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93
METRIC-BASED ANALYSES
MBA 3–1
Metric Effects
Transactions Liquidity
Quick Assets Profitability
Net Income – Accrual Basis
94
MBA 3–2
Metric Effects
Liquidity Profitability
Transactions Quick Assets Net Income – Accrual Basis
MBA 3–3
Metric Effects
Liquidity Profitability
Adjustments Quick Assets Net Income – Accrual Basis
95
MBA 3–4
Metric Effects
Liquidity
Quick Assets Profitability
Net Income – Accrual Basis Adjustments
MBA 3–5
4. GameStop is experiencing competitive pressures from the availability of in-
96
MBA 3–6
MBA 3–7
MBA 3–8
The quick assets, current liabilities, and quick ratios (from MBA 3-6 and MBA 3-7)
for Year 2 are summarized below.
American Eagle
The Gap Outfitters
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MBA 3–9
1. This item is intended to encourage students to think about different types of
2. Quick Ratio
3. Wal-Mart has a significantly lower quick ratio than does Alphabet. Wal-Mart’s
quick ratio is 0.24 compared to Alphabet’s 4.26. This difference can be partially
CASES
Case 3–1
Revenue is normally recorded when the services are provided or when the goods
are delivered (title passes) to the buyer. By waiting until after the services are
provided, the expenses of providing the services can be more accurately
(1) The receipt of revenue from customers in advance of a flight represents un-
(2) At the end of the airline’s accounting period, it would have adjustments re-
lated to items such as the following:
• Accrued wages for employees
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Case 3–2
1. There are several indications that adjustments were not recorded before the
financial statements were prepared, including the following:
2. Likely accounts requiring adjustment include the following:
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Case 3–3
1. The answers will vary among the student groups. The objective of this case is
to generate student interest and discussion of business emphases.
The advantages of the do-it-yourself emphasis are as follows:
The advantages of the do-it-for-me emphasis are as follows:
2. Examples of real-world businesses that have a do-it-yourself emphasis include
101
Case 3–4
3. Cigna’s accrual-based net income is closer to what would be reported as net
102
Case 3–5
1. Company A is FaceBook, Inc.
2. FaceBook has experienced rapid growth since its inception. Year 3 revenues
International Business Machines is a well-established company that has ex-
