Anda di halaman 1dari 2

Universitas Islam Negeri Syarif Hidayatullah

Mid Term November 2014


Financial Statement Analysis
Take Home
1. Please prepare the balance sheet for Upin Inc. as of December 31, 2005. Use
the following information. All information pertains to fiscal 2005 unless otherwise stated.

2. One step in assessing the quality of earnings is to look for red flags. An
example of a red flag is a significant increase in accounts receivable without
commensurate growth in sales (that is, accounts receivable turnover
decreases). List five other red flags an astute analyst might look for. Also,
provide the reason for it being a red flag, and identify where the analyst might
find this information.
3. You are considering purchasing a company - assets, liabilities, warts and all.
You are aware that sometimes liabilities do not always show up on the balance
sheet. Give five examples of liabilities that may not be explicitly recognized
on the balance sheet, being sure to explain why they are liabilities.
4. Below is selected information taken from the balance sheet of LongLi Corp. as
of
12/31/06.

From the operating section of the statement of cash flows, you determine that
the depreciation expense for the year was $2,000 and loss on sales of assets
was $5,000. The investing section reveals that the company purchased
equipment
for
$14,000
and
sold
equipment
for
$2,000.

In the footnotes to the financial statements, the company states:


At the beginning of 2006, we determined that the useful life of our assets was
higher than originally believed. Accordingly we have increased the useful life
from 10 years to 15 years in 2006.
a. What was the gross book value of the equipment that was sold?
b. What was the net book value of the equipment that was sold?
c. With respect to the change in the useful lives of the assets:
i. What is the effect on 2005's financial statements?
ii. What is the effect on 2006's financial statements?
5.

Analysts maintain that two of the most important ratios are Inventory turnover
and Accounts receivable turnover.
a. You are analyzing ABC Company, a computer manufacturer. You notice
that inventory turnover this year is significantly lower than prior years.
Provide three explanations that would be consistent with this observation.
Explain whether these would be of concern to you and what the effect
might be on next period's financial results.
b. You are analyzing ABC Company, a computer manufacturer. You notice
that accounts receivable turnover this year is significantly lower than prior
years. Provide three explanations that would be consistent with this
observation. Explain whether these would be of concern to you.

---------- GOOD LUCK ----------