a. What were HCA's liabilities-to-assets ratios and times-interest-earned ratios in the years 2005 through 2009?
b. What percentage decline in EBIT could HCA have suffered each year between 2005 and 2009 before the company would have been unable to make interest payments out of operating earnings, where operating earnings is defined as EBIT?
c. How volatile have HCA's cash flows been over the period 2005 - 2009?
d. Calculate HCA's return on invested capital (ROIC) in the years 2005 - 2009.
HCA INC
ANNUAL INCOME STATEMENT
($ MILLIONS, EXCEPT PER SHARE)
Dec09 Dec08 Dec07 Dec06 Dec05
Sales $ 30,052 $ 28,374 $ 26,858 $ 25,477 $ 24,455
Cost of Goods Sold 24,826 24,023 22,480 21,448 20,391
Gross Profit 5,226 4,351 4,378 4,029 4,064
Depreciation 1,425 1,416 1,426 1,391 1,374
Operating Profit 3,801 2,935 2,952 2,638 2,690
Interest Expense 1,987 2,021 2,215 955 655
Non-Operating Income/Expense 188 256 661 179 412
Pretax Income 2,002 1,170 1,398 1,862 2,327
Total Income Taxes 627 268 316 625 725
Minority Interest 321 229 208 201 178
Net Income $ 1,054 $ 673 $ 874 $ 1,036 $ 1,424
ANNUAL BALANCE SHEET
ASSETS Dec09 Dec08 Dec07 Dec06 Dec05
Cash & Equivalents $ 312 $ 465 $ 393 $ 634 $ 336
Net Receivables 3,692 3,780 3,895 3,705 3,332
Inventories 802 737 710 669 616
Other Current Assets 1,771 1,319 1,207 1,070 931
Total Current Assets 6,577 6,301 6,205 6,078 5,215
Gross Plant, Property & Equipment 24,669 23,714 22,579 21,907 20,818
Accumulated Depreciation 13,242 12,185 11,137 10,238 9,439
Net Plant, Property & Equipment 11,427 11,529 11,442 11,669 11,379
Investments at Equity 853 842 688 679 627
Other Investments 1,166 1,422 1,669 1,886 2,134
Intangibles 2,577 2,580 2,629 2,601 2,626
Deferred Charges 418 458 539 614 85
Other Assets 1,113 1,148 853 148 159
TOTAL ASSETS 24,131 24,280 24,025 23,675 22,225
LIABILITIES
Long Term Debt Due In One Year 846 404 308 293 586
Accounts Payable 1,460 1,370 1,370 1,415 1,484
Taxes Payable - 224 190 - -
Accrued Expenses 2,007 1,912 1,981 1,868 1,825
Total Current Liabilities 4,313 3,910 3,849 3,576 3,895
Long Term Debt 24,824 26,585 27,000 28,115 9,889
Deferred Taxes - - - 390 830
Minority Interest 1,008 995 938 907 828
Other Liabilities 2,825 2,890 2,612 1,936 1,920
TOTAL LIABILITIES 32,970 34,380 34,399 34,924 17,362
Preferred Stock 147 155 164 125 -
Common Stock 1 1 1 1 4
Capital Surplus 226 165 112 - -
Retained Earnings (9,213) (10,421) (10,651) (11,375) 4,859
Common Equity (8,986) (10,255) (10,538) (11,374) 4,863
TOTAL EQUITY (8,839) (10,100) (10,374) (11,249) 4,863
TOTAL LIABILITIES & EQUITY $ 24,131 $ 24,280 $ 24,025 $ 23,675 $ 22,225

Answers

Answer 1

Answer:

HCA

a. HCA's Liabilities-to-assets ratios and times-interest-earned ratios in the years 2005 through 2009:

1. Liabilities-to-assets ratios = Total liabilities/Total Assets

                  Dec. 09     Dec. 08    Dec. 07     Dec. 06     Dec. 05

                 136.63%     141.60%    143.18%     147.51%     78.12%

2. Times-interest-earned ratios = EBIT/Interest Expense

                  Dec. 09     Dec. 08      Dec. 07       Dec. 06       Dec. 05

                 1.91 times  1.45 times   1.33 times    2.76 times   4.11 times

b. The percentage decline in EBIT that HCA could have suffered each year between 2005 and 2009 to make it unable to make interest payments out its operating earnings, where operating earnings is defined as EBIT:

                  Dec. 09     Dec. 08      Dec. 07       Dec. 06       Dec. 05

                 191%            145%           133%            276%         411%

c. The volatility of HCA's cash flows over the period 2005 to 2009:

