NAME ( last)___BORDEN___________, (first)__SOLUTION________________
CIRCLE SECTION 001 002
Faculty of Management
Introduction to Financial Accounting
Lecturer: Karen Zajdman-Borden Date: February 20, 2009
Time: 9:00am 11:00am
This is a closed book exam.
You are allowed dictionaries.
Only non-text storing calculators are allowed
This exam consists of 4 questions and a total of 20 pages.
All Questions are to be answered on this examination paper. The space
allocated to answer must be respected. Elements of an answer outside
of the allocated space may be disregarded.
Show your calculations and explain your reasoning.
You must return this examination.
Question Marks available Grade
1 Question 1 (40marks 48 minutes)
Below you will find the financial statements of BCE inc. for the year ended
December 31, 2007. BCE is Canadas largest communication company. Bell,
the core business operation, provides the nations leading provider of wireline and
wireless communications services, internet access, data services and video
services to residential, business and wholesale customers.
2 Question 1 (40 marks 48 minutes)
3 Question 1 (40 marks 48 minutes)
You are a partner of the accounting firm of Borden & Wineman, you have been
asked by a client for your advice on whether or not he should invest in shares of
BCE. Inc.. You are to help him investigate further on the potential investment in
BCE inc. He has provided you with the ratios for the industry average in the chart
Current ratio 1.1 to 1
Return on assets 6 %
Return on Equity 12 %
Days to Collect A/R 30 days
Days Inventory 30 days
Debt /Equity I 60%
Times Interest Earned 3 times
Based on your analysis, comment on the financial health of BCE, highlight the
areas you are analyzing. Using the ratios that are mentioned in the chart above,
advise your client whether or not he should invest in BCE Inc. (32 marks)