Answer:
Results are below.
Explanation:
Giving the following information:
Machine 1:
Fixed cost= $647
Unitary variable cost= $0.033
Machine 2:
Fixed cost= $785
Unitary variable cost= $0.048
The total cost for 97,000 copies:
Machine 1:
Total cost= 647 + 0.033*97,000
Total cost= $3,848
Machine 2:
Total cost= 785 + 0.048*97,000
Total cost= $5,441
Transaction Analysis and Financial Statements, Including Dividends
(Alternates are 2-47, 2-48, 2-50, and 2-52.) Consider the following balance sheet of a wholesaler
of children’s toys:
Gecko Toy Company
Balance Sheet, December 31, 20X0
Assets Liabilities and Stockholders’ Equity
Liabilities
Cash $ 400,000 Accounts payable $ 800,000
Accounts receivable 400,000 Stockholders’ equity
Merchandise inventory 860,000 Paid-in capital $360,000
Prepaid rent 45,000 Retained earnings 645,000
Equipment 100,000 Total stockholders’ equity 1,005,000
Total $1,805,000 Total $1,805,000
The following is a summary of transactions that occurred during 20X1:
a. Acquisitions of inventory on open account, $1 million.
b. Sales on open account, $1.5 million; and for cash, $200,000. Therefore, total sales were
$1.7 million.
c. Merchandise carried in inventory at a cost of $1.3 million was sold as described in b.
d. The warehouse 12-month lease expired on October 1, 20X1. However, the company immediately
renewed the lease at a rate of $84,000 for the next 12-month period. The entire rent was
paid in cash in advance.
e. Depreciation expense for 20X1 for the warehouse equipment was $20,000.
f. Collections on accounts receivable, $1.25 million.
g. Wages for 20X1 were paid in full in cash, $200,000.
h. Miscellaneous expenses for 20X1 were paid in full in cash, $70,000.
i. Payments on accounts payable, $900,000.
j. Cash dividends for 20X1 were declared and paid in full in December, $100,000.
Required
1. Prepare an analysis of transactions, employing the balance sheet equation approach demonstrated
in Exhibit 2-3 (p. 49 ) . Show the amounts in thousands of dollars.
2. Prepare an ending balance sheet, a statement of income, and the retained earnings column of
the statement of stockholders’ equity for 20X1.
3. Reconsider transaction j. Suppose the dividends were declared on December 15, 20X1,
payable on January 31, 20X2, to shareholders of record on January 20. Indicate which
accounts and financial statements in requirement 2 would be changed and by how much. Be
complete and specific.
Answer:
Gecko Toy Company
1. Analysis of Transactions, using the balance sheet equation approach:
a. Inventory $1 million Accounts Payable $1 million
b. Accounts Receivable $1.5 million Cash, $200,000 Equity: Sales Revenue $1.7 million
c. Inventory ($1.3 million) Equity: Cost of goods sold ($1.3 million)
d. Cash ($84,000) Prepaid Rent $63,000 Equity: Rent Expenses $66,000
e. Equipment (Acc. Depreciation) ($20,000) Equity: Depreciation Expense ($20,000)
f. Cash $1.25 million Accounts Receivable ($1.25 million)
g. Cash ($200,000) Equity: Wages Expense ($200,000)
h. Cash, ($70,000) Equity: Miscellaneous expenses ($70,000)
i. Cash ($900,000) Accounts Payable ($900,000)
j. Cash ($100,000) Equity: Dividends ($100,000)
2. Statement of Income:
Sales Revenue $1.7 million
Cost of goods sold ($1.3 million)
Gross profit $0.4 million
Rent Expenses ($66,000)
Depreciation Expense ($20,000)
Wages Expense ($200,000)
Miscellaneous expenses ($70,000)
Total expenses $0.356 million
Net income $0.044 million
Statement of retained earnings:
Retained earnings 645,000
Net income 44,000
Dividends (100,000)
Retained earnings 589,000
Gecko Toy Company
Balance Sheet, December 31, 20X1
Assets Liabilities and Stockholders’ Equity
Liabilities
Cash $ 496,000 Accounts payable $ 900,000
Accounts receivable 650,000 Stockholders’ equity
Merchandise inventory 560,000 Paid-in capital $360,000
Prepaid rent 63,000 Retained earnings 589,000
Equipment 80,000 Total stockholders’ equity 949,000
Total $1,849,000 Total $1,849,000
3. Accounts and Financial Statements that would change:
Assets (Cash) will increase by $100,000 (Balance sheet)
Liabilities (Dividends Payable) will increase by $100,000 (Balance sheet)
Explanation:
a) Data and Calculations:
Gecko Toy Company
Balance Sheet, December 31, 20X0
Assets Liabilities and Stockholders’ Equity
Liabilities
Cash $ 400,000 Accounts payable $ 800,000
Accounts receivable 400,000 Stockholders’ equity
Merchandise inventory 860,000 Paid-in capital $360,000
