Answer:
The answer is "[tex]3.69\%[/tex]"
Explanation:
Dividend Share [tex]= \$3.50[/tex]
stock purchasing Price[tex]= 94.85[/tex]
[tex]\text{Dividend yield} = \frac{Dividend}{Purchase price}\\\\[/tex]
[tex]=\frac{3.50}{94.85}\\\\=0.036900369 \approx 3.69\%[/tex]
You can borrow and lend at the interest rates of 7.00% in the US and 5.00% in Canada. Based on Interest Rate Parity, the forward premium for CAD should be exactly equal to: Group of answer choices 1.90% - 1.87% 1.02% 98.11%
Answer:
1.90%
Explanation:
Note that that CAD exchange rate would be in terms of how many US dollars can be exchanged for 1 CAD, which means that the formula for forward premium would be stated in terms of US dollars, I mean the US$ as the numerator and CAD's interest rate would be the denominator
the forward premium for CAD=((1+US interest rate)/(1+Canada interest rate))-1
the forward premium for CAD=((1+7%)/(1+5%))-1
the forward premium for CAD=1.90%
Rolling Coast Inc. issued BBB bonds two years ago. These bonds provided a yield to maturity (YTM) of 11.5 percent. Long-term risk-free government bonds were yielding 8.7 percent at the time. The current risk premium on BBB bonds versus government bonds is half of what it was two years ago. If the risk-free long-term government bonds are currently yielding 7.8 percent, then at what interest rate should Rolling Coast expect to issue new bonds
Answer: 9.2%
Explanation:
The interest rate that Rolling Coast should expect to issue new bonds will be calculated thus:
Firstly, we will calculate the previous risk premium on BBB bonds which will be:
= 11.5% - 8.7% = 2.8%
Then, the new risk premium on BBB bonds will be:
= Previous risk premium / 2
= 2.8% / 2
= 1.4%
Then, the interest rate that Rolling Coast should expect to issue new bonds will be:
= 7.8% + 1.4%
= 9.2%
Common stock holders: Group of answer choices have one vote in the election of how the company operates. are last in line to receive income. are guaranteed to get paid when the company fails. receive income before preferred stockholders.
Answer:
are last in line to receive income.
Explanation:
Common stock holders are referred to as the owners of the company. They own shares that gives them the right to vote in a company's general meeting, receive dividends, and they have the right to get newly issued shares in the company before others.
However they are also called unsecured creditors of the company because when the business makes income they are the last in line to receive dividends if any remains.
Also in the case of bankruptcy preference share holders and other creditors are paid first. Common share holders are paid last.
Problems and Applications Q11 You are the curator of a museum. The museum is running short of funds, so you decide to increase revenue. When should you raise the admission price in order to increase revenue
Answer: Only when demand is inelastic
Explanation:
For a product that has an inelastic demand, the demand of a buyer with regards to a product has minimal changes when when there is a change in price. In such case, an increase in the price will lead to an increase in revenue.
On the other hand, for a product that has an elastic demand, there will be a greater change in the demand of the buyer when when there is a change in price. In such case, an inrease in the price will lead to an reduction in revenue as buyers will go for other products.
Therefore, the admission price should be increased when demand is inelastic in order to increase revenue.
1. Given the following demand and supply functions Qd = 500 - 3P Qs = 100 + 5P Calculate; i. The equilibrium price and the equilibrium quantity ii. The consumer surplus iii. The producer surplus)R
Given:
The demand and supply functions are:
[tex]Q_d=500-3P[/tex]
[tex]Q_s=100+5P[/tex]
To find:
i. The equilibrium price and the equilibrium quantity.
ii. The consumer surplus .
iii. The producer surplus.
Explanation:
(i) At equilibrium, the demand and supply are equal. So, equating both functions, we get
[tex]500-3P=100+5P[/tex]
[tex]500-100=3P+5P[/tex]
[tex]400=8P[/tex]
Divide both sides by 8, we get
[tex]\dfrac{400}{8}=P[/tex]
[tex]50=P[/tex]
Putting [tex]P=50[/tex] in the demand function, we get
[tex]Q_d=500-3(50)[/tex]
[tex]Q_d=500-150[/tex]
[tex]Q_d=350[/tex]
Therefore, the equilibrium price is 50 and the equilibrium quantity is 350.
