Answer:
$26000
Explanation:
from the question;
check per day; 20000
delay: 3 days
checks to pay suppliers; 17000
clearing time 2 days
we first calculate collection flaot:
collection flaot = average amount of check x outstanding days
= 20000 x 3
= 60000
now we have to calculate disbursements float:
average amount of check x days to clear
= 17000 x 2
= 34000
with these two values we can get the net float
= collection flaot - disbursements float
= 60000 - 34000
= $26000
On July 1, Wildhorse Co. purchases 560 shares of its $5 par value common stock for the treasury at a cash price of $10 per share. On September 1, it sells 370 shares of the treasury stock for cash at $11 per share. Required:Journalize the two treasury stock transactions.
Answer:
Please see the journal entries for the two treasury stock transactions.
Explanation:
• Purchase of treasury stock
Treasury stock Dr $5,600
To Cash account Cr $5,600
(Being the purchase of treasury stock that is recorded)
For recording the above, treasury stock was debited because it increased the treasury while cash credited because it decreased the assets.
• Sale of treasury stock
Cash account Dr $4,070
To Treasury stock Cr $3,700
To paid in capital- treasury stock Cr $370
Explanation
° Purchase of treasury stock
Treasury stock
= 560 shares × $10 per share
= $5,600
° Sales of treasury stock
Cash receipt
= 370 shares × $11 per share
= $4,070
Treasury stock
= 370 shares × $10 per share
= $3,700
Paid in capital treasury stock
= 370 shares × ($11-$10)
= $370
1. Name one practice that is prohibited under Section 8 of RESPA.
2. List at least three categories under ECOA on which creditors may not base credit decisions.
3. Define rescission as it relates to a mortgage loan transaction.
4. List at least two practices that are not prohibited with regard to appraisers.
Answer:
The answer is below
Explanation:
1. Pactice that is prohibited under Section 8 of RESPA includes the following:
i. Payment or Receive of "things of value" for business referrals
ii. Fee splitting when the job or work is yet to be done, to earn a part of the fee
iii. Excessive charges such as mark-ups, double billing, etc.
iv. Void agreement or understanding with regard to referrals and settlement services
2. Categories under ECOA on which creditors may not base credit decisions are:
Race, Color, Religion, Nationality, Sex, Marital status, Age, Receipt of public assistance and Exercise of rights under the Consumer Credit Protection Act
3. Rescission is a term that describes a form of legal remedy that voids an agreement between two parties and take back both parties to the initial state before the transaction.
Recission right is however applicable to specific loan transactions, for example refinances and home equity lines of credit.
4. Practices that are not prohibited with regard to appraisers.
i. Payment or Receive of "things of value" for business referrals
ii. Fee splitting when the job or work is yet to be done, to earn a part of the fee
iii. Excessive charges such as mark-ups, double billing, etc.
iv. Void agreement or understanding with regard to referrals and settlement services.
The answer to the queries given above are stated as follows:-
1. Cash or other 'things of value' as defined under section 8 of the Act are stated to be not to be used by any such firm for the purpose of business referrals.
2. A banking or financial institutions providing credit facilities may not base their credit decisions on factors like race, sex, religion, nationality, beliefs, etc which are irrelevant to the credibility of a borrower in the market.
3. Rescission relates to the revoking, calling back, reversing the judgement passed by the law and make necessary amendments to the law as may be deemed fit.
4. An appraiser may not try to influence the property through the way of wrongful behavior like fraud,coercion or impersonation. And any other such act which relates to criminal conduct must be avoided by the appraiser.
Things of value refer to such assets or class of assets that are easily liquidated and their values are easily realizable due their liquidity and acceptability in the market.There shall be no discrimination for providing credit facilities on the bases of unrelated phenomenon such as sex, religion, race, castes of a person and shall be purely based on credibility of such person.Rescission relates to the mortgage loan transaction in a way that it is available to the parties of such transaction in cases where there is refinancing or a home mortgage against finance facility.Any such agreements which are void ab initio, void during the contract or voidable at the end of any party are not allowed for appraisers so it can be concluded that only legally bound contracts are allowed.There shall be no acts of impersonation, frauds leading to coercion are also prohibited in case of appraisers of a property so only genuine appraisal of a property is allowed.Hence, the correct statements are mentioned above for all the queries as asked under the headings of 1, 2, 3 and 4 and hold true.
