in which prices are actually falling. Which inventory valuation method would you choose—LIFO, FIFO, or average cost? Assume that unit purchases exceed unit sales.
2: Goforit has a large investment in warehouse equipment, including conveyor belts, forklifts, and automated packaging systems. Which depreciation method would you choose: straight line (SL) or double declining balance (DDB)? (Points : 36)

 


Question 5. 5. (TCO F) Please review the following real-world ratios for Johnson & Johnson and Pfizer for the year ended 2012 and address the 2 questions below.


Ratio Name


Johnson & Johnson


Pfizer


 


 


 


Profit margin


16.1%


24.7%


Inventory turnover ratio


3.1


1.7


Average collection period


59.4 days


69.1 days


Cash debt coverage ratio


.27


.16


Debt to Total assets


46.6%


127.5%



Required: 1: Please explain the meaning of each of the Pfizer ratios above. 2: Please state which company performed better for each ratio. (Points : 36)

 



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