I need help with the following M8D1 Decision Case AOL Time Warner, Inc Prior to discussion activity you should Schoenebeck and Holtzman (2013) Interpreting and Analyzing Financial Statements (6th ed ) Chapter 8 Comprehensive Review Review Module 8 PowerPoint Watch Video How is Liquidity Measured 31 27 mins Discussion Background Suppose AOL Time Warner, Inc is having a bad year in 2011, as the company has incurred a $4 9 billion net loss The loss has pushed most of the return measures into the negative column and the current ratio dropped below 1 0 The companys debt ratio is still only 0 27 Assume top management of AOL Time Warner is pondering ways to improve the companys ratios In particular, management is considering the following transactions Sell of the cable television segment of the business for $30 million (receiving half in cash and half in the form of a long term not receivable ) Book value of the cable television business is $27 million Borrow $100 million on long term debt Purchase treasury stock for $500 million cash Write off one fourth of goodwill carried on the books at $128 million Sell advertising at the normal gross profit of 60 The advertisements run immediately Top management wants to know the effects of these transactions (increase, decrease, or no effect) on the following ratios of AOL Time Warner Current ratio Debt ratio Times interest earned ratio Return on Equity Book value per share of common stock Some of these transactions have an immediately positive effect on the companys financial condition Some are definitely negative Others have an effect that cannot be judged as clearly positive or negative Evaluate each transactions effect as positive, negative or unclear Challenge your classmates on their assessments Once you have posted your response into the Message field on the forum, your next step is to peruse the postings of your fellow classmates Use the subject line as an advanced organizer to allow your classmates and the instructor to have some idea of what youre posting is about, for example a subject line response to discussion question is not appropriate Your responses to fellow students should contain substance, should be more than just opinion, and must go beyond a simple agreement or disagreement

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I need help with the following: M8D1: Decision Case - AOL Time Warner, Inc. Prior to discussion activity you should: Schoenebeck and Holtzman (2013). Interpreting

I need help with the following:

M8D1: Decision Case - AOL Time Warner, Inc.

Prior to discussion activity you should:

Schoenebeck and Holtzman (2013). Interpreting and Analyzing Financial Statements (6th ed.)
- Chapter 8: Comprehensive Review
Review Module 8 PowerPoint
Watch Video: How is Liquidity Measured? [31.27 mins]

Discussion Background

Suppose AOL Time Warner, Inc. is having a bad year in 2011, as the company has incurred a $4.9 billion net loss. The loss has pushed most of the return measures into the negative column and the current ratio dropped below 1.0. The companys debt ratio is still only 0.27. Assume top management of AOL Time Warner is pondering ways to improve the companys ratios. In particular, management is considering the following transactions:

Sell of the cable television segment of the business for $30 million (receiving half in cash and half in the form of a long-term not receivable.) Book value of the cable television business is $27 million.
Borrow $100 million on long-term debt.
Purchase treasury stock for $500 million cash.
Write off one-fourth of goodwill carried on the books at $128 million.
Sell advertising at the normal gross profit of 60%. The advertisements run immediately.

Top management wants to know the effects of these transactions (increase, decrease, or no effect) on the following ratios of AOL Time Warner:

Current ratio
Debt ratio
Times-interest-earned ratio
Return on Equity
Book value per share of common stock

Some of these transactions have an immediately positive effect on the companys financial condition. Some are definitely negative. Others have an effect that cannot be judged as clearly positive or negative. Evaluate each transactions effect as positive, negative or unclear. Challenge your classmates on their assessments.

Once you have posted your response into the Message field on the forum, your next step is to peruse the postings of your fellow classmates.

Use the subject line as an advanced organizer to allow your classmates and the instructor to have some idea of what youre posting is about, for example a subject line response to discussion question is not appropriate. Your responses to fellow students should contain substance, should be more than just opinion, and must go beyond a simple agreement or disagreement.