Why do you think the direct method for operating cash flows is used so rarely? Should the standard setters force companies to use the direct method? Why or why not? Do you believe investors calculate their own direct method cash flows for firms that use the indirect method?
Can you describe why the managers may have wanted to overproduce vehicle inventory? Can you describe some of the negative consequences of doing so? Can you suggest an incentive system that would lead to a more optimal outcome? Should cash flows be “more important” than earnings in this context?
What is your opinion about Costco’s borrowing the cash to pay shareholders the dividend before taxes on dividends increase? What are some of the ratios that will be affected by this change in capitalization?
If interest rates are negative, then future values of deposits or investments are lower than present values. If this is a result, why not just hold cash?
Why are firms hoarding cash? If you were CFO, would you be doing the same? What would be factors in your decision?
Can you map out a plan using accruals that will fool the markets? If you think you can, are the markets “efficient”? And, if you implement the plan, would you have committed fraud?
Should the FASB have pushed for more qualitative disclosures about going concern? What would be the downside?
