NO.PZ202308140300008002
问题如下：
Brian Jordan is interviewing for a junior equity analyst position at Orion Investment Advisors. As part of the interview process, Mary Benn, Orion’s Director of Research, provides Jordan with information about two hypothetical companies, Alpha and Beta, and asks him to comment on the companies’ financial statements and ratios. Both companies prepare their financial statements in accordance with International Financial Reporting Standards (IFRS) and are identical in all respects except for their accounting choices.
Jordan is told that, at the beginning of the current fiscal year, both companies purchased a major new computer system and began building new manufacturing plants for their own use. Alpha capitalized and Beta expensed the cost of the computer system; Alpha capitalized and Beta expensed the interest costs associated with the construction of the manufacturing plants.
Benn asks Jordan, “What was the impact of these decisions on each company’s current fiscal year financial statements and ratios?”
Jordan responds, “Alpha’s decision to capitalize the cost of its new computer system instead of expensing it results in lower net income, lower total assets, and higher cash flow from operating activities in the current fiscal year. Alpha’s decision to capitalize its interest costs instead of expensing them results in a lower fixed asset turnover ratio and a higher interest coverage ratio.”
Jordan is told that Alpha uses the straight-line depreciation method and Beta uses an accelerated depreciation method; both companies estimate the same useful lives for long-lived assets. Many companies in their industry use the units-of-production method.
Benn asks Jordan, “What are the financial statement implications of each depreciation method, and how do you determine a company’s need to reinvest in its productive capacity?”
Jordan replies, “All other things being equal, the straight-line depreciation method results in the least variability of net profit margin over time, while an accelerated depreciation method results in a declining trend in net profit margin over time. The units-of-production can result in a net profit margin trend that is quite variable. I use a three-step approach to estimate a company’s need to reinvest in its productive capacity. First, I estimate the average age of the assets by dividing net property, plant, and equipment by annual depreciation expense. Second, I estimate the average remaining useful life of the assets by dividing accumulated depreciation by depreciation expense. Third, I add the estimates of the average remaining useful life and the average age of the assets in order to determine the total useful life.”
Jordan is told that at the end of the current fiscal year, Alpha revalued a manufacturing plant; this increased its reported carrying amount by 15 percent. There was no previous downward revaluation of the plant. Beta recorded an impairment loss on a manufacturing plant; this reduced its carrying value by 10 percent.
Benn asks Jordan “What was the impact of these decisions on each company’s current fiscal year financial ratios?”
Jordan responds, “Beta’s impairment loss increases its debt to total assets and fixed asset turnover ratios, and lowers its cash flow from operating activities. Alpha’s revaluation increases its debt to capital and return on assets ratios, and reduces its return on equity.”
选项：
A.interest coverage ratio. B.fixed asset turnover ratio. C.interest coverage and fixed asset turnover ratios.解释：
B is correct. Alpha’s fixed asset turnover will be lower because the capitalized interest will appear on the balance sheet as part of the asset being constructed. Therefore, fixed assets will be higher and the fixed asset turnover ratio (total revenue/average net fixed assets) will be lower than if it had expensed these costs. Capitalized interest appears on the balance sheet as part of the asset being constructed instead of being reported as interest expense in the period incurred. However, the interest coverage ratio should be based on interest payments, not interest expense (earnings before interest and taxes/interest payments) and should be unchanged. To provide a true picture of a company’s interest coverage, the entire amount of interest expenditure, both the capitalized portion and the expensed portion, should be used in calculating interest coverage ratios.
int coverage ratio = EBIT / int paid
虽然资本化或费用化不会改变分母 int paid，但是费用化会使EBIT低于资本化的EBIT，那么资本化的int coverage ratio 应该更大啊