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You find a zero coupon bond with a par value of $10,000 and 14 years to maturity. The yield to maturity on this bond is 5.1 percent. Assume semiannual compounding periods. What is the price of the bond
Answer:
Bond Price = $4940.8468 rounded off to $4940.85
Explanation:
The price of a zero coupon bond is simply calculated by calculating the present value of the face value of the bond that the bond pays at maturity. The formula for the price of a zero coupon bond is,
Bond Price = Face Value / ( 1 + r )^n
Where,
r is the rate or YTM n is the number of periods left to maturityAssuming that the r or YTM is always stated in annual terms, the semi annual YTM will be 5.1% / 2 = 2.55%
Assuming semi annual compounding periods, the total number of periods or n will be,
n = 14 * 2 = 28
Bond Price = 10000 / (1 + 0.0255)^28
Bond Price = $4940.8468 rounded off to $4940.85
Jamie has worked for ABC Printing for 5 years. During this period ABC Printing has contributed $25,000 to her non-contributory retirement plan. Assuming ABC uses graded schedule vesting, how much will Jamie be able to roll into an IRA if she left ABC Printing after 5 years?
Answer:
$20,000
Explanation:
Generally a graded vesting schedule lasts 6 years. After the first 2 years, the employee is entitled to 20% of accrued benefits (in this case contributions to her retirement plan). Then, the employee will be vested an additional 20% of the contribution benefits per year until the sixth year when 100% of the benefits are vested.
In this case, Jamie would be able to roll out $25,000 x 80% = $20,000
End of year % vested
2 20%
3 40%
4 60%
5 80%
6 100%
The Association of Organic Food Growers, which does not include all organic farmers and ranchers, refuses to deal with any parties who do not carry the products of its members. This group boycott is Group of answer choices a situation that neither restrains trade nor harms competition. not within the scope of the Sherman Act. a per se violation of antitrust law. subject to analysis under the rule of reason.
Answer:
a per se violation of antitrust law.
Explanation:
The antitrust laws can be defined as those laws that are created by the US government to protect consumers from unfair means of competition in market. The aim of creating such laws is to ensure the protection of customers from corruptive business practices and also to ensure safe healthy competitive environment among same business companies.
In the given scenario, the Association of Organic Food Growers is violating the antitrust law by boycotting farmers, ranchers, etc. The antitrust laws are violated by companies in several ways among them is by boycotting.
Boycotting can be defined as an agreement between several companies that excludes a group of customers or market to avert them from buying aanyy goods or products.
This boycotting agreement is a per se violation of antitrust law.
The 7 percent bonds issued by Modern Kitchens pay interest semiannually, mature in eight years, and have a $1,000 face value. Currently, the bonds sell for $987. What is the yield to maturity? B) 6.92 percent D) 7.22 percent A) 6.97 percent C) 6.88 percent E) 7.43 percent
Answer:
The answer is D. 7.22 percent
Explanation:
Interest payments are being made semiannually, this means it is being paid twice in a year
N(Number of periods) = 16 periods ( 8 years x 2)
I/Y(Yield to maturity) = ?
PV(present value or market price) = $987
PMT( coupon payment) = $35 ( [7 percent÷ 2] x $1,000)
FV( Future value or par value) = $1,000.
We are using a Financial calculator for this.
N= 16; PV = -987 ; PMT = 35; FV= $1,000; CPT I/Y= 3.61
3.61 percent is the Yield-to-maturity for semiannual
Therefore, the Yield-to-maturity of the bond annually is 7.22 percent (3.61 percent x 2)
The maximum tax rate on estates and gifts: Question 7 options: is gradually increasing. has remained constant. is gradually declining. has increased sharply.
Is gradually declining.
Ball Bearings, Inc., faces costs of production as follows:Quantity Total Fixed Costs (Dollars) Total Variable Costs (Dollars)0 100 01 100 502 100 703 100 904 100 1405 100 2006 100 360(a.) Complete the following table by calculating the company's total cost, marginal cost, average fixed cost, average variable cost, and average total cost at each level of production.
(b.) The price of a case of ball bearings is $50. Seeing that he can't make a profit, the company's chief executive officer (CEO) decides to shut down operations.The firm's profit in this case is...(c.) True or False: This was a wise decision.(d.) Vaguely remembering his introductory economics course, the company's chief financial officer tells the CEO it is better to produce 1 case of ball bearings, because marginal revenue equals marginal cost at that quantity.At this level of production, the firm's profit is...True or False: This is the best decision the firm can make.