Prepaid rent 45,000 Retained earnings 645,000
Equipment 100,000 Total stockholders’ equity 1,005,000
Total $1,805,000 Total $1,805,000
Analysis of Transactions, using the balance sheet equation approach:
a. Inventory $1 million Accounts Payable $1 million
b. Accounts Receivable $1.5 million Cash, $200,000 Equity: Sales Revenue $1.7 million
c. Inventory ($1.3 million) Equity: Cost of goods sold ($1.3 million)
d. Cash ($84,000) Prepaid Rent $63,000 Equity: Rent Expenses $66,000
e. Equipment (Acc. Depreciation) ($20,000) Equity: Depreciation Expense ($20,000)
f. Cash $1.25 million Accounts Receivable ($1.25 million)
g. Cash ($200,000) Equity: Wages Expense ($200,000)
h. Cash, ($70,000) Equity: Miscellaneous expenses ($70,000)
i. Cash ($900,000) Accounts Payable ($900,000)
j. Cash ($100,000) Equity: Dividends ($100,000)
Prepaid Rent
Account Title Debit Credit
Balance $45,000
Cash 84,000
Rent expense $66,000
Balance 63,000
Before starting up a team to handle a big contract with a new client, the team leader identified the most important skills and expertise that the team would need, and then staffed the team with this expertise. This meant putting employees from production, marketing, finance, and sales on the team. You want to find a way to reduce the waste your company generates so you create this type of team. This type of team is particularly difficult to implement because it requires specific self-management and team skills that many employees lack.
Answer: a. Cross functional team
b. Problem solving team
c. Self directed team
Explanation:
a. Cross-functional team refers to the group of people that has different functional expertise whom work tomorrow together towards a common goal. It basically includes all the employees in an organization.
b. Problem Solving Teams are the team that's formed in an organization in order to solve a particular problem. Since the company wants to find a way to reduce the waste that's generated, this team was formed
c. Self-directed work team is a team that's made up of people who combine their skills, experiences and talents together and work without being supervised in order to achieve a common goal. This type of team is particularly difficult to implement because it requires specific self-management and team skills that many employees lack.
how does under investment affect the market
Answer:
Since the stock market is a vote of confidence, a crash can devastate economic growth. Lower stock prices mean less wealth for businesses, pension funds, and individual investors. Companies can't get as much funding for operations and expansion. When retirement fund values fall, it reduces consumer spending.
Explanation:
Economic Considerations
Business investment can affect the economy's short-term and long-term growth. In the short term, an increase in business investment directly increases the current level of gross domestic product (GDP), because physical capital is itself produced and sold.
A company has the following selected account balances: Sales $ 250,000 Sales Discounts 1,500 Sales Returns and Allowances 2,300 Sales Salaries Expense 56,000 Store Supplies Expense 15,000 Advertising Expense 8,000 Cost of Goods Sold 125,000 What is the gross profit that would appear on a multiple-step income statement: multiple choice $121,200 $167,200 $42,200 $246,200
Answer:
$121,200
Explanation:
Calculation to determine the gross profit that would appear on a multiple-step income statement
First step is to determine the Net sales
Sales $ 250,000
Less Sales Discounts ($1,500)
Less Sales Returns and Allowances ($2,300 )
Net sales $246,200
Now let determine the Gross profit using this formula
Gross profit=Net sales-Cost of Goods Sold
Let plug in the formula
Gross profit=$246,200-$125,000
Gross profit=$121,200
Therefore the gross profit that would appear on a multiple-step income statement is $121,200
Sales $7,270,000 Gross profit $ 1,450,000 Indirect labor $330,000 Indirect materials $195,000 Other factory overhead $90,000 Materials purchased $5,100,000 Total manufacturing costs for the period $6,170,000 Materials inventory end of the period $ 480,000 how much direct material cost
Answer:
$5,775,000
Explanation:
Direct materials cost = Materials purchased + Indirect materials + Materials inventory, end of the period
Direct materials cost = $5,100,000 + $195,000 + $480,000
Direct materials cost = $5,775,000
So, the amount of the direct material cost is $5,775,000.