The standard deviation of the cash flows (cash and cash equivalents) is 115, showing that there is so much volatility in the cash flows.

d. HCA's return on invested capital (ROIC) in the years 2005 - 2009:

= Net Income - Dividend / Total Liabilities + Equity x 100

ROIC =                        4.37%      2.77%      3.64%        4.38%     6.41%

Explanation:

a) Data and Calculations:

HCA INC

ANNUAL INCOME STATEMENT

($ MILLIONS, EXCEPT PER SHARE)

                                  Dec. 09    Dec. 08     Dec. 07     Dec. 06     Dec. 05

Sales                         $ 30,052  $ 28,374  $ 26,858   $ 25,477  $ 24,455

Cost of Goods Sold     24,826     24,023     22,480       21,448      20,391

Gross Profit                   5,226         4,351        4,378        4,029       4,064

Depreciation                  1,425          1,416        1,426          1,391         1,374

Operating Profit            3,801         2,935       2,952        2,638       2,690

Interest Expense           1,987         2,021        2,215           955          655

Non-Operating

 Income/Expense           188            256           661             179           412

Pretax Income             2,002           1,170        1,398         1,862       2,327

Total Income Taxes       627            268            316           625          725

Minority Interest            321             229           208           201           178

Net Income             $ 1,054           $ 673       $ 874      $ 1,036    $ 1,424

ANNUAL BALANCE SHEET

ASSETS                   Dec. 09    Dec. 08     Dec. 07     Dec. 06     Dec. 05

Cash & Equivalents  $ 312        $ 465       $ 393       $ 634       $ 336

Net Receivables      3,692         3,780       3,895        3,705       3,332

Inventories                 802            737            710           669          616

Other Current

 Assets                     1,771           1,319        1,207          1,070          931

Total Current

 Assets                   6,577         6,301       6,205         6,078       5,215

Gross Plant, Property

 & Equipment      24,669       23,714     22,579       21,907     20,818

Accumulated

 Depreciation       13,242       12,185        11,137       10,238       9,439

Net Plant, Property

 & Equipment       11,427        11,529      11,442        11,669      11,379

Investments

 at Equity                 853            842         688            679         627

Other Investments 1,166         1,422       1,669         1,886       2,134

Intangibles            2,577        2,580      2,629         2,601      2,626

Deferred Charges   418           458          539             614           85

Other Assets          1,113          1,148          853             148          159

TOTAL ASSETS  24,131      24,280     24,025       23,675    22,225

LIABILITIES

Long Term Debt Due

In One Year          846          404           308             293         586

Accounts

 Payable            1,460         1,370         1,370            1,415       1,484

Taxes Payable      -               224            190                -              -

Accrued

 Expenses      2,007           1,912          1,981           1,868       1,825

Total Current

 Liabilities       4,313           3,910        3,849          3,576      3,895

Long Term

 Debt          24,824        26,585      27,000         28,115      9,889

Deferred Taxes -                  -                -                  390         830

Minority

 Interest       1,008              995          938             907          828

Other

Liabilities    2,825           2,890        2,612          1,936        1,920

TOTAL LIA-

 BILITIES   32,970         34,380     34,399       34,924       17,362

Preferred

 Stock            147                155           164             125                -

Common

 Stock               1                     1                1                 1                4

Capital

 Surplus      226                 165            112                 -                -

Retained

 Earnings (9,213)          (10,421)     (10,651)       (11,375)       4,859

Common

 Equity     (8,986)        (10,255)     (10,538)      (11,374)       4,863

TOTAL

 EQUITY  (8,839)         (10,100)     (10,374)      (11,249)       4,863

TOTAL LIABILITIES &

EQUITY $24,131      $ 24,280  $ 24,025   $ 23,675  $ 22,225

ii) Liabilities-to-assets ratio:

                                  Dec. 09    Dec. 08     Dec. 07     Dec. 06     Dec. 05

Liabilities                    32,970      34,380     34,399       34,924       17,362

Assets                         24,131      24,280     24,025       23,675     22,225

                                 136.63%     141.60%    143.18%     147.51%     78.12%

iii) Times Interest Earned:

Operating Profit           3,801         2,935       2,952        2,638       2,690

Interest Expense          1,987         2,021        2,215           955          655

                                1.91 times   1.45 times 1.33 times  2.76 times 4.11 times

iv) Volatility:  This is the degree of change of the cash flows, showing its tendency to change from one period to the other.  As calculated, the volatility is very high, showing that the cash flows have higher risk of change.  See below:

