On November 14, Thorogood Enterprises announced that the public and acrimonious battle with its current CEO had been resolved.Under the terms of the deal, the CEO would step down from his position immediately. In exchange, he was given a generousseverance package. Given the information below, calculate the cumulative abnormal return (CAR) around this announcement. Assumethe company has an expected return equal to the market return.Note: A negative value should be indicated by a minus sign. Leave no cells blank - be certain to enter "O" wherever required. Donot round intermediate calculations. Round your answers to 1 decimal place.MarketReturn (%) Return (%)CompanyDateNovember 70.80.4November 80.60.4November 9-0.5-0.3November 10-0.6-0.5November 111.61.0November 14-0.42.1November 150.10.1November 160.91.0November 170.50.6November 18-0.50.0November 210.60.2Days fromAnnouncement-5-4-3-2-1012345Daily AbnormalReturnCumulative AbnormalReturnPrev1 of 2Next >

Abnormal returnThe difference between the asset's actual return and the expected return is called…

Answered: On November 14, Thorogood Enterprises…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Similar questions

Company X has not historically had a valuation allowance and has historically been very profitable. The Company is getting ready to prepare its year-end financial statement for December 31, 2021 and is thinking ahead about technical accounting issues they might encounter as they prepare their financial statements. The last two years have been rough, as COVID hit the company's bottom line in 2020 and early 2021. In the second half of 2021, inflation began to eat into the Company's bottom line as they were unable to raise prices to offset the increase in costs from their suppliers. In both 2020 and 2021 the Company will have a loss and these losses outweigh the 2019 income year, putting the company in a small three year cumulative loss position. Management thinks they may need to record a valuation allowance, but is looking for some guidance. They have hired you to assist them with this analysis. They have specifically asked for your guidance on what factors they should evaluate when…
JKW Corporation (a fictional company) has been selling plumbing supplies since 1981. In 2003, the company adopted the LIFO method of valuing its inventory. The company has grown steadily over the years and a layer has been added to its LIFO inventory in each of the years the method has been used. The company's inventory turnover ratio has averaged 4.5 in recent years. Management attempts to maintain a stable level of inventory at each store; the growth in inventory has been due to new stores being opened each year. In 20X1, the board of directors approved an incentive program that pays managers a sizable bonus in each year that certain performance targets are met. For 20X2, targeted earnings per share are $3.35. In an effort to track progress toward meeting this target, management produced the following income statement for the first nine months of 20X2. JKW Corporation Income Statement January 1-September 30, 20X2 Sales $13,284,000 Cost of goods sold Gross margin Operating expenses…
How to interpret Priceline's method of reporting total bookings as revenue versus their agency fee. Would a higher reported revenue incline it to be more favorable towards investing? Or, would it be a moot point since the bottom line shows the company losing $102 million?
Upon further investigation, you have found that the amount of account payables for Companies A and X at the start of the lyear is 20,000 and 30,000, respectively. Apart from that, the amount of credit purchase for Companies A and B is 250,000 and 280,000, respectively. Based on all this information, recommend on which company that gire lower risk to your company. The recommendation must be ustified by the following analysis: a) hiquidity analysis. b) Solvency analysis. c) Any other financial analysis that you think can help in making your decision. Table: Balance Sheet for Company A and Company B Assets Fixed Assets Other Non-Current Assets Account Receivables Inventory Cash 250,000 80,000 120,000 80,000 120,000 650,000 280,000 110,000 140,000 100,000 100,000 ТОTAL 730,000 Liabilities Саpital Long Term Debt Account Payables Other Current Liabilities ТОTAL 250,000 120,000 160,000 120,000 650,000 280,000 140,000 180,000 130,000 730,000
As ABC Corporation's fiscal year end date of December 31 approaches, management is worried that reported earnings will fall short of investors' expectations. Which of the following actions would increase ABC's earnings for the current year? O a. Convince customers to pay outstanding accounts receivable by offering a discount for payments received by December 31. O b. Postpone scheduled year-end maintenance on Acme's machinery until next year. O c. Collect more cash from customers for services that Acme will provide next year. O d. Delay until next year the payment of bonuses that employees have earned this year. 12:00 PM pe here to search 5/5/2021 DELL F1 F2 F3 F4 F5 F6 F7 F8 F9 F10 F11 F12 PrtScr Insert Delete @ # 2$ % & + Backspac 1 3 4 7 8 E R T. Y P. 一 A D F G