Answer:
Ball Bearings, Inc.
a) Calculations of Costs of Production:
Qty Total Fixed Total Total Marginal Average Average Average
Costs ($) Variable Costs ($) Costs ($) Fixed Variable Total
Costs ($) Costs ($) Costs ($) Costs ($)
0 100 0 100 100 100 0 100
1 100 50 150 50 100 50 150
2 100 70 170 20 50 35 85
3 100 90 190 20 33 30 63
4 100 140 240 50 25 35 60
5 100 200 300 60 20 40 60
6 100 360 460 160 17 60 77
b) For the first ball bearings, the profit in this case is a loss of $100 (Revenue - Total costs; $150 - 50).
c) False
d) At this level of production, the firm's profit, is a loss of $100. This is the best decision the firm can make: False.
Explanation:
a) Data:
Costs of production as follows:
Quantity Total Fixed Costs ($) Total Variable Costs ($)
0 100 0
1 100 50
2 100 70
3 100 90
4 100 140
5 100 200
6 100 360
a) Ball Bearings, Inc. can become profitable when the total revenue exceeds the total costs (variable and fixed). Ball's marginal cost is the additional cost that the corporation incurs for producing one additional unit of ball bearings. Its average fixed, variable, and total costs are computed by dividing the total fixed, variable, and total costs by the number of ball bearings produced.
Steel Tariffs Appear to Have Backfired on Bush
President Bush set aside his free-trade principles last year and imposed heavy tariffs on imported steel to help out struggling mills in Pennsylvania and West Virginia. Some economists say the tariffs may have cost more jobs than they saved, by driving up costs for automakers and other steel users.
Source: The Washington Post, September 19, 2003
Explain how a high tariff on steel imports can help domestic steel producers.
Explain how a high tariff on steel imports can harm steel users.
When a high tariff is placed on steel imports, U.S. steel producers produce______steel and they pay a ________price.
A. less; higher
B. more; lower
C. less; lower
D. more; higher
Answer:
Steel industry in the United States of America has had its up and down over the years. this is especially going by the fact that it is cheaper to import steel from outside America than to buy those produced in U.S. However, high tariff on steel import would enable the domestic steel producers to meet their obligation as well as recoup their investments in the steel industry in U.S.
For example, most construction based organisation would prefer to buy from domestic steel producer if the price and tariff of imported ones makes it extremely difficult to purchase.
On the other-hand, the high tariff placed on steel import could also harm steel users due to the fact that, the quality of steel which they buy from outside U.S would no longer be available to them.
Also, they would be forced to buy at whatever price from domestic producers whether they had need for the steel or not due to high tariff on imported ones.
When a high tariff is placed on steel imports, U.S. steel producers produce more steel and they pay a higher price.
Answer: D. more; higher
Explanation:
The ratio of sales to invested assets, which is also a factor in the DuPont formula for determining the rate of return on investment, is called
Answer:
Investment turnover
Explanation:
Investment turnover is used to compare the revenue earned by a business to the invested assets (equity or debt). It measures how effectively the business is using investment to generate profit.
The number of times investment is converted to revenue is calculated using this method (that is the turnover).
This metric is used in the Dupont formula.
Dupont formula is a financial ratio that evaluates a company's ability to increase return on equity.
Three main components of the Dupont formula are: profit margin, total asset turnover, and financial leverage.
A firm has current assets of $36,000, cash of $5,000, current liabilities of $20,000, total assets of $80,000 and total liabilities of $45,000. What is its net working capital?
a. $16,000
b. $28,000
c. $35,000
d. $44,000
Answer:
Option A, $16000, is the right answer.
Explanation:
The current assets = $36000
Cash = $5000
Current liabilities = $20000
Total assets = $80000
Total liabilities = $45000
Use the below formula to find the net working capial.
Net working capital = Current assets - Current Liabilities
Net working capital = 36000 – 20000
Net working capital = 16000
Therefore, option A, $16000 is correct.
Suppose you invested in the Ishares High Yield Fund (HYG) a month ago. It paid a dividend of today and then you sold it for . What was your dividend yield and capital gains yield on the investment?
Complete Question:
Suppose you invested $100 in the Ishares High Yield Fund HYG your dividend yield and capital gains yield on the investment?
