6. Wish records supplies using the FIFO method. Assuming that there has been an average rate of inflation of 2.5 percent in recent years, if Wish used LIFO would they have reported a higher or lower...

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6. Wish records supplies using the FIFO method. Assuming that there has been an average rate of inflation of 2.5 percent in recent years, if Wish used LIFO would they have reported a higher or lower increase in net assets than they did using FIFO? 7. In their notes, Wish indicates that it performs eight functions, listed below. Which of these eight qualify as program services, as opposed to support services? a. Wish granting b. Chapter support c. Program-related support d. Committee and board support e. Training and development f. Public information g. Fund-raising h. Management and general 8. Wish had a decrease in net assets for the year ending August 31, 2002. Would you say that a sizeable portion of that decrease resulted from stock market losses on Wish's investment portfo-lio? Explain. 9. Did the amount of land Wish owned increase or decrease during the year ending August 31, 2002? How do you know? 10. How much did permanently restricted net assets change during the year ending August 31, 2002? How much of the temporarily restricted net assets as of August 31, 2002 are restricted for the specific purpose of wish fulfillment? 11. Does Wish include any provision (i.e., liability) for lawsuits in its financial statements? How do you know? 12. What is the Program Services Expense Ratio for Wish for the year ending August 31, 2002? 13. What were fund-raising costs, as a percent of total revenue and other support, for the years ending August 31, 2002 and 2001?
Chapter 14 • Financial Statement Analysis 557
14. a. What percent did Program Service Expenses grow from 2001 to 2002? b. What percent did Support Service Expenses grow from 2001 to 2002? c. Which is growing at a faster rate, Program Service Expenses or Support Service Expenses? 15. Did Wish meet any donor restrictions during the year ending August 31, 2002, allowing restricted contributions to become unrestricted? If so, how much? 16. What is the unrestricted total margin for the year ending August 31, 2002? 17. From the combined statement of cash flows we see that the change in contributions receivable required a negative adjustment of $710,659 for the year ending August 31, 2002. How would you interpret this adjustment? Explain. 18. Cash used for investing activities was over $9 mil-lion. Should we be concerned with this cash decrease? Why or why not? 19. Looking at Wish's assets on the combined statements of financial position, would you consider investments to be short-term or long-term? Why? 20. Assuming that the obligation to international affil-iates is short-term, and deferred rent is long-term, what is the current ratio for 2002? 21. What is the ratio of total debt to equity for 2002? 22. Based on your calculation of total margin, current ratio, and debt to equity, in Questions 16, 20, and 21, and your overall review of the financial statements and notes of Wish, how would you categorize their financial position? Circle just one answer. a. Weak b. Neutral c. Strong 23. What is your overall assessment of the finances of Wish?
Case Study Problem
14-13. For the Major Medical Center financial statements on the following pages, complete the following: a. Read the auditor's opinion letter. Are any flags raised? b. Review the financial statements. Search for unusual items. What things catch your eye on the balance sheet, operating statement, and cash flow statement? c. Review the notes. Do any of them raise cause for concern?
d. Calculate the following ratios: common size, current, quick, days of cash on hand, receiv-ables turnover, average collection period, fixed asset turnover, total asset turnover, debt, debt to equity, times-interest-earned, operating margin, total margin, ROA, and RONA. e. What do you think of Major Medical Center's financial status?
Answered Same DayDec 21, 2021

Answer To: 6. Wish records supplies using the FIFO method. Assuming that there has been an average rate of...

Robert answered on Dec 21 2021
111 Votes
a. Read the auditor's opinion letter. Are any flags raised?

he audit report issued by I.N. SINGER AND OLD, CPAs confirms that
the financial accounts and statements of “Medical Centre” present fairly,

in all material respects, the financial position at December 31, 2012 and
2011. The results of its operations, changes in net assets, and cash flows for the
year ended confirms with GAAP.
In view of the above, there are no flags raised in the audit report.
b. Review the financial statements. Search for unusual items. What things catch
your eye on the balance sheet, operating statement, and cash flow statement?
he review of financial statements does not reveal any unusual item. The
statements of operations and statements of financial position gives the true
information about the Medical Centre’s financial health.
c. Review the notes. Do any of them raise cause for concern?

he notes attached to financial statements, explains the operations
and financial health of the centre. The area of concern is about the
following:
- Government grants – There is an advance government grant of
$1,587,000, at December 2012, which needs to be accounted for on
accrual basis.
- Professional Liability Insurance – There are claims against the
centre, and hope that auditors have fully evaluated their adjustments in
the books.
- Contingencies – The Medical Centre is defendant in various legal
cases. These cases need to properly checked, towards the probable
claims. If required, necessary provision in the books is needed.
d. Calculate the following ratios: common size, current, quick, days of cash on
hand, receivables turnover, average collection period, fixed asset turnover,
total asset turnover, debt, debt to equity, times-interest-earned, operating
margin, total margin, ROA, and RONA.
The ratios are computed as below:
Common size
BALANCE SHEET (COMMON SIZE)
2012 % 2011 %
ASSETS
Cash and Cash equivalent 8,065 4.11% 9,065 5.15%
Assets Limited to use - compensating
balance for letters of credit...
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