                                  Dec. 09    Dec. 08     Dec. 07     Dec. 06     Dec. 05

Cash & Equivalents     $ 312      $ 465        $ 393         $ 634       $ 336

Mean = $428

Deviation from mean     -116            37            -35             206          -92

Squared deviation      13,456       1,369         1,225       42,436      8,464

Sum of squared deviation = 66,950

Mean = 13,390

Square root of mean or Standard Deviation = 115

v) Return on Invested Capital = Net Income/Total liabilities + Equity

                               Dec. 09    Dec. 08     Dec. 07     Dec. 06     Dec. 05

Net Income             $ 1,054        $ 673       $ 874      $ 1,036    $ 1,424

TOTAL LIABILITIES &

EQUITY                  $24,131  $ 24,280  $ 24,025   $ 23,675  $ 22,225

ROIC =                        4.37%      2.77%      3.64%        4.38%     6.41%


Related Questions

A firm has a long-term debt-equity ratio of .4. Shareholders’ equity is $1 million. Current assets are $200,000, and the current ratio is 2. The only current liabilities are notes payable. What is the total debt ratio?

Answers

Answer:

Total debt ratio is 33.33%

Explanation:

A long term debt to equity ratio of 0.4 tells that the value of long term debt is 0.4 or 40% of the value of the equity. If the value of the equity is $1 million, the value of long term debt is,

Long term debt = 0.4 * 1000000 = $400000

A current ratio is calculated by dividing the current assets by the current liabilities. It tells how many current assets are available to satisfy $1 of current liabilities. A current ratio of 2 means that for every $1 of current liability, $2 of current assets are available. Thus, current liabilities are half of current assets. If the value of current assets is $200000, the value of current liabilities is,

Current liabilities = 200000 * 1/2  = $100000

Total liabilities = 400000 + 100000 = $500000

A debt ratio is calculated by dividing the value of total debt or total liabilities by the value of total assets.

Total assets = total liabilities + total equity

Total assets = 500000 + 1000000

Total assets = $1500000 or $1.5 million

Total debt ratio = 500000 / 1500000

Total debt ratio = 1/3 or 0.3333 or 33.33%

"A registered representative ("RR") manages a corporate account. The corporation recently elected a new CEO who contacts the "RR" and gives trade instructions. Which statement is TRUE? The trade should be:"

Answers

Answer: D. entered once the "RR" verifies that the CEO is an authorized trader in the account

Explanation:

The registered representative must only trade on a corporate account on orders given by a person that is authorised to do so to avoid any mismanagement.

The people authorized to do so will be listed in a Corporate Resolution issued by the Board of Directors of the company or relevant stakeholders.

The registered representative would need to check this resolution first and if they find the new CEO listed in it as authorized to make trades, the registered representative will then enter the trade.

1. A research project began with the selection of women who had recently had abdominal surgery. The project matched those women with controls and continued with measurements of abdominal muscle strength for both groups every three months for a year. This project was: A. Prospective study B. Retrospective study C. Experimental study D. Cross sectional study

Answers

Answer:

Abdominal rectus diastasis is a condition where the abdominal muscles are separated by an abnormal distance due to widening of the linea alba causing the abdominal content to bulge. It is commonly acquired in pregnancies and with larger weight gains. Even though many patients suffer from the condition, treatment options are poorly investigated including the effect of physiotherapy and surgical treatment. The symptoms include pain and discomfort in the abdomen, musculoskeletal and urogynecological problems in addition to negative body image and impaired quality of life. The purpose of this review was to give an overview of treatment options for abdominal rectus diastasis.

Results: The first treatment step is physiotherapy. However, evidence is lacking on which regimen to use and success rates are not stated. The next step is surgery, either open or laparoscopic, and both surgical approaches have high success rates. The surgical approach includes different plication techniques. The recurrence and complication rates are low, complications are minor, and repair improves low back pain, urinary incontinence, and quality of life. Robotic assisted surgery might become a possibility in the near future, but data are still lacking.

Conclusions: Evidence on what conservatory treatment to use is sparse, and more research needs to be done. Both open and laparoscopic surgery have shown positive results. Innovative treatment by robotic assisted laparoscopic surgery has potential, however, more research needs to be done in this area as well. An international guideline for the treatment of rectus diastasis could be beneficial for patients and clinicians.