It paid a dividend of $2 today and then you sold it for $95. What was Dividend Yield and Capital Gains Yield on the investment?
Answer:
Dividend Yield is 2%
Capital Gains Yield is -5%
Explanation:
Dividend Yield:
We can calculate the Dividend Yield using the following formula:
Dividend Yield = D0 / Initial Stock Price
Here
D1 was Dividend paid just now and is $2 per share
Initial Stock Price before the dividend payment was $100 per share
By putting values, we have:
Dividend Yield = $2 per share / $100 per share = 2%
Capital Gains Yield:
We can find capital gains yield by using following formula:
Capital Gains Yield = (P1 - P0) / P0
Here
P1 is $95
P0 is $100
By putting values we have:
Capital Gains Yield = ($95 - $100) / $100 = -5%
Solve the consumer’s problem for John’s optimal demand for Germ-X and Purell. (You should find actual numbers representing the quantity of Germ-X chosen and the quantity of
Answer:
Hello your question is incomplete below is the missing part and the needed diagram
suppose John is shopping and has $20 to spend on hand sanitizer. He can go with Germ-X (G) at $1 per fluid ounce (pG=1), or he can purchase purell (P) at $1.25 per fluid ounce (Pp=1.25). His utility function for the two different hand sanitizers is as follows:
U = G +1.1P
where G and P are measured in fluid ounces.
Solve the consumer’s problem for John’s optimal demand for Germ-X and Purell. (You should find actual numbers representing the quantity of Germ-X chosen and the quantity of purell chosen
ANSWER: The solution = (Germ-x,Purell ) = (20,0).
Explanation:
The consumers problem for John's optimal demand for Germ-x and Purell as seen in the diagram can solved by John going maximizing his utility given the constraint of the budget,
that means that John will purchase/spend the constrained budget of ($20) on Germ-x since the unit price of Germ X is at $1 while Purell's unit price is at $1.25 per fluid ounce
In a concentrated network configuration:
a. firms perform a supply chain activity in one location and serve foreign locations from it
b. firms allow each site on the network to operate with full autonomy
c. firms tightly link operations and supply chain activities to one another
d. firms perform a supply chain activity in various countries
Answer:
B
Explanation:
Here, in this question, we are to select which of the options is best.
The correct answer to this question is that in a concentrated network configuration, firms allow each site on the network to operate with full autonomy.
What this means is that each site in the network operate independently of the other sites.
A site is thus an autonomous entity but still part of the concentrated network
Labor productivity growth can be attributed to: a. improvement in technology. b. a decline in university attendance. c. an increase in population growth. d. a decline in the physical capital per worker.
Answer:
The answer is A. improvement in technology
Explanation:
Labor productivity growth is not relevant to a decline in university attendance.
Applying the Malthusianism theory, an increase in population growth can't lead to labor productivity growth because while that population growth is potentially exponential, the growth of resources is linear.
Finally, the physical capital per worker is the quantity of equipment and input resources that are used to produce output goods and services. It has no direct influence to the labor productivity growth.
Quantitative Problem 1: Hubbard Industries just paid a common dividend, D0, of $1.50. It expects to grow at a constant rate of 2% per year. If investors require a 8% return on equity, what is the current price of Hubbard's common stock? Do not round intermediate calculations. Round your answer to the nearest cent. $ per share
Answer:
The current price of Hubbard's common stock is $25.50.
Explanation:
This can be calculated using the Gordon growth model (GGM) formula that assumes growth is dividend will be constant as follows:
P = D1/(r - g) ............................ (1)
Where,
P = Current stock price = ?
D1 = Next dividend = D0 * (1 + g) = $1.50 * (1 + 2%) = $1.53
r = required return = 8%, or 0.08
g = growth rate = 2%, or 0.02
Substituting the values into equation (1), we have:
P = $1.53 / (0.08 - 0.02) = $25.50
Therefore, the current price of Hubbard's common stock is $25.50.
The face value is $81,000, the stated rate is 10%, and the term of the bond is eight years. The bond pays interest semiannually. At the time of issue, the market rate is 8%. What is the present value of the bond at the market rate?
Present value of $1:
4% 5% 6% 7% 8%
15 0.555 0.481 0.417 0.362 0.315
16 0.534 0.458 0.394 0.339 0.292
17 0.513 0.436 0.371 0.317 0.270
18 0.494 0.416 0.350 0.296 0.250
19 0.475 0.396 0.331 0.277 0.232
a. $91,561
b. $47,773
c. $43,673
d. $84,788
Answer:
The Present Value of the bond at the market rate = $90,438.36
Explanation:
The value of the bond is the present value(PV) of the future cash receipts expected from the bond. The value is equal to present values of interest payment plus the redemption value (RV).