Students submitting initial CPT applications should allow at least ____ business days for their CPT application to be reviewed. one (1) five (5) ten (10) thirty (30)
Answer:
The answer is "thirty (30)".
Explanation:
Students applying for initial CPT must allow their CPT application to also be examined for at least 30 working days.
It's Curricular Practical Training (CPT) is an outside study/stage probably understand to the subject. The student that is still learning in a certain program always is open to it.
Indeed, during the first semester, undergraduates could qualify for CPT because it is indeed a significant part of a graduate degree.
The review of all applications takes about 30 business days.
Zigzag Manufacturing has just hired a new controller, Leslie Demorest. During her first week on the job, Leslie was asked to establish a budget for operating expenses in 2019. Since Leslie was not yet familiar with the operations of Zigzag Manufacturing, she decided to budget these expenses using the same procedures as the prior controller. Therefore, in order to establish a budget for operating expenses, Leslie started with actual operating expenses incurred in 2018 and added 3.8%. Leslie based this percentage on inflation as measured by the consumer price index.
Required: Comment on the effectiveness of Leslie’s budgeting strategy.
Answer:
Zigzag Manufacturing
The Effectiveness of Leslie Demorest's Budgeting Strategy
The strategy of adjusting the previous year's operating expenses with inflation is not an effective way of strategic budget planning. Leslie's budgeting strategy does not take advantage of forecasts of unexpectedly good performance and fails to provide any reaction that can occur when there are downturns in cash flow.
An effective budgeting strategy should provide the standard for the effective use of financial resources of Zigzag Manufacturing in its business operations. There are no clear goals to be achieved and an evaluation of how the goals will be achieved through the budget implementation.
Explanation:
An effective budget should be able to forecast and track revenues and expenses, which are received and incurred in pursuit of business goals and projections. An effective budget ensures that those who implement the projections contained in the budget remain motivated. The idea of adjusting previous expenses with inflation is not an effective budgeting strategy.
Assign each of the following to a category of GDP. Assume products are made domestically unless indicated otherwise:
You buy a carmultiple:____.
1. Consumption
2. Investment
3. Govt. Purchases
4. Imports or Exports
A bakery buys a new:_____.
A. Consumption
B. Investment
C. Govt. Purchases
D. Imports or Exports
You get a haircut:_____.
A. Consumption
B. Investment
C. Govt. Purchases
D. Imports or Exports
Your town buys a fire truck:_____.
A. Consumption
B. Investment
C. Govt. Purchases
D. Imports or Exports
You buy shoes made in Thailand:_____.
A. Consumption
B. Investment
C. Govt. Purchases
D. Imports or Exports
The Federal Government builds a bridge:_____.
A. Consumption
B. Investment
C. Govt. Purchases
D. Imports or Exports
A private hospital buys a new MRI machine:_____.
A. Consumption
B. Investment
C. Govt. Purchases
D. Imports or Exports
You stay in a hotel in Italy:_____.
A. Consumption
B. Investment
C. Govt. Purchases
D. Imports or Exports
Answer:
*Buy Car = Consumption
*A bakery buys a new = Investment
*You get a haircut = Consumption
*Fire truck = Govt. purchase
*Buy shoes made in Thailand = Import or export
*Government build bridge = Govt. purchase
*Buy new MRI machine = Investment
*Stay in hotel in Italy = Import or Export
Explanation:
The component of GDP is Consumption, Investment, Government Expenditure, and import-export. Here, consumption is denoted by C, Investment is denoted by I, Government expenditure is denoted by G and Import-export is denoted by NX. Since the car bought for use that means the person is consuming it. While the haircut includes the consumption of service and buying a new bakery is an investment. Similarly below is the list for which the following product belongs.
