Spring 2018 #21

Telford12Telford12
in MSA.Ratios

In calculating Equity for part a) the solution has E(x-1) + NI + AOCI - Dividends

In Fall 2018 # 25 - Total Equity is calculated as E(x-1) + NI + Change in AOCI

What is different between these two questions that we subtract previous years AOCI in one but not the other?

Thanks.

Comments

  • Telford12Telford12

    Nevermind - I believe the difference is one refers to AOCI and the other is just OCI. Thanks anyways.

  • javidjavid

    That is correct :)

  • jptardif2jptardif2

    Hi Graham,

    Is it just me or we are using the total liabilities instead of the net liabilities to calculate the Overall Net Leverage in this problem? Matter of fact, we couldn't calculate the net liabilities with the information given. Do we just have to assume that this company doesn't have any reinsurance? I guess that's what I would have done on exam day...

    Thanks,

  • grahamgraham

    Yes, that's exactly what you would do. There is no other option. It might be an idea to note your assumption of no reinsurance just to show you really know what you're doing, but I'm not sure that was even necessary to get full points.

  • ChristoRoyerChristoRoyer
    edited April 2023

    I'm reviving this old post instead of making a new one, but my question is not related to the previous.
    In this question, is there a reason we can assume that Asset - Equity = NET Liability?
    I would ave assume that it was Total Liability instead. I would have mentioned in the question that we could assume there is no Reinsurance, but we are getting other "Net values" so I'm not sure it would be a valid assumption.

    Thank you!

  • Staff-T1Staff-T1

    I think you'd just implicitly assume that because there would be no way to get the net liability otherwise

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