Keywords: rectus diastasis, treatment options, physiotherapy, surgery, abdominoplasty, laparoscopy, robot assisted surgery

If government spends $80 billion at each level of GDP, and imposes a lump-sum tax of $100 then equilibrium GDP will be:_________

Answers

Answer: $350

Explanation: The equilibrium GDP or output of an economy is such that an economy output is level or equal to the total amount of planned spending. it is usually equal to the amount produced, or GDP. which is, equilibrium GDP = ( C + Ig ). Consumption expenditures usually rise with GDP while planned gross investment expenditures are independent of whatever level the GDP gets to.

The Sapote Corporation is a manufacturing corporation. The corporation has accumulated earnings of $450,000 and the corporation cannot establish a reasonable business need for any of that amount. What is the amount of the accumulated earnings tax (if any) that will be imposed on the corporation?

Answers

Answer: $40,000

Explanation:

As this is a manufacturing company, they are exempt of Accumulated earnings tax of the amount of $250,000. Anything above that will be subject to an Accumulated Earnings tax rate of 20%.

Accumulated Earnings tax = 20% * (450,000 - 250,000)

Accumulated Earnings tax = 20% * 200,000

Accumulated Earnings tax = $40,000

Under a contract with Bucolic Farms, Agro Excavation, Inc., begins digging an agricultural pond. In mid-project, Agro asks for $15,000 over the contract price, claiming an increase in the "cost of doing business." Bucolic agrees but later refuses to pay. Their agreement is

Answers

Answer:

unenforceable because Agro's performance was preexisting duty.

Explanation:

In the situation being described, it can be said that their agreement is unenforceable because Agro's performance was preexisting duty. This refers to the party's offer of a performance that was already required of them under the existing contract making a modification null. In this scenario, this is exactly what is happening, Agro Excavations has already signed a contract to dig the pond and has no enforceable reason to add $15,000 to the contract price mid-project and must finish digging the pond for the agreed-upon price of the first contract.

At January​ 1, 2019, the Accrued Warranty Payable is . During​ 2019, the company recorded Warranty Expense of . During​ 2019, the company replaced defective products in accordance with product warranties at a cost of . What is the Accrued Warranty Payable at December​ 31, 2019?

Answers

Answer: A.$8,800

Explanation:

The Accrued Warranty Payable Balance for the year ending December 2019 will take into account the Warranty expenses that were old less the warranty expenses that have been paid for already with the formula;

= Opening Accrued Warranty payable + Warranty Expense recorded for the Year - Warranty Expenses Paid in the year

= 1,800 + 19,400 - 12,400

= $8,800

Answer:

jus 2 ez pz lemon squeezey ppppppp

Explanation:

Bi-Lo Traders is considering a project that will produce sales of $33,300 and have costs of $19,700. Taxes will be $3,500 and the depreciation expense will be $1,900. An initial cash outlay of $1,600 is required for net working capital. What is the project's operating cash flow?

Answers

Answer: $10,100

Explanation:

Based on the information that have been given in the question, the project's operating cash flow goes thus:

Sales. $33,300

Less: cost. $19,700

Less: depreciation. $1,900

Profit before tax $11,700

Less: tax. $3500

Net profit. $8200

Add: depreciation. $1900

Operating cash flow. $10,100

"A small business owner of a firm that has 25 employees wants to establish a retirement plan and make contributions for her employees. What type of plan can the employer establish?"

Answers

Answer:

SEP IRA

Explanation:

For this type of company, the best type of plan would be a SEP IRA. This refers to a Simplified Employee Pension Plan and is a plan that is set up by an employer, with deductible contributions made by the employer themselves. The employer sets the actual contribution rate when creating the plan, and provides all employees the same contribution rate. The annual contribution of such an account is capped at $56,000 in 2019 and the individuals may withdraw the total amount of the account tax-free when they turn 59 1/2 years old.

Calculate the future value of an investment of $463 for 10 years earning an interest of 9%? (Round your answers to 2 decimal places.)