*Buy Car = Consumption
*A bakery buys a new = Investment
*You get a haircut = Consumption
*Fire truck = Govt. purchase
*Buy shoes made in Thailand = Import or export
*Government build bridge = Govt. purchase
*Buy new MRI machine = Investment
*Stay in hotel in Italy = Import or Export
Travis Company purchased merchandise on account from a supplier for $11,100, terms 2/10, net 30 on December 26. Travis Company paid for the merchandise on December 31, within the discount period.
Required:
Under a perpetual inventory system, record the journal entries required for the above transactions. Refer to the Chart of Accounts for exact wording of account titles.
Record the journal entries on each transaction. Refer to the Chart of Accounts for exact wording of account titles.
PAGE 1
JOURNAL
DATE DESCRIPTION POST. REF. DEBIT CREDIT
1
2
3
4
Answer and Explanation:
The journal entries are shown below:
On Dec 26
Inventory $11,100
To Accounts payable $11,100
(Being the purchase merchandise on account is recorded)
On Dec 31
Account payable $11,100
To Discount on account payable (2% of $11,100) $222
To Cash $10,878
(being the cash paid is recorded)
These two entries should be recorded
A portfolio consists of $16,800 in Stock M and $27,400 invested in Stock N. The expected return on these stocks is 9.70 percent and 13.30 percent, respectively. What is the expected return on the portfolio?
A) 11.07%.
B) 11.93%.
C) 12.62%.
D) 11.50%.
E) 10.15%.
Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A tax of $1 per frame levied on picture frames will increase the price paid by buyers of picture frames by a. $0.50. b. between $0.50 and $1. c. $1. d. less than $0.50.
SSSSSSSDDDDDSADDDDDDDDDDDDDSADSA
Barth Company reports the following year-end account balances at December 31, 2016. Prepare the 2016 income statement and the balance sheet as of December 31, 2016.
Accounts payable $16,000 Inventory $36,000
Accounts receivable 30,000 Land 80,000
Bonds payable, long-term 200,000 Goodwill 8,000
Buildings 151,000 Retained earnings 160,000
Cash 148,000 Sales revenue 500,000
Common stock 150,000 Supplies inventory 3,000
Cost of goods sold 180,000 Supplies expense 6,000
Equipment 70,000 Wages expense 40,000
Answer and Explanation:
The preparation of the income statement and the balance sheet is presented below
Income statement
REVENUE
Sales $500,000
Less: EXPENSES
Cost of goods sold ($180,000)
Supplies expenses ($6,000)
Wages expenses ($40,000)
Total expenses ($226,000)
Net income $274,000
Balance sheet :
Assets Amount Liabilities & stockholder equity Amount
Cash $148,000 Account payable $16,000
Account receivable $30,000 Bonds payable, long term $200,000
Supplies $3,000
Inventory $36,000 Total liabilities $216,000
Total current assets $217,000 Common stock $150,000
Land $80,000 Retained earnings $160,000
Building $151,000
Equipment $70,000
Goodwill $8,000
Total assets $526,000 Total liabilities and equity $526,000
The beginning inventory was 300 units at a cost of $10 per unit. Goods available for sale during the year were 1,300 units at a total cost of $14,400. In May, 600 units were purchased at a total cost of $6,600. The only other purchase transaction occurred during October. Ending inventory was 550 units.
Required:
a. Calculate the number of units purchased in October and the cost per unit purchased in October
b-1. Assume the periodic inventory system is used. Calculate cost of goods sold and ending inventory using FIFO method
b-2. Assume the periodic inventory system is used. Calculate cost of goods sold and ending inventory using LIFO method
Answer:
a. The number of units purchased in October = 400
The cost per unit = $12
b-1. Cost of goods sold = $7,950
Ending inventory = $6,450
b-2. Cost of goods sold = $8,650
Ending inventory = $5,750
Explanation:
a) Data and Calculations:
Beginning inventory 300 units at $10 per unit = $3,000
May purchases 600 units at $11 per unit = 6,600
October purchases 400 units at $12 per unit = 4,800
Goods available 1,300 units $14,400
Ending inventory 550 units
Goods sold 750 units
a. The number of units purchased in October = 400 (1,300 - 300 - 600)
The cost per unit = $12 ($4,800/400)
b-1. Cost of goods sold and ending inventory using FIFO method:
Cost of goods sold:
300 units at $10 per unit = $3,000
450 units at $11 per unit = 4,950 $7,950
Ending inventory = $6,450 ($14,400 - $7,950)
b-2. Cost of goods sold and ending inventory using LIFO method:
Cost of goods sold:
350 units at $11 per unit = 3,850
400 units at $12 per unit = 4,800
Total Cost of goods sold = $8,650
Ending inventory = $5,750 ($14,400 - $8,650)
Correct the single error in each of the following sentence. A week later, you browses through the trend reports
Answer:
A week later, you browse through the trend reports.
