Ratio analysis is the comparative or the relationship analytical tool between two components of the balance sheet and the income statement.
The answers to various parts of the question are as follows:
(a) Earnings per share
[tex]\begin{aligned}\text{Earning per share}&=\frac{\text{Total Earning after tax}}{\text{Number of shares}}\\&=\frac{\$313,400}{58,000}\\&=\$5.4\;\text{per share} \end{aligned}[/tex]
(b) Return on common stockholders’ equity
[tex]\begin{aligned}\text{Return}&=\frac{\text{ Earning Available to ordinary equity }}{\text{Total shareholders equity - preference shares}}\\&=\frac{\$290,000}{\$603,400-\$58,800}\\&=0.53 \end{aligned}[/tex]
(c) Return on assets
[tex]\begin{aligned}\text{Return on Asset} &= \frac{\text{Net income}}{\text{Average Total Asset}}\\&=\frac{\$218,000}{\$513,450}\\&=0.42 \end{aligned}[/tex]
(d) Current ratio
[tex]\begin{aligned}\text{Current Ratio}&=\frac{\text{Current Asset}}{\text{Current Liabilities}}\\&=\frac{\$377,900}{\$203,500}\\&=1.85 \end{aligned}[/tex]
(e) Accounts receivable turnover
[tex]\begin{aligned}\text{Account Receivable Turnover}&=\frac{\text{Annual credit sales}}{\text{Average Account Receivable}}\\&=\frac{\$1,890,540}{\$58,900}\\&=32.09 \end{aligned}[/tex]
(f) Average collection period
[tex]\begin{aligned}\text{Average Collection Period}&=\frac{\text{Average Account Receivable}}{\frac{\text{Annual Sales}}{365}}\\&=\frac{\$58,900}{\frac{\$1,890,540}{365}}\\&=11.37 \end{aligned}[/tex]
(g) Inventory turnover
[tex]\begin{aligned}\text{Inventory Turnover}&=\frac{\text{Cost of good sold}}{\text{Average Inventory}}\\&=\frac{\$1,058,540}{\$63,000}\\&=16.80 \end{aligned}[/tex]
(h) Days in inventory
[tex]\begin{aligned}\text{Days in Inventory}&=\frac{365}{\text{Inventory Turnover}}\\&=\frac{365}{16.80}\\&=21 \end{aligned}[/tex]
(i) Times interest earned
[tex]\begin{aligned}\text{Times interest earned }&=\frac{\text{Income before interest, income taxes}}{\text{Interest expense}}\\&=\frac{\$310,000}{\$92,000}\\&=3.36\end{aligned}[/tex]
(j) Asset turnover
[tex]\begin{aligned}\text{Asset Turnover}&=\frac{\text{Net Sales}}{\text{Average total assets}}\\&=\frac{\$1,890,540}{\$513,450} \\&=3.68\end{aligned}[/tex]
(k) Debt to assets ratio
[tex]\begin{aligned}\text{Debt to Asset Ratio}&=\frac{\text{Total Liabilities}}{\text{Total Asset}}\times100\\&=\frac{\$423,500}{\$1,026,900}\times100\\&=41.20\% \end{aligned}[/tex]
(l) Free cash flow
[tex]\begin{aligned}\text{Fre cash Flow}&=\text{Cash from operating Activities - Capital Expenditure}\\&=\$223,000-\$137,000\\&=\$86,000 \end{aligned}[/tex]
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Final answer:
The provided data from Wahlberg Company is used to compute financial ratios for 2020, which will include earnings per share, return on common stockholders' equity, current ratio, and other key metrics necessary for evaluating the company's financial performance.
Explanation:
The question presents Wahlberg Company's comparative statements for financial analysis and requires the computation of various financial ratios for the year 2020. For calculating ratios like earnings per share, return on common stockholders' equity, and others, you will use the provided income statement and balance sheet data.
For example, to calculate the earnings per share (EPS), divide the net income by the number of shares outstanding. To find the current ratio, divide total current assets by total current liabilities. Ratios like the accounts receivable turnover involve dividing net sales by the average accounts receivable to assess how effectively the company is managing its credit sales.
All these ratios are essential for investors and management to understand the company's operational effectiveness, financial stability, and profitability over the fiscal year.
In 2019, Alliant Corporation acquired Centerpoint Inc. for $339 million, of which $59 million was allocated to goodwill. At the end of 2021, management has provided the following information for a required goodwill impairment test:Fair value of Centerpoint Inc. $ 247 millionBook value of Centerpoint’s net assets (excluding goodwill) 221 millionBook value of Centerpoint’s net assets (including goodwill) 280 millionRequired: 1. Determine the amount of the impairment loss. (Negative amount should be indicated by a minus sign. Enter your answer in millions (i.e., 10,000,000 should be entered as 10)).Impairment Loss : _______
Answer:
Impairment loss = $280 - $247 = $33
Explanation:
Impairment loss is the reduction in Company asset's Fair value from its book value.
2019
Centerpoint Inc.'s acquisition value = $339
Goodwill = $59
Net Asset at the time of acquisition = $280
At the end of 2021
Fair Value of Centerpoint Inc. = $247
Book value of Centerpoint Inc. = $280
Book value of Good will = $59
Book value of Net Assets = $280 - $59 = $221 (That is also given)
Impairment loss = Book value of Centerpoint Inc. - Fair Value of Centerpoint Inc.
Impairment loss = $280 - $247 = $33
This loss will be adjusted to the goodwill as follows
Goodwill Book value = $59
New goodwill (Impairment loss adjusted) = $59 - $33 = $26
Revised Book value of Centerpoint Inc. after adjustment of Impairment
Revised Book value / New value of Centerpoint Inc. = $221 + $ 26 = $247
Final answer:
The goodwill impairment loss for Centerpoint Inc. is calculated to be $33 million, derived from the difference between the book value including goodwill ($280 million) and the fair value ($247 million).