(ii)
The area under the demand curve and above the equilibrium price is known as consumer surplus. It is represent by the green area in the below figure.
The area of a triangle is:
[tex]A=\dfrac{1}{2}\times base \times height[/tex]
So, the area of consumer surplus is:
[tex]A=\dfrac{1}{2}\times 50 \times (500-350)[/tex]
[tex]A=25 \times 150[/tex]
[tex]A=3750[/tex]
Therefore, the consumer surplus is 3750.
(iii)
The area above the supply curve and below the equilibrium price is known as producer surplus. It is represent by the purple area in the below figure.
So, the area of producer surplus is:
[tex]A=\dfrac{1}{2}\times 50 \times (350-100)[/tex]
[tex]A=25 \times 250[/tex]
[tex]A=6250[/tex]
Therefore, the producer surplus is 6250.
When Dianna does not know the outcome of each alternative until she has actually chosen that alternative, she is facing conditions of uncertainty time pressures confirmation bias emotional intelligence escalation of commitment
Answer:
uncertainty
Explanation:
Uncertainty is the inability of a person to know the outcome of a decision or a line of action.
One does not have a certainty of how things will turn out in a given situation.
In the given instance where Dianna does not know the outcome of each alternative until she has actually chosen that alternative, she is facing a condition where she is not certain of the outcome of any alternative
Complete each statement with the term that correctly defines each platform strategy advantage.
Platform businesses tend to frequently ____________ pipeline businesses.
Platforms scale more efficiently than pipelines by eliminating __________
Platform businesses _________ digital technology can grow much faster
Answer:
Note See full and organized question in the attached picture below
1. Platform businesses tend to frequently outperform pipeline businesses.
2. Platforms scale more efficiently than pipelines by eliminating gatekeepers.
3. Platform businesses leveraging digital technology can grow much faster.
4. Platforms unlock new sources of value creation and supply.
5. Feedback loops from consumers to the producers allow platforms to fine-tune their offerings and to benefit from big data analytics.
Anyina Corporation has an actual profit of $80,000. The break-even point is $500,000 and the variable expenses are 60% of sales. Given this information, the margin of safety, based on actual sales, is:
Answer:
Margin of safety = $200,000
Explanation:
Given:
Actual profit = $80,000
Break-even point = $500,000
Variable expenses = 60% of sales
Find:
Margin of safety
Computation:
Assume sales = a
So,
Variable expenses = 0.6a
Pv ratio = [(Sales - Variable expenses) / Sales]100
Pv ratio = [(a - 0.6a)/a]100
Pv ratio = 40%
Margin of safety = Profit / Pv ratio
Margin of safety = 80,000 / 40%
Margin of safety = $200,000
We are given the following information for the Pettit Corporation.
Sales (credit) $3,549,000
Cash 179,000
Inventory 911,000
Current liabilities 788,000
Asset turnover 1.40 times
Current ratio 2.95 times
Debt-to-assets ratio 40%
Receivables turnover 7 times
Current assets are composed of cash, marketable securities, accounts receivable, and inventory.
Calculate the following balance sheet items:
a. Accounts receivable.
b. Marketable securities.
c. Fixed assets.
d. Long-term debt.
Answer:
See below
Explanation:
a. Accounts receivables
= Sales / Receivables turnover
= $3,549,000 / 7x
= $507,000
b. Marketable securities
= Current assets - (Cash + Accounts receivable + Inventory)
Where;
Current asset = Current ratio × Current liabilities
Current asset = 2.95 × $788,000
Current asset = $2,348,240
Hence,
Marketable securities
= $2,348,240 - ($179,000 + $507,000 + $911,000)
= $2,348,240 - $1,597,000
= $751,240
c. Fixed assets
Total assets = Current assets + Fixed assets
$2,535,000 = $2,348,240 + Fixed assets
Fixed assets = $2,535,000 - $2,348,240
Fixed assets = $186,760
d. Long term debt
= Total debt - Current liabilities
Where,
Total debt = Debt to assets × Total assets
= 40% × ($3,549,000 / 1.40)
= 40% × $2,535,000
= $1,014,000
Hence,
Long term debt
= $1,014,000 - $788,000
= $226,000
Q2. With the help of book please elaborate What is the difference between a corporate strategy and a competitive strategy? Give three examples of each. (Words limit up to 150)
Answer and Explanation:
Competitive and corporate strategy are very important for the success and good management of a business. Competitive strategy is one that allows a company to promote elements capable of making it different from its competitors. Examples of competitive strategy are offering lower prices, higher quality products and negotiation between customers.
