final exam

BA270, FALL 2003
The final will be a case exam based on a manufacturing company, much like the second half of the
midterm. The old finals are generally representative with a couple of exceptions. First, as I
mentioned in class, we did not cover the residual income valuation approach this year, but did in
prior years—it will not be on the exam. Second, last year’s exam did not cover intercompany
investments, but 2001 and (especially) 2000 did. Coverage of a topic on the exam will be
approximately proportional to the time spent in class (with the exception of tax, which will have at
most one very easy brief question).
Valuation and Evaluation
Be able to compute and interpret EVA and the first few terms of a valuation equation using
the discounted dividend and free cash flows approaches. If you understood the material
covered in class, the Coke pro forma and the handout “Takeaways on Valuation and
Evaluation” you should be in good shape. The valuation sections of all previous exams are
generally representative (excluding the residual income approach).
Accounts Receivable and Asset Impairments
Understand the allowance method of accounting for bad debts. Be able to record the journal
entries from a set of transactions or from financial statement disclosures. Be able to solve
accounts receivable and allowance t-accounts given information from the balance sheet and
income statement. Understand the link to inventory obsolescence, asset impairments and
warrantees. If you understood the example worked in class, problem 6.14, the Warnaco case
and the inventory obsolescence piece of Callaway golf, you should be in good shape. The
receivables sections of prior exams are very representative.
Manufacturing and Absorption Costing
Understand the basics of manufacturing accounting relative to merchandising and be able to
trace costs through the various inventory accounts to cost of goods sold like we did in class.
If you understood the Callaway Golf case and problem 7.33, you are in good shape.
Manufacturing from previous years’ exams is very representative.
Having showed up for class is enough (really!).
Intercompany investments
Understand the basic distinction in accounting based on percentage ownership. Be able to
follow the stuff we did in class on marketable securities, equity method investments and
consolidation. If you could work problem 11.22, you should be in good shape. Coverage of
these topics in class was fairly cursory, as will be the coverage on the exam.
Exam topics will be limited to material covered in class, probably employee stock options
and treasury stock but will not include topics we don’t get to. Again, coverage on the exam
will be brief.