1. While a firm’s sales and net income have been steady during the last three years, the firm has experienced a decrease
Posted: Wed Jul 06, 2022 6:40 pm
1. While a firm’s sales and net income have been steady duringthe last three years, the firm has experienced a decrease in itsaccounts receivable and inventory turnovers and an increase in itsaccounts payable turnover. What is the likely direction of changein cash flow from operations? How would your answer be different ifsales and net income were increasing?
2. The concept of accounting quality has several dimensions, buttwo characteristics often dominate: the accounting informationshould be a fair representation of performance for the reportingperiod and it should provide relevant information to forecastexpected future earnings. Provide a specific example of pooraccounting quality that would hinder the forecasting of expectedfuture earnings.
3. Identify and explain conditions that would lead an analyst toexpect that management might attempt to manage earnings upward andconditions that would lead to expectations of managing earningsdownward.
2. The concept of accounting quality has several dimensions, buttwo characteristics often dominate: the accounting informationshould be a fair representation of performance for the reportingperiod and it should provide relevant information to forecastexpected future earnings. Provide a specific example of pooraccounting quality that would hinder the forecasting of expectedfuture earnings.
3. Identify and explain conditions that would lead an analyst toexpect that management might attempt to manage earnings upward andconditions that would lead to expectations of managing earningsdownward.