Answers

Answer:

$1,096.09

Explanation:

The computation of the future value by using the following formula is shown below:

As we know that

Future value = Present value × (1 + interest rate)^number of years  

= $463 × (1 + 0.09)^10

= $463 × 2.367363675

= $1,096.09

We simply applied the above formula so that the future value could arrive and the same is to be considered

When the Federal Reserve buys long term MBS and Treasury securities from banks and announces its intention to keep buying these assets in large quantities for a long time the effect on commercial banks is to increase the value of fixed income securities that are not sold and at the same time to lower the interest spread between new loans originated and the cost of financing these loans. True False

Answers

Answer:

True

Explanation:

Since, Federal reserve purchased long term MBS in order to pay the less market interest rate and this will cause a rise in the amount of income i.e fixed securities. Also, due to less market interest rate, the financing cost is less and at the same time interest spread is narrower as it provides more liquidity

Therefore the given statement is true

Which clause in a mortgage allows a lender to increase the interest rate? A.) Defeasance B.) Escalation C.) Acceleration D.) Exculpatory

Answers

Answer:

A

Explanation:

During 2021, Deluxe Leather Goods issued 707,000 coupons which entitles the customer to a $5.00 cash refund when the coupon is submitted at the time of any future purchase. Deluxe estimates that 71% of the coupons will be redeemed. 261,000 coupons had been processed during 2021. Deluxe recognizes coupon expense in the period coupons are issued. At December 31, 2021, Deluxe should report a liability for unredeemed coupons of:

Answers

Answer:

Deluxe should report a liability for unredeemed coupons of $1,204,850

Explanation:

Estimated coupons to be redeemed     $501,970

(707,000 * 71%)

Less: Coupons redeemed                       $261,000

Coupons unredeemed                             $240,970

X Cost per Coupon                                      5.00    

Liability for unredeemed Coupons       $1,204,850

Your client is 40 years old; and she wants to begin saving for retirement, with the first payment to come one year from now. She can save $5,000 per year; and you advise her to invest it in the stock market, which you expect to provide an average return of 9% in the future.

Answers

Answer:

14,000

Explanation:

im smart

Which of the following types of decisions involves deciding whether to perform a particular activity in-house or purchase it from an outside supplier?
A. Special-order
B. Make-or-buy
C. Continue or discontinue
D. Sell-or-process further

Answers

Answer: Make-or-buy

Explanation:

The decision that involves deciding whether to perform a particular activity in-house or purchase it from an outside supplier is regarded to as the Make-or-buy.

A company can decide to purchase a particular activity when it sees that it's cheaper or when the company wants to focus on other aspects of production.

The Golden Company issues of ​%, 10year bonds at on March​ 31, 2019. The bonds pay interest on March 31 and September 30. Assume that the company uses the straightline method for amortization. The journal entry to record the issuance includes a

Answers

Answer:

Debit to Cash for $560,560

Explanation:

Based on the information given we were told that the Company issues the amount of $539,000 at 104 on March 31 2019 this means that the journal entry to record the issuance will includes a:

Debit to Cash for $560,560.

Calculated as :

Cash received = $539,000 × 104%

Cash received = $560,560

An investor with a balanced domestic portfolio who is looking for diversification and returns in the event that U.S. markets do not continue to expand, would be most interested in investing in which of the following?

a. Equities in Emerging Markets
b. Equities in U. S. companies with international appeal
c. Equities in U. S. companies involved in exports of their products
d. Equities in Italian wine exporting companies

Answers

Answer:

Option A, Equities in Emerging Markets, is the right answer.

Explanation:

A person who is not interested to invest in the U.S market or company then will not prefer the U.S companies for their diversification because the economic contraction in the U.S will affect these companies. He will be willing to invest in the equities in the emerging market. Moreover, he will not invest only in the foreign company because it will not provide him with the diversification. Therefore, the option “a” is correct.

Assuming a bottom-up process of budget development, which of the following should be initially responsible for developing sales estimates?

a. The budget committee.
b. The accounting department.
c. The sales department.
d. Top management.
e. The marketing department.

Answers

Answer: The Sales Department

Explanation:

In budgeting, a bottom-up approach simply means that each head of department in the organization create a budget that'll be sent upwards for approval.

Assuming a bottom-up process of budget development, the sales department should be initially responsible for developing sales estimate.

The following data relate to the direct materials cost for the production of 50,000 automobile tires: Actual: 725,000 lbs. at $3.00 per lb. Standard: 730,000 lbs. at $2.95 per lb. a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Answers

Answer and Explanation:

a. The computation of the material price variance is shown below:

= Actual Quantity × (Standard Price - Actual Price)

= 725,000 × ($2.95- $3)

= 725,000 × $0.5

= $36,250 unfavorable

b. The computation of the material quantity variance is shown below:

= Standard Price × (Standard Quantity - Actual Quantity)

= $2.95 × (730,000 - 725,000)

= $2.95 × 5,000

= $14,750 favorable

And, the total direct material cost variance is

= Material price variance + material cost variance

= $36,250 unfavorable + 14,750 favorable

= $21,500 unfavorable

In your own words, assess the process of international strategy, competencies, planning, and international competitive advantage.