Matthewo wns an insurance policy (face amount of $1,630,000) on the life of Emily with Uma listed as the designated beneficiary. Of Emily dies first and the $1,630,000 is paid to Uma, how much is included in the following gross estates?
a. Matthew's gross estate?
b. Emily's gross estate?
Answer:
a. $0b. $0Explanation:
Matthew owns an insurance policy that has designated Uma as the beneficiary. If Emily dies, the money will go to Uma and not to Matthew so Matthew will not include any amount in his estate.
If Emily dies, no amount goes to her estate either because Emily was not the beneficiary, Uma was. Emily dying will simply lead to Uma's estate getting the money and not Emily's.
Karla makes a pitch to her supervisor about changing their company's stance on recycling but finds out after the pitch meeting that her supervisor was already considering a change to the recycling policy. Which component of advocacy did Karla fail to consider
Answer:
Knowing the supervisor's knowledge
Explanation:
In making a pitch about a particular idea it is important to to follow the steps of advocacy in order to effectively promote the idea and get a positive result.
In the given scenario Karla makes a pitch to her supervisor about changing their company's stance on recycling.
The steps to follow are:
- identify a challenge or opportunity
- determine your audience
- find out what they already know or perceive
- determine how receptive they are
- establish objectives for the audience
- define points for the audience
- determine channel of communication
- decide on needed resources
- set timelines for activities
- evaluate success
Karla did not know her supervisor was already considering a change to the recycling policy.
So she failed to determine her Supervisor's knowledge of the situation.
The component of advocacy that Karla has failed to consider here is the supervisors knowledge.
She made a pitch about the issue without finding out if the supervisor already had a prior knowledge to what was happening.
This would have made her to make her case in a different way. The principle of advocacy is done with the aim of promoting a cause or interests of certain people.
She did not consider that the pitch she was making had already been dealt with by the supervisor she was giving it to.
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Demonstrate the principles of health care finance for revenue management through the intended application of cost reporting and variances.
Solution :
Integration of all the processes:
Some integrated software system should be adopted where all the details about each patient along with the every billing and the payment details would help in keeping the track of the revenue.
Claims and billing management :
All the claims happened through some of the individuals or the company policies or the billing processes that take place to be accounted for the EHR system that can reduce the delays and also improve the effectiveness of the revenue management.
Documentation:
All the transactions should be documented, so there there are less chances for any error to occur.
Twenty-five percent of the company's sales are for cash and 75% are on account. Collections for sales on account follow a stable pattern as follows: 50% of a month's credit sales are collected in the month of sale, 30% are collected in the month following sale, and 15% are collected in the second month following sale. The remainder are uncollectible. Given these data, cash collections for December should be:
Answer: $136,375
Explanation:
Going by the collections pattern of the company, there will be collections for 3 months in December being October, November and December.
December collections will be:
= (50% * December credit sales) + (30% * November Credit sales) + (15% * October credit sales) + December cash sales
December credit sales = 75% * 130,000 = $97,500
November credit sales = 75% * 170,000 = $127,500
October credit sales = 75% * 150,000 = $112,500
December collections are:
= (50% * 97,500) + (30% * 127,500) + (15% * 112,500) + (25% * 130,000)
= $136,375
Capri Industries is considering an investment that has an initial cost of $26,500 and the following expected cash inflows: Year Cash Inflow 1 $6,000 2 $8,000 3 $10,000 4 $5,000 5 $3,000 The expected payback period is
Answer:
It will take 3.5 years to cover the initial investment.
Explanation:
Giving the following information:
Initial investment= $26,500
Cash flows:
1 6,000
2 8,000
3 10,000
4 5,000
5 3,000
The payback period is the time required to cover the initial investment:
Year 1= 6,000 - 26,500= -20,500
Year 2= 8,000 - 20,500= -12,500
Year 3= 10,000 - 12,500= -2,500
Year 4= 5,000 - 2,500= 2,500
To be more accurate:
(2,500/5,000)= 0.5
It will take 3.5 years to cover the initial investment.
