Bankruptcy Risk Market Beta Earnings Management " The company used too small a discount rate to estimate the present value of future service costs on a defined pension plan" " the company used a rate in estimating accounts receivable defaults that was too large" " the company capitalized all research and development costs" " the US based company, an exporter, did not mark to market its Euro based accounts receivable in a year when the dollar was strengthening" " a company did not impair goodwill associated with an acquired division (competitive advantage loss) who's product became obsolete" " the company recognized all gift card sales as revenues in the year sold even though they didnt expire for 3 years" " the company an importer failed to hedge foreign exchange risk in a year when the dollar was strengthening"  

1. Bankruptcy Risk

Altmans Z score. Investment, Operating, and Financing Factors

2. Market Beta

Beta coefficient measures the covariability of
a firm's return with the returns of a
diversified portfolio of all shares traded on
the market.
Beta is a measure of the Systematic risk of
the firm

3. Earnings Management

-managers use positive reporting to impress stockholders

4. " The company used too small a discount rate to estimate the present value of future service costs on a defined pension plan"

Assets:No Effect
Liabilities: Overstated
Equity: Understated
Revenues: No Effect
Expenses: overstated
Net Income: understated

5. " the company used a rate in estimating accounts receivable defaults that was too large"

Assets: under
Liabilities: no
Equity: under
revenues: no
expenses over
net income under

6. " the company capitalized all research and development costs"

Assets: over
liabilties: no
equity: over
revenues: no
expenses:under
net income: over

7. " the US based company, an exporter, did not mark to market its Euro based accounts receivable in a year when the dollar was strengthening"

Asset: under
liabilities: no
equity: under
revenues: under
expenses: no
net income: under

8. " a company did not impair goodwill associated with an acquired division (competitive advantage loss) who's product became obsolete"

Asset: over
liabilities: no
equity: over
revenues: no
expenses: under
net income: over

9. " the company recognized all gift card sales as revenues in the year sold even though they didnt expire for 3 years"

Asset: no
liabilities: under
equity: over
revenues: over
expenses no
net income: over

10. " the company an importer failed to hedge foreign exchange risk in a year when the dollar was strengthening"

No to ALL