Answers

Explanation:

An international strategy can be understood as the set of processes and action plans that a company will implement to achieve its objectives in an external market.

An organization decides to internationalize its activities with the objective of conquering a different market that can bring different competitive and financial benefits to the company.

To be successful, the organizational strategy must comprise the set of requirements that must be followed to include itself in a different market, such as, for example, the set of policies that will guide the operation of the business.

In addition, it is necessary to plan its activities in such a way that they are in line with the fundamental requirements of the country, such as multicultural norms, values, tastes, preferences, etc.

Companies generally use internationalization as a competitive strategy, since this can be an effective means of reducing costs, due to the cheaper labor and the less bureaucratic process. A well-positioned brand also guarantees a differential that adds to the ease of an organization being successful in the process of conquering new markets.

In the _____ stage of the product life cycle, competition intensifies and profits diminish. Companies increase their promotional efforts but emphasize selective demand.

Answers

Answer: maturity

Explanation:

The product life cycle is the time used by a product from the day the product is introduced into the market till the day it's withdrawn. The four stages of the product life cycle are the introduction stage, the growth, the maturity stage and finally the decline stage.

In the maturity stage of the product life cycle, competition intensifies and profits diminish. Companies increase their promotional efforts but emphasize selective demand.

Explain some of the basic principles of cost management, such as profits, life cycle cost, tangible and intangible costs and benefits, direct and indirect costs, and Reserves.

Answers

Answer:

Profits - These refer to the revenues accrued from a project less the costs of the project.

Life Cycle Cost - Life Cycle Cost is a concept in Cost management where the cost of a project throughout it's entire life is assessed. Costs assessed therefore include; initial capital costs, maintenance costs and operating costs.

Tangible and Intangible Costs - When costs are tangible, quantifying them.is easy as the cost can be stated and directly attributable to a cost object eg, cost of a fixed asset. Intangible cost on the other hand is not easy to quantify and is not easily attributable. For instance, the experience that a Project Manager leaves with if they resign.

Tangible and Intangible Benefits - Like tangible costs, tangible benefits are easily quantifiable and noticeable such as trade discounts from buying in bulk. Intangible benefits on the other hand are not easily quantifiable. An example would be Employee motivation from a safer working Environment.

Direct and Indirect Costs - Direct costs are costs that can be easily traced to a cost object. In other words, the reason for the cost is known e.g labor cost for assembling a product. Indirect Costs are harder to trace to a cost object even though they are related to production. An example would be the Electricity used for production.

Reserves - Cost reserves are monies held for any emergency expenses that may come up. This way the company can deal with them speedily.

​O'Mally Department Stores is considering two possible expansion plans. One proposal involves opening 5 stores in Indiana at the cost of​ $1,810,000. Under the other​ proposal, the company would focus on Kentucky and open 6 stores at a cost of​ $2,000,000. The following information is​ available: Indiana proposal Kentucky proposal Required investment ​$1,810,000 ​$2,000,000 Estimated life 6 years 6 years Estimated residual value ​$80,000 ​$40,000 Estimated annual cash inflows over the next 10 years ​$700,000 ​$800,000 Required rate of return ​13% ​13% The accounting rate of return for the Indiana proposal is closest to​ (Round any intermediary calculations to the nearest​ dollar, and round your final answer to the nearest hundredth of a​ percent, X.XX%.)

Answers

Answer:

O'Mally Department Stores

The accounting rate of return for the Indiana proposal is closest to 24.28%

Explanation:

a) Data and Calculations:

                                              Indiana proposal        Kentucky proposal

Required investment ​                  $1,810,000 ​                $2,000,000

Estimated life                                     6 years                        6 years

Estimated residual value                ​$80,000                       ​$40,000

Estimated depreciable cost       $1,730,000                  $1,960,000

Average depreciable cost            $288,333                    $326,667

Estimated annual cash inflows

 over the next 10 years ​              $700,000 ​                    $800,000

Average cash inflows                    $70,000                       $80,000

Required rate of return                    13%                               13%

Accounting rate of return = Average cash inflows/Average depreciable cost x 100 = $70,000/$288,333 x 100 = 24.28%

The Indiana proposal of O'Mally Department Stores' accounting rate of return is the ratio of estimated accounting profit to the average investment cost.  The estimated accounting profit is equivalent to the average cash inflow and the average investment cost is equivalent to the average depreciable cost.

"Your customer has been declared legally incompetent and his daughter has presented the proper legal papers appointing her as the guardian. Which statement is TRUE?"