Explanation:
To determine the impairment loss for Centerpoint Inc., we first compare the fair value of Centerpoint Inc. to the book value of its net assets excluding goodwill. The fair value of Centerpoint Inc. is $247 million, and the book value of its net assets excluding goodwill is $221 million, indicating no impairment based solely on these numbers because the fair value exceeds the book value of its net assets.
However, for goodwill impairment, we compare the fair value of the reporting unit ($247 million) to its book value including goodwill ($280 million). The difference between the fair value ($247 million) and the book value including goodwill ($280 million) indicates an impairment loss.
Therefore, the goodwill impairment loss is calculated as follows:
$280 million (book value including goodwill) - $247 million (fair value) = $33 million
This amount represents the impairment loss that needs to be recognized.
Craig borrowed $700,000 on October 1, 2017 and is required to pay $720,000 on March 1, 2018. What amount is the note payable recorded at on October 1, 2017 and how much interest is recognized from October 1 to December 31, 2017? A) $700,000 and S0. B) $700,000 and $12,000. C) $720,000 and SO. D) $700,000 and $20,000.
Answer:
B) $700,000 and $ 12,000
Explanation:
The note payable is recorded on the borrowing date of October 01 2017 at its face value $ 700,000. The amount due on the maturity of the note on March 01 2018 is 720,000, thus the interest on the note is $ 20,000 for the 5 month period of the borrowing. (October 1 to March 1).
The recognition of the interest for the 3 month period October to December is calculated as under:
Total interest for 5 months $ 20,000
Interest for 3 months $20,000/5*3 = $ 12,000
So the answer is $ 700,000 and $ 12,000
Answer:
B lol have a good day
Explanation:
Charles Ndhlovu regularly purchased large quantities of materials used in counterfeit manufacturing, such as blank CDs and DVDs, cases, and labeling paper. a store run by Ndhlovu did not display a business license and offered no signage or advertisement to indicate he sold CDs and DVDs. Law enforcement authorities sent a confidential informant to Ndlovu’s store to purchase CDs and DVDs. with $180, the informant bought 80 counterfeit discs labeled with well-known movie and music titles. Police raided Ndlovu’s store and seized over 6,500 counterfeit CDs and DVDs. Ndhlovu was charged and convicted of criminal copyright infringement. He argued on appeal that the government had failed to prove that his copyright infringement was committed for purposes of commercial gain.
Should Ndhlovu’s conviction be upheld?
Answer:
Charles Ndhlovu regularly purchased large quantities of materials used in counterfeit manufacturing, such as blank CDs and DVDs, cases, and labeling paper. a store run by Ndhlovu did not display a business license and offered no signage or advertisement to indicate he sold CDs and DVDs. Law enforcement authorities sent a confidential informant to Ndlovu’s store to purchase CDs and DVDs. with $180, the informant bought 80 counterfeit discs labeled with well-known movie and music titles. Police raided Ndlovu’s store and seized over 6,500 counterfeit CDs and DVDs. Ndhlovu was charged and convicted of criminal copyright infringement. He argued on appeal that the government had failed to prove that his copyright infringement was committed for purposes of commercial gain.
Should Ndhlovu’s conviction be upheld?
It can never be upheld because of the following reasons:
He runs illegal outlet because no licence to back it up
he sells other people's work without their copyright
The was an evidence against him which would be used in the court of law
There is no basis for his appeal as his points are pointless, his conviction should not be upheld in order to serve as deterrent to other criminals.
Explanation:
The summaries of balance sheet and income statement data follow.
Beginning of year:
Total assets $ 85,000
Total liabilities 62,000
Total owner’s equity ?
End of year:
Total assets 110,000
Total liabilities ?
Total owner’s equity 60,000
Changes during year in owner’s equity:
Investments by owner ?
Drawings 18,000
Total revenues 175,000
Total expenses 140,000
Required: Calculate the missing items above.
Answer:
Total owner’s equity = $23,000
Total liabilities =$50,000
Investment by owner = $20,000
Explanation:
We use the accounting equation which is presented below:
Total assets = Total liabilities + owners equity
At the beginning of the year
The owner equity would be
= Total assets - total liabilities
= $85,000 - $62,000
= $23,000
At the end of the year
The total liabilities would be
= Total assets - total owners equity
= $110,000 - $60,000
= $50,000
The investment by owner would be
= Ending balance of owners equity + drawing - opening balance of owners equity + total expenses - total revenues
= $60,000 + $18,000 - $23,000 + $140,000 - $175,000
= $20,000
Suppose you decide (as did Steve Jobs and Mark Zuckerberg) to start a company. Your product is a software platform that integrates a wide range of media devices, including laptop computers, desktop computers, digital video recorders, and cell phones. Your initial market is the student body at your university. Once you have established your company and set up procedures for operating it, you plan to expand to other colleges in the area, and eventually to go nationwide. At some point, hopefully sooner rather than later, you plan to go public with an IPO, and then to buy a yacht and take off for the South Pacific to indulge in your passion for underwater photography. With these issues in mind, you need to answer for yourself, and potential investors, the following questions.
a. What is an agency relationship? When you first begin operations, assuming you are the only employee and only your money is invested in the business, would any agency conflicts exist? Explain your answer.
b. If you expanded and hired additional people to help you, might that give rise to agency problems?
c. Suppose you need additional capital to expand and you sell some stock to outside investors. If you maintain enough stock to control the company, what type of agency conflict might occur?
d. Suppose your company raises funds from outside lenders. What type of agency costs might occur? How might lenders mitigate the agency costs?