Corporate strategy, on the other hand, is one that allows the company to generate elements that will increase its profit and strengthen its capacity to be more competitive. Examples of this type of strategy are the acquisition of subsidiary companies, the merger of competing companies and the restructuring of the company.
For each of the following sentences, select the phrase or group of words that best completes the statement. Earnings per share Dividend yield ratio Dividend payout ratio Return on assets ratio Return on common stockholders' equity ratio
Answer:
Note See complete and organized question as attached as picture below
1. Dividend yield ratio
Correct phrase: Relationship between dividends and the market price of a company's stock.
2. Dividend payout ratio
Correct phrase: Percentage of earnings paid out as dividends.
3. Return on assets ratio
Correct phrase: Measure of a company's success in earning a return for all the providers of the capital.
4. Return on common stockholders' equity ratio
Correct phrase: Measure of a company's success in earning a return for the common stockholders.
While on a trip to South Africa, Madison was impressed with the colorful woven outdoor placemats, floor mats, chair cushions, and umbrellas that local artisans were weaving. Upon returning to the United States, she was confident that U.S. consumers would be as intrigued by these accessories as she was. Madison decided to explore the possibility of starting an import business to bring these products to the United States. Which statement seems to be good advice for Madison?
Answer: A) Learn from others who import goods from abroad, and particular from Africa.
Explanation:
Nothing beats experience when it comes to acquiring knowledge so if Madison wants to acquire the knowledge necessary to bring the goods she saw in South Africa to the U.S., she should go to people who have experience in the matter and find out what they know.
This will giver her insight on the amount of money she needs to startup with as well as what business status she should have. They will also give her insight into cost cutting measures to enable her import with more efficiency and make more profit.
Identify whether or not each of the following scenarios describes a competitive market, along with the correct explanation of why or why not.
a. In a small town, there are two providers of broadband Internet access: a cable company and the phone company. The Internet access offered by both providers is of the same speed.
b. The government has granted a patent to a pharmaceutical company for an experimental AIDS drug. That company is the only firm permitted to sell the drug.
c. Dozens of companies produce plain white socks. Consumers regard plain white socks as identical and don't care who manufactures their socks.
d. In a major metropolitan area, one chain of coffee shops has gained a large market share because customers feel its coffee tastes better than that of its competitors.
Answer:
1. not a competitive market
2. not a competitive market
3. competitive market
4. not a perfectly competitive market
Explanation:
To answer this question, i will first start by explaining what a competitive market is and the assumption of a perfectly competitive market as well
A competitive market is a market that has many producers and buyers of a particular product. The producers are usually in a competition to meet up with the needs of the buyers.
some assumptions of the market:
large sellers/producersidentical or homogenous goodsfree entryno discriminationperfect knowledgea. in this question this is not a competitive market. the reason is simple. It says that there are only two providers of internet. So there are no enough producers or sellers
b. The government has limited entry into this market by giving patent to only one pharmaceutical company.
c. yes this market is competitive since there are many producers of the product and the consumers regard the products as identical or homogenous. this meets with all of the assumptions of a perfectly competitive market.
d. the product here is not homogenous or identical as this is not a perfectly competitive market since buyers would prefer to buy the coffee that tastes better and leave that of the competitors
thank!
Assume that an investor purchased a put option on BP with an exercise price of $1.900 for $0.0215 per unit. There are 31,250 units in a GBP options contract. At the time of the option expiration date, the spot price for GBP was $1.885. What was the net profit/loss on this option to the investor?
a. $203.125
b. $671.8750
c. $468.75
d. $1,140.625
Answer:
a. $203.125
Explanation:
Calculation to determine the net profit/loss on this option to the investor
Net profit/loss=((1.900 - 1.885) - 0.0215)(31,250)
Net profit/loss=(0.015-0.0215)*31,250
Net profit/loss=0.0065*31,250
Net profit/loss=$203.125
Therefore the net profit/loss on this option to the investor will be $203.125
The trial balance of Swifty Corporation at the end of its fiscal year, August 31, 2022, includes these accounts: Beginning Inventory $18,650; Purchases $227,110; Sales Revenue $208,200; Freight-In $9,560; Sales Returns and Allowances $3,440; Freight-Out $1,810; and Purchase Returns and Allowances $8,000. The ending inventory is $23,400.