Answers

Answer: B. Trading instructions can be accepted only from the daughter

Explanation:

The customer has been declared legally incompetent which means that he should not be making decisions that have to do with something as serious as trading instructions as he will not be able to comprehend them.

The only person that should therefore take over such roles would be his daughter who is a legal guardian. As she is not his guardian, she is able to take such decisions for him and so the trading instructions should be accepted only from the daughter.

Competitive markets ______ goods with positive externalities and ______ goods with negative externalities. Group of answer choices overprovide; underprovide underprovide; overprovide overprovide; overprovide underprovide; underprovide

Answers

Answer:

underprovide; overprovide

Explanation:

A good has positive externality if the benefits to third parties not involved in production is greater than the cost. an example of an activity that generates positive externality is research and development. Due to the high cost of R & D, they are usually under-produced. Government can encourage the production of activities that generate positive externality by granting subsidies.

A good has negative externality if the costs to third parties not involved in production is greater than the benefits. an example of an activity that generates negative externality is pollution. Pollution can be generated at little or no cost, so they are usually overproduced. Government can discourage the production of activities that generate negative externality by taxation

Murie Corporation makes one product and has provided the following information: Budgeted selling price per unit $ 98 per unit sold Budgeted unit sales, February 11,000 units Raw materials requirement per unit of output 5 pounds Raw materials cost $ 3.00 per pound Direct labor requirement per unit of output 2.5 direct labor-hours Direct labor wage rate $ 18.00 per direct labor-hour Predetermined overhead rate (all variable) $ 11.00 per direct labor-hour Variable selling and administrative expense $ 2.70 per unit sold Fixed selling and administrative expense $ 80,000 per month The estimated net operating income (loss) for February is closest to:

Answers

Answer:

Net operating income= $5,800

Explanation:

Giving the following information:

Selling price= $98 per unit

Sales= 11,000 units

Variable cost per unit= (5*3) + (2.5*18) + (2.5*11) + 2.7= $90.2

Fixed selling and administrative expense $ 80,000 per month

Contribution margin income statement:

Sales= 98*11,000= 1,078,000

Total variable cost= (90.2*11,000)= (992,200)

Contribution margin= 85,800

Fixed costs= (80,000)

Net operating income= 5,800

The estimated Net operating income for February should be considered as the $5,800.

Giving that:

Selling price per unit is $98.Sales in February is 11,000 units.Fixed selling and administrative expense per month is $80,000.

Calculation of the estimated net operating income;

Variable cost / unit =  ( 5 [tex]\times[/tex] 3 ) + ( 2.5 [tex]\times[/tex] 18 ) + ( 2.5 [tex]\times[/tex] 11 ) + 2.7

= $90.2

Now, we calculate contribution margin,

Total Sales value = $98 [tex]\times[/tex] 11,000 =  $1,078,000

Total variable cost = $90.2 * 11,000 = $992,200

Contribution margin = Total Sales value - Total variable cost

= $1,078,000 - $992,200

= $85,800

Now, we can calculate net operating income by using following formula,

Net operating income = Contribution margin - Fixed selling and administrative expense

Net operating income = $85,800 - $80,000

Net operating income= 5,800

Learn more about net income : https://brainly.com/question/15745630

Consider the case of Purple Panda Pharmaceuticals: Next year, Purple Panda is expected to earn an EBIT of $2,000,000, and to pay a federal-plus-state tax rate of 30%. It also expects to make $500,000 in new capital expenditures to support this level of business activity, as well as $35,000 in additional net operating working capital (NOWC). Given these expectations, it is reasonable to conclude that next year Purple Panda will generate an annual free cash flow (FCF) of (rounded to the nearest whole dollar).

Answers

Answer:

Purple Panda Pharmaceuticals

Annual Free Cash Flow (FCF):

FCF = Sales Revenue - (Operating costs + Taxes) - Required investments in operating capital or net operating profit after taxes - net investment in operating capital =

Net Income =              $1,400,000

additional NOWC =           35,000

Capital expenditures =  500,000

FCF = $865,000

Explanation:

a) Data and Calculations:

EBIT = $2,000,000

Tax = 30% or $600,000

Net Income =              $1,400,000

additional NOWC =           35,000

Capital expenditures =  500,000

FCF = $865,000

Purple Panda Pharmaceuticals' Free Cash Flow shows what is available for distribution to security holders after the payment of taxes.  Purple Panda will use the information from its Free Cash Flow to judge if a project will pay off and generate enough cash flow so that shareholders' value will be enhanced.