Value of Bond = PV of interest + PV of RV
The value of bond can be worked out as follows:
Step 1
PV of interest payments
Semi annul interest payment
= 10% × 81000 × 1/2 = 4050
Semi-annual yield = 8%/2= 4 % per six months
Total period to maturity (in months)
= (2 × 8) = 16 periods (Note the bond term is 8 yeras)
PV of interest = 4050 × (1-1.04^(-16))/0.04 = 47,191.79
Step 2
PV of Redemption Value
Assuming a redemption value equals to the nominal value =
PV of RV = 81,000 × 1.04^-16 = 43,246.56
Step 3 :Total Present Value
Total prent value = 43,246.56 + 47,191.79721 = 90,438.36
The Present Value of the bond at the market rate = $90,438.36
Microsoft online. Which of the following price customization tool is Microson using?
a. Controlling availability
b. Setting prices based upon transaction characteristics
c. Managing product-line offerings
d. Setting prices based upon buyer characteristic
Answer:
Setting prices based upon buyer characteristic
Explanation:
Microson is setting prices based on buyer characteristics. The question says it is giving educational discounts of 10 percent to parents and students. This is value pricing and it mainly involves setting prices with your customers or consumers in focus. Microson based their prices on the worth as perceived by the parents and students. It's discount is characteristic of the people buying it.
The production budget shows expected unit sales of 40000. Beginning finished goods units are 3800. Required production units are 41600. What are the desired ending finished goods units
Answer:
desired ending inventory= 5,400 units
Explanation:
Giving the following information:
Sales= 40,000 units
Beginning finished goods= 3,800 units
Production= 41,600 units
To calculate the desired ending inventory, we need to use the following formula:
Production= sales + desired ending inventory - beginning inventory
41,600= 40,000 + desired ending inventory - 3,800
41,600 + 3,800 - 40,000= desired ending inventory
desired ending inventory= 5,400 units
Nature's Garden, a new restaurant situated on a busy highway in Pomona, California, specializes in a chef's salad selling for $7. Daily fixed costs are $1,710, and variable costs are $4 per meal. With a capacity of 950 meals per day, the restaurant serves an average of 900 meals each day.Requried:a. Determine the current average cost per meal.b. A busload of 30 Girl Scouts stops on its way home from the San Bernardino National Forest. The leader offers to bring them in if the scouts can all be served a meal for a total of $150. The owner refuses, saying he would lose $0.60 per meal if he accepted this offer. How do you think the owner arrived at the $0.60 figure? Comment on the owner's reasoning.c. A local businessman on a break overhears the conversation with the leader and offers the owner a one-year contract to feed 300 of the businessman's employees one meal each day at a special price of $4.50 per meal. Should the restaurant owner accept this offer? Why or why not?
Answer:
Nature's Garden
a. Determination of the current average cost per meal:
Variable cost per meal = $3,800 ($4 x 950) based on full capacity
Fixed costs per day = $1,710
Total costs = $5,510
Average cost per meal = $5,510/950 = $5.80
b. Girl Scouts' offer of $150 for 30 girls:
Offered price per person = $5 ($150/30)
Projecting a loss of $0.60 per meal, this gives a total loss of $18 ($0.60 x 30)
Projected revenue from the offer = $150 + $18 = $168
Projected revenue per meal = $168/30 = $5.60
Actual revenue to be received per meal = $5.00
Loss of $0.60
The owner arrived at the $0.60 loss because his total costs per meal was $5.60.
c. Since the variable cost per meal is $4, the restaurant owner could accept the offer if the additional 300 meals will not increase his daily fixed costs due to lack of capacity. If the fixed costs increase with this addition, then it may not be reasonable to accept the offer. Based on this offer, the contribution to defraying fixed costs, given present capacity, is only $0.50 ($4.50 - $4) per meal.
Explanation:
Selling price of chef's salad = $7
Daily fixed costs = $1,710
Variable costs per meal = $4
Meals capacity per day = 950
Average meals = 900
Nature's Garden has a fixed cost of $1,710 based on current capacity of 950 meals per day. The fixed cost may increase with increasing capacity. This fact must be borne in mind when making decisions.