The expected payback period is 3.19 years.
Expected payback period is the amount of time it take to recover the amount invested from the cumulative cash flows.
Amount invested = $26,500
Cumulative cash flow in year 1 = $6000
Cumulative cash flow in year 2 = $14, 000
Cumulative cash flow in year 3 = $24,000
Cumulative cash flow in year 4 = $29,000
Cumulative cash flow in year 5 = $32,000
The amount invested would be recovered in the third year.
3 + [tex]\frac{29,000 - 24,000}{26,500}[/tex] = 3.19 years
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Proponents of the LIFO inventory cost flow assumption argue that this costing method is superior to the alternatives because it results in better matching of revenue and expense. The recent purchase costs to the Cost of Goods Sold account results in better matching of revenue and expense.
a. True
b. False
Answer: True
Explanation:
The assumption of the LIFO method is that the most recent goods which are added to the inventory of a company have been sold first.
This brings about a better matching of the cost incurred and the revenue since the most recent products added are the ones which are then sold first. Therefore, the correct option is True.
Outsourcing to provide extra workers during periods of peak workloads can be much more economical than trying to fill entire projects with internal resources. Which advantages does this characteristic of outsourcing provide organizations?
A) offers control over all aspects of projects that suppliers carry out
B) provides flexibility
C) shifts accountability from external suppliers to internal staff
D) helps avoid any form of dependency on suppliers
Answer:
B
Explanation:
Which medium when sending a negative employment message lets you control the message and avoid confrontation?
Face-to-face
Email
Phone
Social media
Answer:
En mi opinión personal sería cara a cara. Por qué así se puede expresar lo que uno quiere decir y en los otros no.
Explanation:
Espero ayudarte suerte
Once account numbers have been enabled, where can the numbers be assigned and edited?
Answer: Chart of Accounts
Explanation:
Once account numbers have been enabled, the numbers be assigned and edited in the chart of accounts.
To assign the account numbers, one needs to go to the accounting menu and then the chart of accounts will be selected. After that, one will select batch edit which can be seen in the action menu and add the account numbers after which one will then save. In order to see the account numbers,one can then go to chart of accounts
5. What is the purpose of a Job Cost Sheet? What type of information is included in one?
Answer:
The purpose of a job cost sheet is to record the various costs that went into the manufacturing of a product or the provision of a service. This will enable the company know how much the process cost so that the company can understand the cost of the product better and make informed decisions based on this.
The information generally included in a job cost sheet include:
Direct labor hours Direct materials used and their costMaterial requisition number Manufacturing overhead rate and the basis (eg labor hours or machine hours).Total cost of production.Each of the following would be a period cost except: Group of answer choices the salary of the company president's secretary. the cost of a general accounting office. depreciation of a machine used in manufacturing. sales commissions.
Answer:
depreciation of a machine used in manufacturing.
Explanation:
A periodic system of inventory can be defined as a method of financial accounting, that typically involves updating informations about an inventory on a periodic basis (at specific intervals) as the sales or purchases are being made by the customers, through the use of either an enterprise management software applications or a digitized point-of-sale equipment.
Periodic cost are costs that occur or arise on a periodic basis such as quarterly.
Each of the above mentioned costs would be a period cost except depreciation of a machine used in manufacturing.
Which of the following statements is CORRECT?
a. Suppose a firm’s total assets turnover ratio falls from 1.0 to 0.9, but at the same time its profit margin rises from 9% to 10% and its debt decreases from 60% of total assets to 40%. Under these conditions, the ROE will increase.
b. Suppose a firm’s total assets turnover ratio falls from 1.0 to 0.9, but at the same time its profit margin rises from 9% to 10% and its debt increases from 40% of total assets to 60%. Without additional information, we cannot tell what will happen to the ROE.
c. The Du Pont equation provides information about how operations affect the ROE, but the equation does not include the effects of debt on the ROE.
d. Other things held constant, an increase in the debt ratio will result in an increase in the profit margin on sales.
e. Suppose a firm’s total assets turnover ratio falls from 1.0 to 0.9, but at the same time its profit margin rises from 9% to 10%, and its debt decreases from 60% of total assets to 40%. Under these conditions, the ROE will decrease.
