01/19/15 Flashcards
THE NUMBER ONE CONCERN AN AUDITOR HAS WITH EDI TRANSACTIONS IS
THE IMPROPER DISTRIBUTION OF EDI TRANSACTIONS TO UNINTENDED RECEPIENTS.
A WEIGHTED AVERAGE OF PROBABILITIES USING WEIGHTS IS THE….
EXPECTED VALUE/AVERAGE
MINIMIZE DISASTER DISRUPTIONS
PROVIDE INSURANCE TO COMPENSATE FOR BUSINESS INTERRUPTIONS AND REPLACE EQUIPMENT
THESE ARE COMPONENTS OF A DISASTER RECOVERY PLAN.
MERGER AN ACQUISITION STRATEGIES PROVIDE?
VERTICAL INTEGRATION THAT RESULTS IN LOWER COSTS
THE NUMBER OF UNITS TO PRODUCE A PARTICULAR PROFIT = FC+NI/PROFIT-VC
THE NUMBER OF UNITS TO PRODUCE A PARTICULAR PROFIT = FC+NI/PROFIT-VC
COST OF GOODS SOLD/AVERAGE INVENTORY=
INVENTORY TURN OVER
360/INVENTORY TURN OVER=
NUMBER OF DAYS SALES IN INVENTORY
A COEFECIENT OF DETERMINATION CLOSEST TO 1 EXPLAINS…..
THE CLOSEST FIT
Accounting rate of return is a nondiscounted method of computing the rate of return of an investment. It is based on accrual accounting and has the measurement of profitability as the goal. The limitation of this method, however, is that it ignores the time value of money.
Accounting rate of return = (Net cash inflow - Depreciation) ÷ Investment or net income ÷ investment.
There is some controversy about the denominator—the most commonly used amount is the initial cost of the investment, but some advocate the use of an average investment.
ACCOUNTING R. OF RETURN
Discounted cash flow is forecasted future cash flows, discounted (at an appropriate rate) to reflect present value.
Discounted cash flow is forecasted future cash flows, discounted (at an appropriate rate) to reflect present value.
Internal rate of return (IRR) is the method used to determine the rate of return that causes the present value of the net cash flows to equal the initial investment. It is a way of evaluating an investment as the present value of the net future cash flows from the investment, expressed as:
Investment = PV (i,t)
…where i (the rate at which the cash flows are discounted) is unknown.
An acceptable or beneficial proposal is one for which the IRR is equal to or greater than the firm’s predetermined minimum acceptable rate of return on the investment.
Internal rate of return
Net present value is a measure of the projected return on investment that accounts for the time value of money. It is the difference between the present value of future cash inflows from an investment and the costs related to the investment, including the investment’s initial cost. Often, initial investment is at current dollar levels.
Net present value is a measure of the projected return on investment that accounts for the time value of money. It is the difference between the present value of future cash inflows from an investment and the costs related to the investment, including the investment’s initial cost. Often, initial investment is at current dollar levels.
the times interest earned ratio is net income before tax+interest expense/interest expense
times interest earned ratio….
The appropriate technique to analyze the alternatives by using expected inputs and then altering them before a decision is made is
Sensitivity analysis
the Economic Value added is the residual income that remains after the cost of capital including equity capital has been deducted
economic value added