The major components of a time series are all of the following EXCEPT: trend. cycles. random variations. seasonality. inflation.

Answers

Answer: Inflation

Explanation:

Time series data are refer to those taken over a period of years with a minimum of four years being satisfactory. The data shown will have variations that fall under four major components being;

Trend - Data that moves in a predictable fashion and so can be used to predict future behavior.Cycles - The variation here follows the business cycle or its own. Random Variables - Cannot be predicted. Seasonal - These follow a chronological pattern.

Only Inflation does not fall here.

Board Company has a foreign subsidiary that began operations at the start of 2017 with assets of 155,000 kites (the local currency unit) and liabilities of 100,000. During this initial year of operation, the subsidiary reported a profit of 49,000 kites. It distributed two dividends, each for 7,300 kites with one dividend declared on March 1 and the other on October 1. Applicable exchange rates for 1 kite follow:

January 1, 2017 (start of business) $0.80
March 1,2017 0.78
Weighted average rate for 2017 0.77
October 1,2017 0.76
December 31, 2017 0.75

Required:
a. Assume that the kite is this subsidiary's functional currency. What transfation adjustment would Board report for the year 2017?
b. Assume that on October 1,2017, Board entered into a forward exchange contract to hedge the net investment in this subsidiary. On that date, Board agreed to sell 200,000 kites in three months at a forward exchange rate of $0.76/1 kite. Prepare the journal entries required by this forward contract.
c. Compute the net translation adjustment for Board to report in Accumulated Other Comprehensive Income for the year 2017 under this second set of circumstances.

Answers

Answer:

a. The Board would report translation adjustment of -$3,138.

b. See the journal entries and explanation below.

c. Net translation adjustment is -$1,138.

Explanation:

a. Assume that the kite is this subsidiary's functional currency. What translation adjustment would Board report for the year 2017?

Note: See the attached file for the calculation of translation adjustment.

The board would report a negative (debit) translation adjustment of $3,138. That is,

Translation adjustment = -$3,138

b. Assume that on October 1,2017, Board entered into a forward exchange contract to hedge the net investment in this subsidiary. On that date, Board agreed to sell 200,000 kites in three months at a forward exchange rate of $0.76/1 kite. Prepare the journal entries required by this forward contract.

Board Company

Journal Entries

Date            Account titles and Explanation         Debit ($)        Credit ($)  

01 Oct 17     (No entry)                                                                                    

12 Dec 17     Forward contract                                   2,000

                     Translation adjustment (positive) (w.1)                    2,000

             (To record forward contract change in the value to adjust translation adjustment.)    

12 Dec 17       Foreign currency (kites) (w.2)           152,000

                        Cash                                                                       152,000

                      (To record 200,000 kites purchased at the spot rate of $0.76)

12 Dec 17       Cash                                                  154,000

                         Foreign Currency (kites)                                      152,000

                         Forward contract                                                     2,000

                         (To record 200,000 kites delivered, $154,000 received, and close the forward contract account.)

Workings:

w.1: Translation adjustment = Number of kites agreed to sell in three months * (Agreed exchange rate on October 1, 2017 per kite - Exchange rate on December 1, 2017) = 200,000 * (0.76 - 0.75) = $2,000

w.2: Foreign Currency (kites) = Number of kites agreed to sell in three months * Agreed exchange rate on October 1, 2017 per kite = 200,000 * 0.76 = $152,000

c. Compute the net translation adjustment for Board to report in Accumulated Other Comprehensive Income for the year 2017 under this second set of circumstances.

This can be calculated as follows:

Net translation adjustment = Negative translation adjustment in part a + Positive translation adjustment in part b (i.e. w.1) = -$3,138 + 2,000 = -$1,138

Therefore, net translation adjustment is -$1,138.

A loan is being amortized by means of level monthly payments at an annual effective interest rate of 8%. The amount of principal repaid in the 12th payment is 1000 and the amount of principal repaid in the tth payment is 3700. Calculate t.

Answers

Answer:

Option D. 216

Explanation:

The value of "t" can be calculated using the compounding formula given as under:

Principal Amount * (1 + r)^(t-n)/n   =  Future Value

Here

Principal Amount is $1,000

r is 8%

n is the number of payment which is 12th here

Future Value is $3,700

By putting values, we have:

$1,000 * (1 + 8%)^(t-12)/12 = $3,700

(1.08)^ (t-12)/12 = 3.7

By taking natural log on both sides:

(t-12)/12 = 17

t = 216

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