Homework Quiz #1 (10 points)

Academic Honor Code of HKUST

Honesty and integrity are central to the academic work of HKUST. Students of the University must
observe and uphold the highest standards of academic integrity and honesty in all the work they do
throughout their program of study.
As members of the University community, students have the responsibility to help maintain the
academic reputation of HKUST in its academic endeavors.

Sanctions will be imposed on students, if they are found to have violated the regulations governing
academic integrity and honesty.
Please sign your name below indicating that you have:
1)    Read and agreed to the terms of the Honor Code
2)    Not collaborated with your fellow colleagues in solving this homework
3)    All written solutions are solely your own work

Full Name: ____ Lin Junqian

Student ID #: __ 20769717

Please upload in excel format to Canvas by 11:59pm Hong Kong time Monday October 11th
Name the file as your full name on Canvas. For example, if your name is Lee Jun-Fan (Bruce Lee's real name)
name the file as HQ1_LeeJunFan_Bruce.
e University must
the work they do

elp maintain the

lations governing

October 11th
(Bruce Lee's real name)
Nike Inc. 12 Months Ended
May 31, 2019 May 31, 2018
Current Ratio 2.10 2.51
Debt-to-Equity Ratio 1.62 1.30
0.56 (also correct)
$ 2.55 $ 1.19
EPS (in dollars per share)

Interest Coverage Ratio (can ignore taxes)

99.00 81.09

Quality of Income Ratio

1.47 2.56
How much is Nike's Total Goodwill as of
May 31st, 2019? 154
How much is Nike's Goodwill in
Converse as of May 31st, 2019? 65

Please provide answers down to 2 decimal points.

McDonalds Inc. 12 Months Ended

Dec 31, 2019 Dec 31, 2018
Current Ratio 1.0 1.4
Interest Coverage Ratio 6.4 7.0
(Can ignore taxes for Int. covg)
Quality of Income Ratio 1.35 1.18

McDonald's has an account called "Deferred Revenue - Initial Franchise Fee" of $660 million on
Dec 31st, 2019. McDonald's owes a service for these fees. Record the journal entry on Dec 31, 2020
for McDonald's providing this service between January 1st, 2020 - December 31st, 2020.
Assume the service McDonald's would have to provide was $20 million worth of consulting hours
for which it would pay the consultants in cash.
(Hint: We went through the footnote for this in class 8)
cash(dr.A) 20 miliions
expenses(cr.L)20millions

Which company audited the financial statements of the McDonalds Inc. in 2019?
Ernst & Young
Which company audited the financial statements of the actual Hong Kong University of Science and
Technology in 2019 (not referring to our hypothetical HKUST Inc.)?
PricewaterhouseCoopers
What does it mean when a company has negative "Cash from Financing Activities" in the cash flow
statement? (1 short sentence only)
A negative figure indicates when the company has paid out capital, such as retiring or paying off long-term debt or making a

What does it mean when a company has positive "Cash from Investing Activities" in the cash flow
statement? (1 short sentence only)
A positive number indicates that cash has come into the company, which boosts its asset levels.

Total
 Points

0.5
0.5
(also correct)

0.5

0.5

0.5

0.5

0.5

3.5

1
1

1.25

0.25
term debt or making a 0.5

0.5

0 10