Answer:
a. Suppose a firm's total assets turnover ratio falls from 1.0 to 0.9, but at the same time its profit margin rises from 9% to 10% and its debt decreases from 60% of total assets to 40%. Under these conditions, the ROE will increase.
Explanation:
Asset turnover ratio of a firm is sales divided by total assets. If this ratio falls the revenue of the firm has declined, but since the profit margin has increased means company has made efforts to cut down its expenses and cost. If the debt has decreased then its equity portion will increase resulting in ROE to increase.
An editorial in the paper argues that a person only should be allowed to attend school if the marginal cost of educating that person is less than the marginal benefit of educating that person. The writer's reasoning is an application of:
Answer:
c
Explanation:
application of:
A. positive economics. B. negative economics. C. normative economics. D. economic naturalism.
Positive Economics is objective and statements are usually based on facts and economic theory. They can be tested.
For example, an increase in input would lead to a decrease in supply of the good is based on economic theory and facts. An increase in input would increase the cost of production and this would discourage sellers from producing.
Normative economics is based value judgements, opinions and perspectives. For example, the statement - social welfare spending in Sweden occupies too large a portion of the national budget - is based on opinion. To some the expenditure might be even too small. There is no economic theory that can be used to determine if this expenditure is too large or small
Based on this model, households earn income whenfirms purchaselabor and capital in markets for factors of production. Suppose Simone earns $525 per week working as a jewelry appraiser for Classy's Jewelry Store. She uses $10 to order a mojito cocktail at Little Havana. Little Havana pays Rajiv $300 per week to wait tables. Rajiv uses $175 to purchase a necklace from Classy's Jewelry Store. Identify whether each of the following events in this scenario occurs in the market for factors of production or the market for goods and services. Event Market for Factors of Production Market for Goods and Services Simone spends $10 to order a mojito cocktail. Simone earns $525 per week working for Classy's Jewelry Store. Rajiv spends $175 to purchase a necklace from Classy's Jewelry Store. Which of the elements of this scenario represent a flow from a household to a firm
Answer:
a. Event Market for Factors of Production Market for Goods and Services
1. Market for Goods and Services (Simone spends $10 to order a mojito cocktail.)
2. Market for Factors of Production (Simone earns $525 per week working for Classy's Jewelry Store.)
3. Market for Goods and Services (Rajiv spends $175 to purchase a necklace from Classy's Jewelry Store.)
b. Flows from a household to a firm:
Simone spends $10 to order a mojito cocktail.
Rajiv spends $175 to purchase a necklace from Classy's Jewelry Store.
Explanation:
In the product market (the market for goods and services), Simone and Rajiv, representing households spend their earned income in exchange for goods and services produced by firms. In the market for factors of production (factor market), Simone and Rajiv offer their labor, capital, and other factors of production to firms in exchange for income. There is a continual exchange in the two markets between households and firms.
You own one call option with an exercise price of $30 on Nadia stock. This stock is currently selling for $27.80 a share but is expected to increase to either $28 or $34 a share over the next year. The risk-free rate of return is 5 percent. What is the current per share value of your option if it expires in one year
Answer: 0.755
Explanation:
From the information given, the current per share value of the option if it expires in one year will be calculated as follows:
Firstly, we calculate the present value which will be:
= $28 / ( 1 + 0.05 )
= $28/1.05
= $26.667
The number of options needed will be:
= ( 34 - 28 )/ ( 4-0)
= 6/4
= 1.5
Therefore,
27.80 = (1.5 x Co) + [28 / (1+0.05)]
27.80 = 1.5Co + (28/1.05)
27.80 = 1.5Co + 26.667
1.5Co = 28.0 - 26.667
1.5Co = 1.1333
Co = 0.755
Therefore, the answer is 0.755
A company had interest expense of $7,800, income before interest expense and income taxes of $19,200, and net income of $9,600. The company's times interest earned ratio equals:
Answer:
2.5 times
Explanation:
The company's times interest ratio is computed as;
= Income before interest expense and income taxes / Interest expenses
Given that;
Income before interest expense and income taxes = $19,200
Interest expenses = $7,800
Then,
Company's interest times ratio = $19,200 / $7,800
Company's interest times ratio = 2.5 times