Answer:
a1) Agency problem refers to conflict of interest between a company's management and its company's stakeholders.
a2) No
b) YES
c) Creditor Agency Problem
d) Agency Cost of Debt
Explanation:
a. What is an agency relationship? When you first begin operations, assuming you are the only employee and only your money is invested in the business, would any agency conflicts exist? Explain your answer.
Answer
a1) Agency problem refers to conflict of interest between a company's management and its company's stakeholders.
a2) When you first begin operations, assuming you are the only employee and only your money is invested in the business, would any agency conflicts exist? NO, because based on the definition above, there will be no stakeholders, hence no possibility of conflict of interest if there is just one person.
b. If you expanded and hired additional people to help you, might that give rise to agency problems?
ANSWER
YES, because based on the definition, conflict of interest will become possible when agents are recruited and expected to act on behalf of the owner of the company; they might just start doing their own thing by pursuing their own interest against that of the owner.
c. Suppose you need additional capital to expand and you sell some stock to outside investors. If you maintain enough stock to control the company, what type of agency conflict might occur?
ANSWER
This will give rise to a Creditor Agency Problem which is different from Management Agency problem. In the Creditor Agency Problem, Creditors are the principal and the shareholders are the agent because they get the money from outside investors on a promise that they will use it in projects that are low in risk and sure in returns BUT after getting the funds, shareholders might approve that the money be used in High Risk High Return projects which is not in the best interest of the outside investors who do have a controlling interest.
d. Suppose your company raises funds from outside lenders. What type of agency costs might occur? How might lenders mitigate the agency costs?
ANSWER
Agency cost of debt will occur, this refers to an increase in the cost of debt in the event that the interests of shareholders differs from that of management.
How might lenders mitigate the agency costs?
Lenders are aware that management is in full control of their money and they can mitigate the agency costs by imposing certain restrictions on the companies called bond indentures, to reduce the agency-cost issue. Indentures are legally binding agreements surrounding the use of the money and what happens in the case of bankruptcy.
Agency relationship arises when one party acts on behalf of another. At the start of your business, conflicts are unlikely but as the firm expands and more employees or investors are involved, agency problems and conflicts might appear. Employing external lenders could result in agency costs, which can be mitigated with loan agreement constraints.
Explanation:An agency relationship exists when one party (the agent) acts on behalf of another party (the principal). At the initial stages of your business, if you're the only employee and solely invested in the business, there would be no agency conflicts because your interests (as both the owner and worker) align perfectly.
If you expanded and hired additional people, you might indeed face agency problems. These occur when the interests of employees (agents) do not necessarily align with the interests of the business owner (principal) or when they have more information than the principals; this is known as information asymmetry.
If you raise further capital to expand by selling stock to outside investors yet maintain enough shares to control the company, you could experience another type of agency conflict. This happens when the interests of the shareholders differ from those of the controlling owner. Shareholders might prefer safer investments and higher dividends, while you might prefer riskier strategies that you believe would boost the company's value and growth.
If you gather funds from lenders (external), some agency costs might occur. These costs include the interest payable on the loan and the monitoring expense incurred by lenders to ensure that the borrowed funds are used as intended. Lenders can mitigate agency costs by devising constraints in loan agreements, like requiring regular audit reports or restricting what the borrowed funds can be used for.
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Elaine Romberg prepares her own income tax return each year. A tax preparer would charge her $170 for this service. Over a period of 15 years, how much does Elaine gain from preparing her own tax return? Assume she can earn 6 percent on her savings.
Answer:
$3,956.91
Explanation:
The future value of an annuity is determined by the following expression:
[tex]FV = P*(\frac{(1+r)^n-1}{r} )[/tex]
For annualdeposits of $170, at a 6 percent rate for 15 years, the future value is:
[tex]FV = 170*(\frac{(1+0.06)^{15}-1}{0.06})\\FV =\$3,956.91[/tex]
Elaine gains $3,956.91 from preparing her own tax return.
Elaine gains $455.94 by preparing her own tax return over a period of 15 years.
Explanation:To calculate how much Elaine gains from preparing her own tax return, we need to calculate the savings she makes each year by not hiring a tax preparer and then calculate the future value of those savings over 15 years. The amount she saves each year is $170. Assuming she can earn 6% on her savings, we can use the future value formula to calculate the total savings over 15 years.
The future value formula is:
FV = PV * (1 + r) ^ n
Where FV is the future value, PV is the present value (in this case the annual savings), r is the interest rate per period (6% or 0.06 in decimal form), and n is the number of periods (15 years). Plugging in the values, we get:
FV = $170 * (1 + 0.06) ^ 15 = $170 * 1.06^15 = $455.94.
So, Elaine gains $455.94 by preparing her own tax return over a period of 15 years.
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________ company emphasizes its home country culture throughout its operations, and it tends to staff key positions abroad with expatriates from its home country operations.
A. A polycentric
B. A geocentric
C. An ethnocentric
Answer:
The correct answer is letter "C": An ethnocentric.
Explanation:
An ethnocentric company is the type of organization that promotes the culture of its own culture among employees and focuses on providing local workers with the best opportunities possible so they can be competitive. These firms have a nationalistic approach and have the main goal of contributing to their country's development.
You have found an asset with 12.60 percent arithmetic average return and a 10.24 percent geometric return. Your observation period is 40 years. What is your best estimate of the return of the asset over the next 5 years? 10 years? 20 years?
Solution:
In years Best estimate of return Working note
5 12.36% ((5-1)/(40-1)*0.1024)+((40-5)/(40-1)*0.126)
10 12.06% ((10-1)/(40-1)*0.1024)+((40-10)/(40-1)*0.126)
20 11.45% ((20-1)/(40-1)*0.1024)+((40-20)/(40-1)*0.126)
The formula for the return on assets is calculated by dividing the net income by the total average assets. The profit margin and total asset sales can also be represented as a consequence of this ratio. For the calculation of the total asset return, either formula may be used.
Present and future value tables of 1 at 9% are presented below. PV of $1 FV of $1 PVA of $1 FVAD of $1 FVA of $1 1 0.91743 1.09000 0.91743 1.0900 1.0000 2 0.84168 1.18810 1.75911 2.2781 2.0900 3 0.77218 1.29503 2.53129 3.5731 3.2781 4 0.70843 1.41158 3.23972 4.9847 4.5731 5 0.64993 1.53862 3.88965 6.5233 5.9847 6 0.59627 1.67710 4.48592 8.2004 7.5233 How much must be invested now at 9% interest to accumulate to $19,000 in two years?
Multiple Choice
$15,992.
$11,329.
$11,062.
$15,725.
Answer:
$15,992
Explanation:
The computation of the present value is shown below:
Amount or Future value = Present value × (1 + rate)^number of years
$19,000 = Present value × (1 + 0.09)^2
$19,000 = Present value × (1.09)^2
$19,000 = Present value × 1.1881
So, the present value would be $15,992
We simply applied the above formula so that the accurate value could come.
Selected data for Lemonâ Grass, Inc. for the year are providedâ below: Factory Utilities $ 2 comma 800 Indirect Materials Used 36 comma 500 Direct Materials Used 303 comma 000 Property Taxes on Factory Building 6 comma 900 Sales Commissions 81 comma 000 Indirect Labor Incurred 20 comma 000 Direct Labor Incurred 149 comma 000 Depreciation on Factory Equipment 5 comma 100 What is the total manufacturingâ overhead?
Answer:
Manufacturing overhead= $152,300
Explanation:
Giving the following information:
Factory Utilities $ 2,800
Indirect Materials Used $36,500
Direct Materials Used $303,000
Property Taxes on Factory Building $6,900
Sales Commissions $81,000
Indirect Labor Incurred $20,000
Direct Labor Incurred $149,000
Depreciation on Factory Equipment $5,100
Manufacturing overhead includes all costs that are involved in the production in general and need to be allocated to each product line.
Manufacturing overhead= Factory Utilities +Indirect Materials Used + Property Taxes on Factory Building + Sales Commissions + Indirect Labor Incurred + Depreciation on Factory Equipment
Manufacturing overhead= 2,800 + 36,500 + 6,900 + 81,000 + 20,000 + 5,100= $152,300
________ seeks to better run an organization using complete and accurate information and management processes or controls.
Answer:
Governance
Explanation:
Governance is a systematic way of how power is exercised for effective management of state/country economy and social resources for development of the state. Governance involved establishing policies and complete monitoring of the policies by the government using all legal tools permitted by the constitution of the state/country to seek accurate information and management control of resources in other to deliver good governance for the betterment of the people.
Answer:
The correct word for the blank space is: Governance.
Explanation:
Governance is used to designate efficiency, quality and good orientation to the government's intervention that provides a good part of its legitimacy in what sometimes is called "new form of government" in the globalized world after the fall of the Berlin Wall.
An investment that you are considering promises to pay $2000 semiannually for the next two years, beginning six months from now. You have determined that the appropriate opportunity cost (discount rate is 8%, compounded quarterly. What is the value of this investment?
Answer:
The present value is = $7325.48
Explanation:
Step 1: Know the formula for the Present Value of the investment
PV formula = PMT x [1- (1/(1+ r)^n)] /r
Where PMT = Annuity Amount
r = Discount Rate
n= number of years or period
Step 2: fill in the necessary figures for the formula
PMT= $2000
Semi-annually = 2000/2 = 1000
r= 8%, however, compounded quarterly = 8/4 (quarter) = 2% per quarter
n= 2 years... however since it is to be compounded quarterly, 2 x 4(quarterly compounding) = 8
Therefore, Present Value =
The semi- annual PMT, the 2% quarterly rate, the 8 for number of years will be used
PV= 1000 x [1- (1/(1+ 0.02)^8] /0.02
= 1000 x 7.32548
The present value of the investment is = $7325.48
The value of the investment is $3549.28.
Explanation:To calculate the value of the investment, we need to find the present value of each cash flow and sum them up. In this case, the investment promises to pay $2000 semiannually for the next two years, beginning six months from now. The appropriate discount rate is 8%, compounded quarterly.
To find the present value of each cash flow, we can use the formula:
PV = CF / (1 + r/n)^(nt)
Where:
PV = Present Value
CF = Cash Flow
r = Discount Rate
n = Number of times the interest is compounded per year
t = Number of years
Using this formula, the present value of each cash flow can be calculated as follows:
First cash flow: PV = $2000 / (1 + 0.08/4)^(4*0.5) = $1847.91Second cash flow: PV = $2000 / (1 + 0.08/4)^(4*1) = $1701.37The value of the investment, which is the sum of the present values of the cash flows, is $1847.91 + $1701.37 = $3549.28.
BK Trucking has total equity of $25,380 and 1,500 shares outstanding.Its stock is currently selling at $38 per share. What is the market-to-book ratio?
Answer:
2.25 times
Explanation:
The computation of the market-to-book ratio is shown below:
Market to book ratio = (Market price per share) ÷ (book value per share)
where,
Market price per share = $38 per share
And, the book value per share
= Total equity ÷ outstanding shares
= $25,380 ÷ 1,500 shares
= $16.92
So, the market to book ratio would be
= $38÷ $16.92
= 2.25 times
Which of these is an example of "serving the bottom of the pyramid"? a. Car-a-Go-Go Inc. is an MNC that specializes in luxury cars. To penetrate into new markets, they offered incentives to wealthy citizens of other countries to buy their vehicles and expand their footprint. b. Radical Computer Corp. is a multinational computer company that acquires resources from all over the world. They found that in many of the countries they get their materials, the citizens have little to no internet access and cannot afford computers. They decided to build highly affordable computers and install a wireless infrastructure to assist the poorest in these countries in getting online. c. HappyTime Silicon provides much needed silicon to the technology industry. They are continually finding new sources of silicon and expanding their business globally. d. Righteous Burgers is a fast food organization that is opening stores all over the world with their big expansion push. They have meticulously studied the countries where they will open new restaurants and have catered to the culture of each country individually to assist in brand recognition and sales.
Answer:
Option B is Correct.
Explanation:
Serving the bottom of the pyramid means carrying in goods that are inexpensive by that class of the budget where individuals cannot afford luxuries like several advanced countries. They cannot afford high charges and would exploration for something affordable. Among the given examples Radical computer corp. which definite to build reasonable computers and install wireless arrangement to assist the humblest in getting these amenities which they generally cannot afford serves as an example of attending the bottom of the pyramid. Hence the answer is B
During the year just ended, Shering Distributors, Inc., had pretax earnings from operations of $490,000. In addition, during the year it received $20,000 in income from interest on bonds it help in Zig Manufacturing and received $20,000 in income from dividends on its 5% common stock holding in Tank Industries, Inc. Shering is in the 40% tax bracket and is eligible for a 70% dividend exclusion on its Tank Industries stock.
A. Calculate the firm's tax on its operating earnings only.
B. Find the tax and after-tax amount attributable to dividend and interest income.
b. Interest c. Dividend
Before-tax income $0 $0
Less exclusion 0 $0 Use the exclusion 70%
Taxable income $0 $0
Tax 40% $0 $0
After-tax amount $0
$0
â Compare, contrast, and discuss theâ after-tax amounts resulting from the interest income and dividend income calculated in parts b. and c. â(Select all the choices thatâ apply.) A. Theâ after-tax amount of dividendsâ received, $ 24 comma 165â, exceeds theâ after-tax amount ofâ interest, $ 21 comma 330â, due to the 50 % corporate dividend exclusion. B. Theâ after-tax amount of dividendsâ received, $ 21 comma 330â, exceeds theâ after-tax amount ofâ interest, $ 24 comma 165â, due to the 50 % corporate dividend exclusion. C. Since theâ after-tax amount of interest exceeds theâ after-tax amount ofâ dividends, this increases the attractiveness of stock investments by one corporation in another relative to bond investments. D. Since theâ after-tax amount of dividends exceeds theâ after-tax amount ofâ interest, this increases the attractiveness of stock investments by one corporation in another relative to bond investments.
Answer:
(D).
Explanation:
Shering's taxable income = Earnings before interest and tax(EBIT) + Interest income + Taxable Dividend Income
A. Tax on operating income only = $490000 × 40% = $196,000
Tax attributable to dividend and interest income = $516,000 × 40% less 490,000 × 40%
Tax attributable to dividend and interest income= $10,400
B. Interest $20,000
Dividend $20,000
Before tax income $490,000 + 20,000 + 20,000= $530,000
Taxable Income = $530,000 - Dividend excluded from taxation
Taxable Income= $530,000 - 70% of 20,000= $516,000
Tax at 40% on above = $516,000 × 40% = $206,400
After tax income= $516,000- 206,400= $ 309,600
In case of dividend, due to 70% exemption from taxation, only 30% of dividend is subject to tax i.e out of $20,000 receipts, only $6,000 is taxable, the tax on which is $2,400
Whereas in case of income from interest, the whole $20,000 is taxable at 40%. Tax on such income being $8,000
The net receipts in case of dividend thus would be, $20,000 - $2,400 = $17,600
Whereas in case of Interest, the after tax receipts would be, $20,000 - $8,000= $12,000
As can be seen, the correct option is (d) since the after tax amounts of dividends exceeds the after tax amount of interest, this increases the attractiveness of stock investments by one corporation in another relative to bond investments.
What needs to be noted though being, investment in stocks might appear favourable here, but such investment is also more riskier than investment in bonds which carry a fixed rate of interest and fixed term of principal repayment.
The tax on Shering's operating earnings is $196,000. The after-tax interest income is $12,000, and the after-tax dividend income is $17,600. Higher after-tax dividends make stock investments more attractive than bonds.
To address the question, we need to calculate the tax and after-tax amounts for Shering Distributors, Inc.
A. Tax on Operating Earnings:
The firm's tax on its operating earnings can be calculated as follows:
Pretax earnings from operations: $490,000Tax Rate: 40%Tax on operating earnings = 40% × $490,000 = $196,000
B. Tax and After-Tax Amount for Dividend and Interest Income:
b. Interest Income
Interest Income: $20,000Tax Rate: 40%Tax on interest income = 40% × $20,000 = $8,000
After-tax interest income = $20,000 - $8,000 = $12,000
c. Dividend Income
Dividend Income: $20,000Dividend Exclusion: 70%Exclusion Amount = 70% × $20,000 = $14,000
Taxable Dividend Income = $20,000 - $14,000 = $6,000Tax Rate: 40%Tax on taxable dividend income = 40% × $6,000 = $2,400
After-tax dividend income = $20,000 - $2,400 = $17,600
Comparison and Contrast
Since the after-tax amount of dividends ($17,600) exceeds the after-tax amount of interest ($12,000), this increases the attractiveness of stock investments by one corporation in another relative to bond investments due to the 70% corporate dividend exclusion.
In order to construct a supply curve and demonstrate the law of supply one would have to __________.
Answer and explanation:
The supply theory studies the relationship between the quantity supplied of a good or service and its price. If the quantity supplied decreases so will the price. If the quantity supplied increases so will the price. The relationship between the quantity supplied and the price is directly proportional.
To draw the supply curve, a coordinate graph is used. Typically the price takes the vertical "Y" axis while the quantity supplied takes "X" horizontal axis. The fluctuations in price and quantity supplied will be joint in different points along the chart.
When resources are scarce, power differences across subunits are _________; when resources are plentiful, subunit power differences are ___________.
A.magnified, reducedB.reduced, magnifiedC.reduced, not affectedD.magnified, not affected
Answer:
The correct answer is letter "A": magnified, reduced.
Explanation:
Scarcity does not only represent individuals having to sacrifice some of their needs to fulfill others because resources are limited. Scarcity can also represent the reason for dispute between social levels. When resources are scarce and one social stratum has more access to it, differences will increase. The opposite happens when the resources are allocated properly between them: differences are likely to be reduced.
Carlton has ordered a digital watch from an e-commerce Web site. He wants to track the shipment details to estimate the delivery of the product. In the context of procurement management, identify the process that helps Carlton to track his watch shipped by the provider.
Answer:
Control
Explanation:
Procurement management refers to the way in which a company buys products or services from suppliers. This involves establishing the specifications for the items that need to be purchased, the selection of the supplier that can provide it, negotiate the conditions with the supplier, control the process of delivery and define measures for evaluating the whole process. According to this, the process that helps Carlton to track his watch shipped by the provider is the control process as it refers to how the procurement department does the follow up with the supplier to make sure that the items are delivered according to the terms that were established which is what Carlton needs to do.
In the US, public insurers such as Medicare are forbidden by law from applying formal health technology assessments - and in particular, cost-effectiveness analyses - in deciding whether to cover new health technologies, no matter how expensive. By contrast, in Beveridge countries, centralized health technology assessment is required before the public health care system will cover expensive new technologies. What is the nature of the social costs associated with covering a new technology in a Beveridge public healthcare system? What is the nature of the social costs associated with not covering a new technology in such a system? What economic problem does centralized health technology assessment partially address?
Answer:
A.
1. It is usually expensive
2. New products are developed to treat diseases and medical conditions affecting humans.
3. It involves lost of training and retraining of medical technologist or health workers
B
1. It affects the health of the citizens. e.g increase in mortality rate, spread of diseases and infections
2. It reduces the economic strength of a nation/community
3. Reduces productivity at work and environment. This is because workers are not giving there best because of health challenges and failed health system
c.
HTA studies the social, medical, ethical and economic. implications of the health technology. It addresses the issues of human productivity by evaluating the impact of health technology.
Explanation:
What is the nature of the social costs associated with covering a new technology in a Beveridge public healthcare system?
1. It is usually expensive
2. New products are developed to treat diseases and medical conditions affecting humans.
3. It involves lost of training and retraining of medical technologist or health workers
What is the nature of the social costs associated with not covering a new technology in such a system?
1. It affects the health of the citizens. e.g increase in mortality rate, spread of diseases and infections
2. It reduces the economic strength of a nation/community
3. Reduces productivity at work and environment. This is because workers are not giving there best because of health challenges and failed health system
What economic problem does centralized health technology assessment partially address?
HTA studies the social, medical, ethical and economic. implications of the health technology. It addresses the issues of human productivity by evaluating the impact of health technology.
Disney relied on licensing agreements with the Oriental Land Company to open its first foreign theme park, Tokyo Disneyland, which resulted in
A. Disney's meeting the challenge of localizing its product offerings in Japan, leading to a low-cost advantage.
B. Disney's taking advantage of the Japanese consumer buying habits and demographics that no longer posed a challenge.
C. Disney's reduced concerns over fluctuating exchange rates and country-to-country variations in host government restrictions and requirements.
D. Disney's licensing partner, the Oriental Land Company, reaping the windfall, since the partner who bore the risk was also likely to be the biggest beneficiary from any upside gain.
E. Disney's reaping the windfall from the agreement because of learning curve effects.
Answer:
D. Disney's licensing partner, the Oriental Land Company, reaping the windfall, since the partner who bore the risk was also likely to be the biggest beneficiary from any upside gain.
Explanation:
The Japanese Disneyland is the first in the world to be opened under a licensing agreement. All other Disneylands are fully or partially owned by Disney. However, for the Tokyo one, Disney only receives a royalty fee, which is common for licensing agreements.
On the other hand, the Oriental Land Company reaps the benefits of the already stable Disneyland business model. Disney does control the creative part, but the operating is under the Oriental Land Company, meaning they would largely benefit from this licensing agreement.
Disney's licensing agreement with the Oriental Land Company for Tokyo Disneyland meant that Disney had reduced concerns over exchange rates and government regulations, as these risks were managed by the Oriental Land Company. This allowed Disney to enjoy the benefits of expanding into the Japanese market with fewer direct investment risks.
Explanation:The opening of Tokyo Disneyland as a result of Disney's licensing agreements with the Oriental Land Company resulted in C. Disney's reduced concerns over fluctuating exchange rates and country-to-country variations in host government restrictions and requirements. This partnership allowed Disney to enter the Japanese market while minimizing financial and regulatory risks that are commonly associated with foreign direct investments. The Oriental Land Company, being the licensee, took on significant investment and operational responsibilities, which in exchange gave it potential for considerable gains from the park's success.
Through such a licensing agreement, Disney benefited from access to local market knowledge and could circumvent challenges associated with direct investment, such as navigating foreign regulations and adapting to local consumer habits. The Oriental Land Company essentially took on the risk of the capital investment and day-to-day operations, which might have involved adapting Disney's products to better fit the Japanese market. Therefore, the financial and operational risks were shouldered substantially by Disney's Japanese partner.
a. Britton String Corp. manufactures specialty strings for musical instruments and tennis racquets. Its most recent sales were $880 million; operating costs (excluding depreciation) were equal to 85% of sales; net fixed assets were $300 million; depreciation amounted to 10% of net fixed assets; interest expenses were $22 million; the state-plus-federal corporate tax rate was 25%; and it paid 40% of its net income out in dividends. Given this information, construct its income statement. Also calculate total dividends and the addition to retained earnings. Report all dollar figures in millions.
Answer:
Britton String Corp reported Net Income of $60 Million, out of which $24 Million were paid paid out in dividends and $36 Million were taken as addition to Retained Earnings.
Income Statement of the company is presented below. Please note that:
All figures are reported in dollar in millionsFigures in brackets represent negative figureExcel solution is attached for your referenceExplanation:
Britton String Corp.
Income Statement
Sales $880
Less: Operating Costs (Sales × 85%) ($748)
Earning before Interest, Tax,
Depreciation & Amortization (EBITDA) $132
Less: Depreciation (Net Fixed Assets × 10%) $(30)
Earnings before Interest and Tax (EBIT) $102
Less: Interest Expense $(22)
Earnings before Tax (EBT) $80
Corporate Tax (EBT × 25%) $(20)
Net Income $60
Payment of Dividends (Net Income × 40%) $24
Addition to Retained Earnings
(Net Income – Dividends paid) $36
Final answer:
The income statement for Britton String Corp. would show net income of $60 million after accounting for sales, operating costs, depreciation, interest expenses, and taxes, with total dividends of $24 million and $36 million retained earnings.
Explanation:
To construct the income statement for Britton String Corp., start by identifying the total sales and subtract operating costs excluding depreciation. Operating costs are 85% of sales. Depreciation is 10% of net fixed assets, which equates to 10% of $300 million.
Income Statement:
Sales: $880 millionOperating Costs (excluding depreciation): $748 million (85% of $880 million)Depreciation: $30 million (10% of $300 million)Earnings Before Interest and Taxes (EBIT): $102 million ($880 million - $748 million - $30 million)Interest Expenses: $22 millionEarnings Before Taxes (EBT): $80 million ($102 million - $22 million)Taxes (25%): $20 million (25% of $80 million)Net Income: $60 million ($80 million - $20 million)After calculating the net income, we can determine the total dividends and the addition to retained earnings by applying the dividend payout and retention ratios.
Total Dividends: $24 million (40% of $60 million)Addition to Retained Earnings: $36 million (60% of $60 million)In order to defer deductions for manufacturing costs until the finished products are sold, Congress enacted rules specifying that the cost of raw materials, shipping costs, and any other indirect costs of manufacturing must be added to the cost of inventory.
What are these rules called?
Answer:
Uniform cost capitalization rules
Explanation:
In order to defer deductions for manufacturing costs until the finished products are sold, Congress enacted rules specifying that the cost of raw materials, shipping costs, and any other indirect costs of manufacturing must be added to the cost of inventory. These rules are called Uniform cost capitalization rules
The life span of a record that follows a set of phases from creation to final disposition is called the ___________.
Answer:
The correct answer is: records and information life cycle.
Explanation:
The records and information life-cycle management is a practice that implies a set of steps to store and dispose of information. The approach comprehends the creation of the piece of information, processing, distribution, organization, storage, and eventual disposition.
Juan likes both hot dogs and burritos. All else equal, when the price of hot dogs rises, he buys more burritos.
This can best be explained by:
A. the income effect.
B. increasing marginal cost.
C. the substitution effect
D. diminishing marginal utility
Answer:
The correct answer is letter "C": the substitution effect.
Explanation:
The substitution effect takes place within a market when the increase in the price of a given good or service implies its decrease in its quantity demanded but the increase in the demand of others as the result of replacement. The product substituted and the replacement good are not complementary.
A Fixed-Price Incentive (Firm Target) (FPIF) contract is awarded for $25 million to design acomputer based training course for the Air Force with a period of performance of 18 months. Whatreports, if any, must the Air Force Program Manager (PM) require the contractor provide regardingtheir cost, schedule, and technical performance?
Answer:
Air Force Program Manager (PM) would require submission of an Integrated Program Management Report (IPMR) with formats 1 through7.
Explanation:
A Fixed-Price Incentive (Firm Target) (FPIF) contract is awarded for $25 million to design a computer based training course for the Air Force with a period of performance of 18 months. Whatreports, if any, must the Air Force Program Manager (PM) require the contractor provide regarding their cost, schedule, and technical performance?
Answer
Air Force Program Manager (PM) would require submission of an Integrated Program Management Report (IPMR) with formats 1 through7.
Projects is an event(starting and finishing time) with date and purpose. A project has stake holders who are responsible for its actualization or not
Integrated project management is the compilation of processes that ensure various aspects of projects are properly coordinated. All relevant stakeholders and resources are been managed and establishes in the documents. Processes must be followed due to organization standards.
Reports are required for cost, schedule, and technical performance.
Explanation:For a Fixed-Price Incentive (Firm Target) (FPIF) contract, the Air Force Program Manager (PM) would require the contractor to provide reports regarding their cost, schedule, and technical performance. In terms of cost, the contractor would need to provide regular updates on their spending and budget. For schedule, the contractor would need to provide updates on their progress and any delays or changes to the project timeline. And for technical performance, the contractor would need to provide information on the quality and effectiveness of the computer-based training course they are designing.
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The declaration of a cash dividend causes stockholders' equity to decrease but has no immediate effect upon corporate assets.
True/False
Answer:
False
Explanation:
Dividend is the amount of money paid out of a corporation's profit to the shareholders, which serves as return on investment.
Dividends are always paid out of current asset which is cash and such payment decreases the corporation's asset. Since it is paid out of earnings, it also decreases stockholders' equity.
The following information relates to Myer, Inc.: Advertising Costs $ 17 comma 800 Sales Salary 17 comma 800 Sales Revenue 560 comma 000 President's Salary 300 comma 000 Office Rent 67 comma 000 Manufacturing Equipment Depreciation 1 comma 600 Indirect Materials Used 1 comma 600 Indirect Labor 11 comma 000 Factory Repair and Maintenance 980 Direct Materials Used 24 comma 500 Direct Labor 44 comma 000 Delivery Vehicle Depreciation 1 comma 700 Administrative Salaries 27 comma 500 How much were Myer's product costs?
A. $ 327 comma 500
B. $ 577 comma 800
C. $ 691 comma 800
D. $ 83 comma 680
Answer:
Option (D) is correct.
Explanation:
Myer's product costs is as follows:
= Manufacturing Equipment Depreciation + Indirect Materials Used + Indirect Labour + Factory repair and Maintenance + Direct Materials Used + Direct Labor
= $1,600 + $1,600 + $11,000 + $980 + $24,500 + $44,000
= $83,680
Therefore, the Myer's product costs were $83,680.
Tory Enterprises pays $238,400 for equipment that will last five years and have a $43,600 salvage value. By using the equipment in its operations for five years, the company expects to earn $88,500 annually, after deducting all expenses except depreciation. (Round your answers to the nearest whole dollar.)
Calculate annual depreciation expenses using double-declining-balance method.
To calculate annual depreciation expenses using the double-declining-balance method, we first need to determine the straight-line depreciation per year, and then apply the double-declining-balance method to calculate annual depreciation for each year. The annual depreciation expenses using the double-declining-balance method are $95,360 for Year 1, $57,216 for Year 2, $34,329.60 for Year 3, $20,597.76 for Year 4, and $12,358.66 for Year 5.
Explanation:To calculate annual depreciation expenses using the double-declining-balance method, we first need to determine the straight-line depreciation per year. The formula for straight-line depreciation is (Cost - Salvage Value) / Useful Life. In this case, the cost of the equipment is $238,400 and the salvage value is $43,600. Since the equipment will last for 5 years, the useful life is 5 years.
Calculating the straight-line depreciation, ($238,400 - $43,600) / 5 = $39,560 per year.
The double-declining-balance method uses a depreciation rate that is twice the straight-line rate. Therefore, the depreciation rate is 2 * (1 / 5) = 0.4, or 40% per year.
To calculate the annual depreciation using the double-declining-balance method, multiply the book value at the beginning of each year by the depreciation rate. The book value at the beginning of the first year is $238,400.
Year 1: $238,400 * 0.4 = $95,360
Year 2: ($238,400 - $95,360) * 0.4 = $57,216
Year 3: ($238,400 - $95,360 - $57,216) * 0.4 = $34,329.6
Year 4: ($238,400 - $95,360 - $57,216 - $34,329.6) * 0.4 = $20,597.76
Year 5: ($238,400 - $95,360 - $57,216 - $34,329.6 - $20,597.76) * 0.4 = $12,358.66
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The annual depreciation for Tory Enterprises can be calculated by doubling the straight-line depreciation rate and applying it annually to the remaining book value of the equipment.
Explanation:To compute the annual depreciation expense using the double-declining-balance method, we first calculate the straight-line depreciation rate. Given that the equipment will last five years, the straight-line rate is 1 divided by 5, which gives us 0.2 or 20%. In the double-declining-balance method, we double this rate, giving us 40%. The book value of the equipment at the beginning is the initial cost, which is $238,400.
So for the first year, the depreciation expense is 40% of $238,400, which equals $95,360. In the second year, we subtract the first year's depreciation from the book value ($238,400 - $95,360 = $143,040) and the depreciation expense is 40% of $143,040, giving us $57,216. We repeat this process for each subsequent year.
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Which two key considerations should be made to make sure the performance of the report is not degraded due to large data volume? Universal Containers (UC) has over 10 million accounts with an average of 20 opportunities with each account. A Sales Executive at UC needs to generate a daily report for all opportunities in a specific opportunity stage.
A. A number of queries running at a time.
B. A number of joins used in report query.
C. A number of records returned by report query.
D. Number of characters in report query.
B. A number of joins used in report query.
C. A number of records returned by report query.
Explanation:
A report on the results of something is a survey. These are generated annually by government bodies that have to prove that the money was spent correctly and accurately, funded by public money.
Such reports should include metrics of success that assess the organization's accomplishments and its services. The statistics that, for instance, show the number of arrests, number of convictions by category of crime and the increase in crime rates for a police department.
Washington Company's employees earn $220 per day and are paid every Friday for a five-day work week. This year, December 31 is a Wednesday.
Required: Journalize the adjusting entry on December 31.
Answer:
Explanation:
The adjusting entry is shown below:
Wages and salaries Expense A/c Dr $660
To Wages and salary payable A/c $660
(Being the wages are adjusted)
The computation is shown below:
= Per day salary × number of days
= $220 per day × 3 days
= $660
So, the wages and salaries expense is debited for $660 and wages and salaries payable is credited for $660
To record the adjusting entry on December 31, the daily wage ($220) is multiplied by the number of unpaid days (2), which equals $440. The journal entry includes a debit to Salary Expense and a credit to Salary Payable by $440.
The subject matter of this question is related to accounting, specifically related to how to journalize an adjusting entry. In this scenario, Washington Company's employees earn $220 per day and they are paid on every Friday for a five-day work week. This year, December 31st is falling on Wednesday.
Since the payment is made on Friday, the company will have due salary for two days (December 31 & January 1st of next year). So, an adjusting entry needs to be made to account for these two days. This is essential to confirm with the accrual basis of accounting.
To calculate the value of the adjusting entry, multiply the daily wages by the number of unpaid days. Here, that would be $220 (daily wage) * 2 days = $440.
Now, we can proceed with the journal entry:
Debit: Salary Expense $440 (to record the cost of employee services)
Credit: Salary Payable $440 (to record the obligation to pay employees in the future)
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