On July 1, 2017, Lopez Company paid $1,400 for six months of insurance coverage. No adjustments have been made to the Prepaid Insurance account, and it is now December 31, 2017. Zim Company has a Supplies account balance of $5,400 on January 1, 2017. During 2017, it purchased $2,200 of supplies. As of December 31, 2017, a supplies inventory shows $900 of supplies available. Prepare the journal entries to reflect expiration of the insurance and correctly report the balance of the Supplies account and the Supplies Expense account as of December 31, 2017.
Answer:
Lopez Company
the journal entries to record prepaid insurance:
July 1, 2017, 6 months of insurance are prepaid
Dr Prepaid insurance 1,400
Cr Cash 1,400
the adjusting entry made on December 31 to record insurance expense:
December 31, 2017, insurance expense
Dr Insurance expense 1,400
Cr prepaid insurance 1,400
Zim Company
supplies account initial balance $5,400
then it purchased $2,200 worth of supplies during the year
final account balance $900
supplies expense = $5,400 + $2,200 - $900 = $6,700
Adjusting journal entry:
December 31, 2017, supplies expense
Dr Supplies expense 6,700
Cr Supplies 6,700
Ending balances:
Supplies expense account $6,700Supplies account $900A__________produces finished-goods inventory in advance of customer demand using a forecast of sales.
Answer:
Push system.
Explanation:
A push system produces finished-goods inventory in advance of customer demand using a forecast of sales and as such it is categorized as a make to stock because the production of goods are not based on actual demand by the consumers.
Under a push system, manufacturing is strictly based on a projected production plan and the flow of information between the manufacturer and the market is in the same direction with those of raw materials used.
When preparing an income statement vertical analysis, each revenue and expense is expressed as a percent of net income.
A. True
B. False
a. What were HCA's liabilities-to-assets ratios and times-interest-earned ratios in the years 2005 through 2009?
b. What percentage decline in EBIT could HCA have suffered each year between 2005 and 2009 before the company would have been unable to make interest payments out of operating earnings, where operating earnings is defined as EBIT?
c. How volatile have HCA's cash flows been over the period 2005 - 2009?
d. Calculate HCA's return on invested capital (ROIC) in the years 2005 - 2009.
HCA INC
ANNUAL INCOME STATEMENT
($ 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
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%
The ______ rate of interest is the actual rate charged by the supplier and paid by the demander of fund
Answer:
nominal
Explanation:
There is a nominal rate that is the interest rate stated on a loan without taking into account the inflation or the compounding of interests and a real rate that is the one that is adjusted to reflect the real cost of the loan to the borrower. According to this, the answer is that the nominal rate of interest is the actual rate charged by the supplier and paid by the demander of fund because this is the rate that is stated when taking a loan.
The classical dichotomy is the separation of real and nominal variables. The following questions test your understanding of this distinction. Eleanor spends all of her money on paperback novels and mandarins. In 2012, she earned $27.00 per hour, the price of a paperback novel was $9.00, and the price of a mandarin was $3.00. Which of the following give the nominal value of a variable? Check all that apply. The price of a mandarin is 0.33 paperback novels in 2012. Eleanor's wage is 3 paperback novels per hour in 2012. The price of a mandarin is $3.00 in 2012. Which of the following give the real value of a variable? Check all that apply. The price of a paperback novel is $9.00 in 2012. Eleanor's wage is $27.00 per hour in 2012. The price of a paperback novel is 3 mandarins in 2012. Suppose that the Fed sharply increases the money supply between 2012 and 2017. In 2017, Eleanor's wage has risen to $54.00 per hour. The price of a paperback novel is $18.00 and the price of a mandarin is $6.00. In 2017, the relative price of a paperback novel is . Between 2012 and 2017, the nominal value of Eleanor's wage , and the real value of her wage . Monetary neutrality is the proposition that a change in the money supply nominal variables and real variables.
Answer:
In 2012, she earned $27.00 per hour, the price of a paperback novel was $9.00, and the price of a mandarin was $3.00. Which of the following give the nominal value of a variable? Check all that apply.
The price of a mandarin is $3.00 in 2012.Nominal values are expressed in terms of current money. real variables are represented in terms of other goods or services.
Which of the following give the real value of a variable? Check all that apply.
The price of a paperback novel is 3 mandarins in 2012.Nominal values are expressed in terms of current money. real variables are represented in terms of other goods or services.
Suppose that the Fed sharply increases the money supply between 2012 and 2017. In 2017, Eleanor's wage has risen to $54.00 per hour. The price of a paperback novel is $18.00 and the price of a mandarin is $6.00. In 2017, the relative price of a paperback novel is still 3 mandarins.
Between 2012 and 2017, the nominal value of Eleanor's wage doubled, and the real value of her wage remained constant.
Monetary neutrality is the proposition that a change in the money supply affects nominal variables and does not affect real variables.
Craig's Car Wash Inc. is considering a project that has the following cash flow and WACC data. What is the project's discounted payback?
WACC: 10.00%
Year : Cash flows
0 : -$900
1 : $500
2 : $500
3 : $500
Answer:
Discounted payback period= 2 years 1 month
Explanation:
The discounted payback period is the estimated length of time in years it takes the present value of net cash inflow from a project to equate the net cash the initial cost
To work out the discounted payback period, we will compute present value of the cash inflow and then determine how long it will take for the sum to be equal to the initial cost. This is done as follows:
Year Cash flow DF Present value
0 900 × 1 = 900
1 500 × 1.1^(-1) = 454.55
2 500 × 1.1^(-2) = 413.22
2 500 × 1.1^(-3) = 375.66
Total PV for 2 years = 454.55 + 413.22 = 867.77
Balance of cash flow remaining to equal 900 = 900 -867.77 = 32.23
Discounted payback period = 32.23 /375.66 × 12 months
= 2 years 1 month
Discounted payback period= 2 years 1 month
Lindley Corp.'s stock price at the end of last year was $33.50, and its book value per share was $25.00. What was its market/book ratio
Answer:
1.34
Explanation:
Computation for the market/book ratio
Using this formula
Market/book ratio=Stock price/Book value per share
Let plug in the formula
Market/book ratio=$33.50/$25.00
Market/book ratio=1.34
Therefore the Market/book ratio will be 1.34.
Bramble Corp. recorded operating data for its shoe division for the year. Sales$1300000 Contribution margin360000 Controllable fixed costs180000 Average total operating assets720000 How much is controllable margin for the year
Answer:
controllable margin for the year is $180,000.
Explanation:
The Controllable Margin is the Profit that is controllable by the divisional manager.
Calculation of Controllable Margin :
Contribution Margin $360,000
Less Controllable fixed costs ($180,000)
Division Controllable Margin $180,000
Refer to the following scenario to answer the following questions.
Five fishermen live in a village and have no other employment or income-earning possibilities besides fishing. They each own a boat that is suitable for fishing but does not have any resale value. Fish are worth $5 per pound, and the marginal cost of operating the boat is $500 per month. They all fish a river next to the village. According to the following schedule, they have determined that when there are more of them out on the river fishing, they each catch fewer fish per month.
Boats Fish Caught per
Boat (pounds)
1 200
2 190
3 175
4 155
5 130
How many fishermen will choose to operate their boats?
Answer:
5 fishermen will choose to operate their boats as each of them will earn a profit of $150
Explanation:
Per boat operating cost = $500 per month.
Price of fish = $5 per pound.
There are 5 fishermen and each fishermen has 1 boat.
For 1 boat
Total revenue = Price * quantity = $5 * 200 = $1,000
Cost = $500
Profit = Total revenue - Cost = 1000 - 500
Profit = $500.
For 2 boats
Total Revenue of each boat = $5 * 190 = $950
Cost of each boat = $500
Profit of each boat = Total revenue - Cost = 950 - 500
Profit of each boat = $450.
For 3 boats
Total Revenue of each boat = 5 * 175 = $875
Cost of each boat = $500
Profit of each boat = TR - Cost = 875 - 500
Profit of each boat = $375
For 4 boats
Total Revenue of each boat = 5 * 155 = $775
Cost of each boat = $500
Profit of each boat = TR - Cost = 775 - 500
Profit of each boat = $275
For 5 boats
Total Revenue of each boat = 5 * 130 = $650
Cost of each boat = $500
Profit of each boat = TR - Cost = 650 - 500
Profit of each boat = $150.
Conclusion: As there are 5 fishermen and if all of them out on the river at the same time then each fisherman earns profit of $150. As all fishermen earns profit hence all of them will choose to operate their boats. Therefore, 5 fishermen will be ready to operate their boats.