Prepare a cost of goods sold section (periodic system) for the year ending August 31, 2022.
Answer and Explanation:
The preparation of the cost of goods sold section is presented below;
Beginning inventory $18,650
Purchases $227,110
Less: Purchase return & allowances ($,8000)
Add: Freight in $9,560
Cost of goods available for sale $247,320
Less: Ending inventory ($23,400)
Cost of goods sold $223,920
In this way it should be prepared
The allowable increase for a constraint is Group of answer choices how much resource to use to get the optimal solution. the amount by which the resource can increase given shadow price. how many more units of resource to purchase to maximize profits. the amount by which the constraint coefficient can increase without changing the final optimal value.
Answer: the amount by which the resource can increase given shadow price.
Explanation:
The allowable increase refers to the amount by which the coefficient of the objective function can be increased without bringing about a change in the optimal basis.
The allowable increase for a constraint is the amount by which the resource can increase given shadow price. Therefore, the correct option is B.
Your sister just deposited $5,500 into an investment account. She believes that she will earn an annual return of 8.8 percent for the next 6 years. You believe that you will only be able to earn an annual return of 8 percent over the same period. How much more must you deposit today in order to have the same amount as your sister in 6 years
Answer:
$5749.02
Explanation:
The first step is to determine the future value of my sister's deposit
The formula for calculating future value:
FV = P (1 + r)^n
FV = Future value
P = Present value
R = interest rate
N = number of years
5500 (1.088)^6 = $9122.97
the second step is to determine the present value of $9122.97 using an interest rate of 8%
$9122.97 / (1.08)^6 = $5749.02
The Work in Process Inventory account for DG Manufacturing follows. Compute the cost of jobs completed and transferred to Finished Goods Inventory.
Work in Process Inventory
Beginning WIP 5,200
Direct materials 47,800
Direct labor 30,300
Applied Overhead 16,500
Total Manufacturing Costs 99,800
To Finished Goods ?
Ending WIP 10,300
The cost of units transferred to finished goods is:_________
Answer:
the cost of units transferred to the finished goods is $89,500
Explanation:
The computation of the cost of units transferred to the finished goods is shown below:
Cost of units transferred to finished goods
= Beginning WIP + Direct materials+ Direct labour + Applied overheads-Ending WIP
= $5,200 + $47,800 + $30,300 + $16,500 - $10,300
= $89,500
Hence, the cost of units transferred to the finished goods is $89,500
On April 1, year 1, Hyde Corp., a newly formed company, had the following stock issued and outstanding: 1) Common stock, no par, $1 stated value, 20,000 shares originally issued for $30 per share. 2) Preferred stock, $10 par value, 6,000 shares originally issued for $50 per share. Hyde's April 1, year 1 statement of stockholders' equity should report
Common stock Preferred stock APIC
a) $20,000 $60,000 $820,000
b) $20,000 $300,000 $580,000
c) $600,000 $300,000 $0
d) $600,000 $60,000 $240,000
Answer:
Common stock Preferred stock APIC
a) $20,000 $60,000 $820,000
Explanation:
Calculation to determine what Hyde's April 1, year 1 statement of stockholders' equity should report
Calculation to determine the COMMON STOCK
Common stock=20,000 shares*$1
Common stock=$20,000
Calculation to determine PREFERRED STOCK
Preferred stock =6,000 shares*$10
Preferred stock =$60,000
Calculation to determine ADDITIONAL PAID-IN CAPITAL (APIC)
APIC=[(6000*$50)-(6000*$10)]+[(20,000*$30)+(20,000*$1)]
APIC=($300,000-$60,000)+($600,000-$20,000)
APIC=$240,000+$580,000
APIC=$820,000
Therefore Hyde's April 1, year 1 statement of stockholders' equity should report:
Common stock Preferred stock APIC
$20,000 $60,000 $820,000
University Car Wash built a deluxe car wash across the street from campus. The new machines cost $234,000 including installation. The company estimates that the equipment will have a residual value of $27,000. University Car Wash also estimates it will use the machine for six years or about 12,000 total hours. Actual use per year was as follows:
Year Hours Used
1 2,800
2 1,900
3 2,000
4 2,000
5 1,800
6 1,500
Required:
a. Prepare a depreciation schedule for six years using the straight-line method.
b. Prepare a depreciation schedule for six years using the double-declining-balance method.
c. Prepare a depreciation schedule for six years using the activity-based method.
Answer:
University Car Wash
a. Straight-line Method:
Year Cost Depreciation Accumulated Net Book
Expense Depreciation Balance
1 $234,000 $34,500 $34,500 $199,500
2 $234,000 $34,500 $69,000 $165,000
3 $234,000 $34,500 $103,500 $130,500
4 $234,000 $34,500 $138,000 $96,000
5 $234,000 $34,500 $172,500 $61,500
6 $234,000 $34,500 $207,000 $27,000
b. Double-Declining-Balance Method:
Year Cost Depreciation Accumulated Net Book
Expense Depreciation Balance
1 $234,000 $77,220 $77,200 $156,780
2 $234,000 $51,737 $128,937 $105,043
3 $234,000 $34,664 $163,601 $70,379
4 $234,000 $23,225 $186,826 $47,154
5 $234,000 $15,561 $202,387 $31,583
6 $234,000 $4,593 $206,980 $27,000
c. Activity-Based Method:
Year Cost Depreciation Accumulated Net Book
Expense Depreciation Balance
1 $234,000 $48,300 $48,300 $185,700
2 $234,000 $32,775 $81,075 $152,925
3 $234,000 $34,500 $115,575 $118,425
4 $234,000 $34,500 $150,075 $83,925
5 $234,000 $31,050 $181,125 $52,875
6 $234,000 $25,825 $206,950 $27,050
Explanation:
a) Data and Calculations:
Cost of new machines = $234,000
Residual value of equipment = $27,000
Depreciable amount = $207,000
Estimated useful life = 6 years
Straight-line depreciation expense per annum = $34,500 ($207,000/6)
Double-declining-balance rate = 33% (100%/6 * 2)
Year Depreciation Declining Balance
1 $77,220 $156,780
2 $51,737 $105,043
3 $34,664 $70,379
4 $23,225 $47,154
5 $15,561 $31,583
6 $4,593 $27,000
Estimated useful life in hours = 12,000
Depreciation rate per hour = $17.25 ($207,000/12,000)
Actual usage per year:
Year Hours Used Usage Charge
1 2,800 $48,300 (2,800 * $17.25)
2 1,900 $32,775 (1,900 * $17.25)
3 2,000 $34,500 (2,000 * $17.25)
4 2,000 $34,500 (2,000 * $17.25)
5 1,800 $31,050 (1,800 * $17.25)
6 1,500 $25,825 (1,500 * $17.25)
Everything else equal, if the United States runs a large foreign trade deficit, the financing of the deficit will: a. increase government subsidies. b. increase interest rates. c. decrease sales of Treasury securities. d. increase the money supply. e. decrease tax revenue.
Answer: decrease tax revenue
Explanation:
A trade deficit occurs when the import of a country's is more than the export of the country for a given period of time period. The main cause is when there's an imbalance between the savings of a country and the investment rates.
In this case, financing the deficit will lead to the reduction in the tax revenue. When part of the tax revenue gotten from economic agents are used in the finance of the deficit, there'll be a reduction in the tax revenue.
Suppose independent truckers operate in a perfectly competitive constant cost industry. If these firms are earning positive economic profits, what happens in the long run to the following: The price of trucking services
Answer:
The price of trucking services would fall until equilibrium prices are reached. Only normal profit would be earned in the long run
Explanation:
A perfect competition is characterized by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.
In the long run, firms earn zero economic profit. If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.
Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.
who has given general principle of management?
Answer:
I think it's " Henri Fayol's "
Answer:
14 management principle of Henri Fayol
Explanation:
1. Division of work or division labor.
2. Balancing Authority and responsibility.
3. Discipline.
4. Unity of command.
5. Unity of Direction.
6. Subordination of individual interest to the general interest.
7. Remuneration.
8. Centralization.
9. Scalar chain.
10. Order.
11. Equity.
12. Stability of tenure of personal.
13. Initiative.
14. Esprit de corps.
What type of plan does a property manager implement to manage renters who do NOT pay their rent in a timely way
Answer:
collection plan
Explanation:
The rent collection plan is a system that is used for the enforcement of rent, in terms of late rent payment as well as lease terms. This is more than just telling the tenant when the rent is due. It has all of the information on all the ways that rent could be paid and also the repercussions for late rent payment or a situation whereby the rent is not even paid at all.
On April 30, 2009, Tilton Products purchased machinery for $88,000. The useful life of this machinery is estimated at 8 years, with an $8,000 residual value. Refer to the information above. Assume that in its financial statements, Tilton Products uses the 200%-declining-balance method and the half-year convention. Depreciation expense in 2009 and 2010 will be: Group of answer choices
Answer:
2009 $11,000
2010 $19,250
Explanation:
Calculation to determine what Depreciation expense in 2009 and 2010 will be:
2009 depreciation expense=$88,000 × 2/8
2009 depreciation expense = $22,000/2
2009 depreciation expense = $11,000
2010 depreciation expense= $77,000 × 2/8 2010 depreciation expense=$19,250
Therefore the Depreciation expense in 2009 and 2010 will be:
2009 $11,000
2010 $19,250
Holt Enterprises recently paid a dividend, D0, of $3.50. It expects to have nonconstant growth of 19% for 2 years followed by a constant rate of 10% thereafter. The firm's required return is 13%. How far away is the horizon date? The terminal, or horizon, date is Year 0 since the value of a common stock is the present value of all future expected dividends at time zero. The terminal, or horizon, date is the date when the growth rate becomes nonconstant. This occurs at time zero. The terminal, or horizon, date is the date when the growth rate becomes constant. This occurs at the beginning of Year 2. The terminal, or horizon, date is the date when the growth rate becomes constant. This occurs at the end of Year 2. The terminal, or horizon, date is infinity since common stocks do not have a maturity date.
Answer:
Holt Enterprises
The terminal, or horizon, date is:
the date when the growth rate becomes constant. This occurs at the end of Year 2.
Explanation:
a) Recent dividend, DO = $3.50
Expected non-constant growth = 19%
Period of non-constant growth = 2 years
Expected constant rate of growth = 10% after 2 years of non-constant growth
The firm's required return rate = 13%
b) The terminal or horizon date is, therefore, from the end of year 2 or beginning of year 3, when constant growth sets in with the Holt stock.
At the horizon date the dividend, D3, must have grown to $5.42 approx.
Then, the horizon value is given by the formula = D3 / required rate - growth rate
= 5.42 / 0.13 - 0.01
= 5.42 / 0.03
= $181
3. Assume that on January 2, 2022, the copyrighted item was impaired in its ability to continue to produce strong revenues. The other intangible assets were not affected. Starn estimated that the copyright would be able to produce future cash flows of $22,100. The fair value of the copyright was determined to be $21,100. Compute the amount, if any, of the impairment loss to be recorded.
Answer:
The amount of the impairment loss to be recorded is $6,800.
Explanation:
Note: This question is not complete. The complete question is therefore provided before answering the question as follows:
On January 1, 2020, Starn Tool & Manufacturing Company purchased a copyright for $31,000 cash. It is estimated that the copyrighted item will have no value by the end of 10 years.
Assume that on January 2, 2022, the copyrighted item was impaired in its ability to continue to produce strong revenues. The other intangible assets were not affected. Starn estimated that the copyright would be able to produce future cash flows of $22,100. The fair value of the copyright was determined to be $21,100. Compute the amount, if any, of the impairment loss to be recorded.
The explanation of the answer is now provided as follows:
Amortization expenses for 2020 = Annual amortization expense = Copyright cost / Estimated useful life of the copyright = $31,000 / 10 = $3,100
Book value of copyright on January 2, 2022 = Copyright cost - Amortization expenses for 2020 = $31,000 - $3,100 = $27,900
Copyright fair value = $21,100
Impairment loss = Book value of copyright on January 2, 2022 - Copyright fair value = $27,900 - $21,100 = $6,800
Therefore, the amount of the impairment loss to be recorded is $6,800.
Triptych Food Corp. Income Statement For the Year Ending on December 31 (Millions of dollars) Year 2 Year 1 Net Sales 6,350 5,000 Operating costs except depreciation and amortization 1,120 1,040 Depreciation and amortization 318 200 Total Operating Costs 1,438 1,240 Operating Income (or EBIT) 4,912 3,760 Less: Interest 663 489 Earnings before taxes (EBT) 4,249 3,271 Less: Taxes (25%) 1,062 818 Net Income 3,187 2,453 Calculate the profitability ratios of Triptych Food Corp. in the following table. Convert all calculations to a percentage rounded to two decimal places.
Question Completion:
The following shows Triptych Food Corp.'s income statement for the last two years. The company had assets of $10,575 million in the first year and $16,916 million in the second year. Common equity was equal to $5,625 million in the first year, 100% of earnings were paid out as dividends in the first year, and the firm did not issue new shares in the second year.
Answer:
Triptych Food Corp.
The profitability ratios of Triptych Food Corp.
Year 2 Year 1
Net profit margin 50.19% 49.06%
Return on total assets 18.84% 23.20%
Return on common equity 36.17% 43.61%
Basic earning power 29.04% 35.56%
Explanation:
a) Data and Calculations:
Income Statement For the Year Ending on December 31 (Millions of dollars) Year 2 Year 1
Net Sales $6,350 $5,000
Operating costs except
depreciation and amortization 1,120 1,040
Depreciation and amortization 318 200
Total Operating Costs 1,438 1,240
Operating Income (or EBIT) 4,912 3,760
Less: Interest 663 489
Earnings before taxes (EBT) 4,249 3,271
Less: Taxes (25%) 1,062 818
Net Income $3,187 $2,453
Total assets $16,916 $10,575
Common equity $8,812 $5,625
Profitability ratios and formulas:
Net profit margin = Net Income/Sales * 100
Return on total assets = Net Income/Total assets * 100
Return on common equity = Net Income/Common Equity * 100
Basic earning power = EBIT/Total assets * 100
Year 2 Year 1
Net profit margin 50.19% 49.06%
= ($3,187/$6,350 * 100) ($2,453/$5,000 * 100)
Return on total assets 18.84% 23.20%
= ($3,187/$16,916 * 100) ($2,453/$10,575 * 100)
Return on common equity 36.17% 43.61%
= ($3,187/$8,812 * 100) ($2,453/$5,625 * 100)
Basic earning power 29.04% 35.56%
= ($4,912/$16,916 * 100) ($3,760/$10,575 * 100)
Mannisto Inc. uses the FIFO inventory cost flow assumption. In a year of rising costs and prices, the firm reported net income of $219,017 and average assets of $1,413,720. If Mannisto had used the LIFO cost flow assumption in the same year, its cost of goods sold would have been $36,220 more than under FIFO, and its average assets would have been $31,640 less than under FIFO.
Required:
Calculate the firm's ROI under each cost flow assumption (FIFO and LIFO).
Answer:
a) Under the FIFO method:-
ROI = 15.49%.
Under LIFO method:-
ROI = 13.2%
Explanation:
ROI = Net Income * 100 / Avverage assets.
a) Under the FIFO method
[tex]ROI= \frac{219017*100}{1413720} \\ROI = 15.49[/tex]
ROI = 15.49%.
Under LIFO method
[tex]ROI= \frac{182797*100}{1382080} \\ROI=13.2%[/tex]
ROI = 13.2%
Net income Under LIFO= Net income under FIFO-Increased cost of goods sold
= $219017-$36,220= $182797.
Average assets under LIFO= Average assets under FIFO-Average assets that are less under LIFO
= $1413720 - $31,640= $1382080.
The following statements describe why profits for firms in a perfectly competitive industry tend to vanish in the long run. Select the explanation that most accurately reflects this scenario?
A) Firms try to increase supply to cover their costs if they experience losses, and this leads to zero profits.
B) Firms are unable to generate revenue over time because the demand for products drops.
C) When other perfectly competitive firms see an opportunity to earn profits and enter the market prices drop.
D) When other perfectly competitive firms see an opportunity to earn profits and enter the market, prices rise.
Answer:
The correct answer is the option C: When other perfectly competitive firms see an opportunity to earn profits and enter the market the prices drop.
Explanation:
To begin with, in the microeconomics theory the perfect competitive market is characterized by the fact that there a lot of companies that sell an homogenous product and that are price takers of the market itself. So therefore that the only big difference in the firms are the costs and the prices that they have. Moreover, in the long run the firms are obtaining great profits so that leads to the enter of another more companies to the market and the supply rises the prices will have to go low so that will implicate as well a decrease in the prices of every company that now works in that industry.
