Controllership Homework
Answer all the questions.
Question 1 - Using the Wal-Mart, Inc. financial statements provided on Blackboard, calculate and interpret the current liabilities ratios (including cash cycle) we discussed in class.
Question 2 - Using the Wal-Mart, Inc. financial statements provided on Blackboard, calculate and interpret the long-term liabilities ratios we discussed in class.
Question 3 - You are the controller of a firm whose CEO believes that debt should always be used to finance long-term expenditures because interest is tax deductible. List and describe other benefits to debt financing. Also, list and describe risks to using debt.
Question 4 - Given the following information, calculate the firm's WACC:
Tax rate: 40%
Debt rate: 6%
Preferred stock dividend rate: 11% of $100 par value
Risk-free rate of return: 2%
Market rate of return: 13%
Stock beta: 1.2
Debt value: $15,000,000
P/S value: $5,000,000
C/S value: $30,000,000
Question 5 - List and describe three accounting issues related to acquisitions. What role does the controller play in addressing these issues?