Anton Blair is the manager of a medium-sized company. A few years ago, Blair persuaded the owner to base a part of his compensation on the net income the company earns each year. Each December he estimates year-end financial figures in anticipation of the bonus he will receive. If the bonus is not as high as he would like, he offers several recommendations to the accountant for year-end adjustments. One of his favorite recommendations is for the controller to reduce the estimate of doubtful accounts. 1. What effect does lowering the estimate for doubtful accounts have on the income statement and balance sheet? 2. Do you believe Blair's recommendation to adjust the allowance for doubtful accounts is within his rights as a manager, or do you believe this action is an ethics violation? Justify your response. 3. What type of internal control(s) might be useful for this company in overseeing the manager's recommendations for accounting changes?
As ABC Corporation's fiscal year end date of December 31 approaches, management is worried that reported earnings will fall short of investors' expectations. Which of the following actions would increase ABC's earnings for the current year? O a. Convince customers to pay outstanding accounts receivable by offering a discount for payments received by December 31. O b. Postpone scheduled year-end maintenance on Acme's machinery until next year. O c. Collect more cash from customers for services that Acme will provide next year. O d. Delay until next year the payment of bonuses that employees have earned this year. 12:02 PM o search 5/5/2021 DELL F2 F3 F4 F5 F6 F7 F8 F9 F10 F11 F12 PrtScr Insert Delete # 2$ & + Backspace 2 4 7 9. %3D { W E R Y U 1
Which of the following is the most correct? A. In reference to the time value of money, the present value is always labeled as t=1 B. Negative MVAs indicate that a company's executives are managing the expenses well C. Nominal rates, or annual percentage rates, always equal the effective annual rate D. A strong ROE always indicates a strong year for a company E. Firms should generally try to minimize their days' sales outstanding in order to access their receivables at fast rates.
Anton Blair is the manager of a medium-size company. A few years ago, Blair persuaded the owner to base a part of his compensation on the net income the company earns each year. Each December he estimates year-end financial figures in anticipation of the bonus he will receive. If the bonus is not as high as he would like, he offers several recommendations to the accountant for year-end adjustments. One of his favorite recommendations is for the controller to reduce the estimate of doubtful accounts. Required 1. What effect does lowering the estimate for doubtful accounts have on the income statement and balance sheet? 2. Do you believe Blair’s recommendation to adjust the allowance for doubtful accounts is within his rights as manager, or do you believe this action is an ethics violation? Justify your response. 3. What type of internal control(s) might be useful for this company in overseeing the manager’s recommendations for accounting changes?
If in February, MBB DID NOT take up any opportunity that the suppliers offered for early settlement discount, how would its performance be impacted? 1. Gross profit for February will decrease 2. Other things being equal, net cash flow from operating activities will decrease a) Neither of the above is correct b) Only statement 1 is correct c) Both 1 and 2 are correct d) Only statement 2 is correct
(Earnings Management) Charlie Brown, controller for Kelly Corporation, is preparing the company’s income statement at year-end. He notes that the company lost a considerable sum on the sale of some equipment it had decided to replace. Since the company has sold equipment routinely in the past, Brown knows the losses cannot be reported as an unusual item. Healso does not want to highlight it as a material loss since he feels that will reflect poorly on him and the company. He reasons that if the company had recorded more depreciation during the assets’ lives, the losses would not be so great. Since depreciation is included among the company’s operating expenses, he wants to report the losses along with the company’s expenses, where he hopes it will not be noticed. Instructions(a) What are the ethical issues involved?(b) What should Brown do?
Read the scenario below and answer the questions that follow. A company is under pressure from influential shareholders to change its dividend policy. The company has always followed the residual dividend policy, but the influential shareholders feel that the company needs to change to a stable pay-out ratio policy. The company just reported earnings of R232m for the year ended 31 March 2024. The company is considering the following investment opportunities for the upcoming financial year: Investment opportunity A BUD C E Cost R72m R62m R110m R96m R48m Internal rate of return 14.28% 13.03% 15.67% 16.01% 13.79% The company's cost of capital is 13.5% and its target capital structure is represented by a debt-to-assets ratio of 40%. The company has 28m ordinary shares outstanding.

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS