TB MC Qu. 6-62 Gayne Corporation's contribution margin ratio is ... Gayne Corporation's contribution margin ratio is 18% and its fixed monthly expenses are $51,000. If the company's sales for a month are $313,000, what is the best estimate of the company's net operating income

Answers

Answer 1

Answer:

$5,340

Explanation:

Gayne's corporation contribution margin ratio is 18%

= 18/100

= 0.18

The fixed monthly expenses is $51,000

The company sales for the month is $313,000

Therefore, the net operating income can be calculated as follows

= (Contribution margin ratio×sales)-fixed expenses

= (0.18× $313,000)- $51,000

= $56,340-$51,000

= $5,340

Hence the best estimate of the company's net operating income is $5,340


Related Questions

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

Answers

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

             

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

Answers

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 maturity

Assuming 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

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

Answers

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 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

Answers

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)

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

Answers

Answer: $10,100

Explanation:

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

Sales. $33,300

Less: cost. $19,700

Less: depreciation. $1,900

Profit before tax $11,700

Less: tax. $3500

Net profit. $8200

Add: depreciation. $1900

Operating cash flow. $10,100

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?

Answers

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%

Amy and Maxwell Walker have decided to invest their investment dollars: 40 percent in stocks, 30 percent in bonds, and 30 percent in cash equivalents. Over the past year, the market value of their bonds increased while the market value of their stocks declined. Using the asset allocation model, they should now

Answers

Answer:

C.use some of their cash equivalents to buy more stocks.

Explanation:

Data provided in the question

Stock = 40%

Bond = 30%

cash equivalent = 30%

The Market value of the bond rise

The market value of the stock falls

Based on the above information,

According to the asset allocation model, mostly everyone uses some of their cash equivalents i.e bank account, marketable securities to purchased more stock

Hence, the option c is correct

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.

Answers

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 maximum tax rate on estates and gifts: Question 7 options: is gradually increasing. has remained constant. is gradually declining. has increased sharply.

Answers

Is gradually declining.

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

Answers

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

A__________produces finished-goods inventory in advance of customer demand using a forecast of sales.

Answers

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.

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?

Answers

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.

Do you believe the cash flows from investing activities should include not only the return of investment, but also the return on investment, that is the interest and dividend revenue?

Answers

Answer:

Yes. Cash flows from investing activities should also include return on investment.

Explanation:

Dividend and Interest revenue arise as a result of the Investments that were made by the company and as such constitutes cash flow from investing activities of a Company.

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

Answers

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.

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.

Answers

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 $900

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.

Answers

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.

The ______ rate of interest is the actual rate charged by the supplier and paid by the demander of fund

Answers

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 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

Answers

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

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

Answers

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.

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

Answers

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

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?

Answers

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%

When preparing an income statement vertical analysis, each revenue and expense is expressed as a percent of net income.
A. True
B. False

Answers

True , In vertical analysis for an income statement ,items of income statement are expressed as percentage of net sales.

Hope this helps! <3

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

Answers

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.

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

Answers

Answer:

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%

A company would like to evaluate two incentive schemes that take effect once the worker exceeds standard performance. In the first case the benefits are split 30% to the worker and 70% to the company up to 120% performance. If the worker exceeds 120% performance, all of the earnings go to the worker. In the second case, all earnings beyond standard performance are split 50/50 between the worker and the company.
a. Plot the earnings for each scheme.
b. Derive the equations for worker earnings and normalized unit labor costs for each scheme
c. Find the point at which the two plans break even.
d. Which do you think would the company prefer?

Answers

Answer:

B) plan 1 : worker earning  y = x - 0.14  ,  unit labor = [tex]\frac{x-(0.14)}{x}[/tex]

   plan 2 : worker earning y  = 0.5x + 0.5, unit labor = (0.5x + 0.5) / x

C) At 128%

D ) plan D IS PREFERABLE

Explanation:

In the first case Benefits are split : 30% to worker , 70% to company ( up to 120% ) performance

In the second case benefits 50% go to the worker and 50% go the company

B) The equations for worker earnings and normalized unit labor costs for each scheme

Plan 1 :

y  ( percentage earning of worker ) = 1

unit labor cost = Y / 1

y = 0 - 30

unit labor = 0.3 / x

y = x - 0.14  therefore unit labor = [tex]\frac{x-(0.14)}{x}[/tex]

plan 2 :

y  ( percentage earning of worker ) = 1,   y  = 0.5x + 0.5

unit labor cost :  Y / 1  =  (0.5x + 0.5) / x

C )  The point at which the two plans break even

0.5x + 0.5 = x - 0.14

0.5 + 0.14 = x - 0.5x

0.64 = x(1 - 0.5 )

x = 0.64 / 0.5 =  1.28 = 128%

D) The company would prefer plan 1

A company's strategy evolves over time as a consequence of : Select one: a. The need to keep strategy in step with changing market conditions and changing customer needs and expectations b. The proactive efforts of company managers to fine-tune and improve one or more pieces of the strategy c. The need to respond to the newly-initiated actions and competitive moves of rival firms d. All of the above

Answers

Answer:

The correct answer is the option D: All of the above.

Explanation:

To begin with, a company's primary strategy that focus on completing the main goal of the company of increasing the sales and with that the profits is considered to be the most important element that the business has in order to keep existing and therefore that as the time passes and the context around the organization changes, that strategy evolves. And there are a lot of reasones why that could happen, including the market conditions that vary over the pass of years as well as the need to react to the competitors decisions in order to keep fighting for the market. And other consequence that may help the change of the strategy is the effort itself of managers to make the strategy better as ideas turn to came out.

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

Answers

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 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

Answers

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.

You own two bonds. Both bonds pay annual interest, have 7 percent coupons, and currently have 7 percent yields to maturity. Bond A has 5 years to maturity and Bond B has 10 years to maturity. If the market rate of interest changes unexpectedly to 6 percent, the price of Bond A will change by _____ percent and the price of Bond B will change by _____ percent.

Answers

Answer:

the price of Bond A will change by 4.21% and the price of Bond B will change by 7.36%.

Explanation:

Bonds A and B

current bond price $1,000

interest rate 7%

Bond A matures in 5 years, annual payments

Bond B matures in 10 years, annual payments

if market interest decreases to 6%

Bond A:

$1,000 / (1 + 6%)⁵ = $747.26

$70 x 4.2124 (annuity factor, 6%, 5 periods) = $294.87

market price = $1,042.13

% change = 4.21%

Bond B:

$1,000 / (1 + 6%)¹⁰ = $558.39

$70 x 7.3601 (annuity factor, 6%, 10 periods) = $515.21

market price = $1,073.60

% change = 7.36%

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.

Answers

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.

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