Transactions that affect earnings do not necessarily affect cash. Identify the effect, if any, that each of the following transactions would have upon cash and net income.
(a) Purchased $100 of supplies for cash.
(b) Recorded an adjusting entry to record use of $20 of the above supplies.
(c) Made sales of $1,200, all on account.
(d) Received $800 from customers in payment of their accounts.
(e) Purchased equipment for cash, $2,500.

Answers

Answer 1

Answer:

(a) Cash reduction, no effect on net income

(b) Net income reduction, no effect on cash

(c) Net income increment, no effect on cash

(d) Cash increase, no effect on net income

(e) Cash reduction, no effect on net income

Explanation:

When items or services are exchanged for cash, these may be recognized as assets or expenses. While expenses reduce income, assets do not as it forms the exchange of one asset (cash) for another.

Considering the transactions in light of the above,

a) Purchased $100 of supplies for cash - Supplies are inventory (an asset) and would not reduce net income until it is used up

(b) Recorded an adjusting entry to record use of $20 of the above supplies. No effect on cash, entry is a reduction in supplies and recognition of cost of goods sold. As such net income reduces.

(c) Made sales of $1,200, all on account. -  Sales on account are credit sales. This will be recognized as a credit to sales (increase in net income) and a debit to accounts receivable.

(d) Received $800 from customers in payment of their accounts. - To recognize this, we debit cash (increase in cash) and debit accounts receivable. This has no effect on net income.

(e) Purchased equipment for cash, $2,500 - Again, this is he exchange of cash for an asset. This has no effect on income.


Related Questions

Specter Consulting purchased $8,900 of supplies and paid cash immediately. What general journal entries will Specter Consulting make to record this transaction? Assume the companyâs policy is to initially record prepaid and unearned items in balance sheet accounts?

Answers

Answer:

Debit Supplies $8,900; Credit Cash $8,900

Explanation:

Based on the information given the general journal entries that Specter Consulting will make to record this transaction assuming the companyâs policy is to initially record prepaid and unearned items in balance sheet accounts will be :

Debit Supplies $8,900

Credit Cash $8,900

At the end of the day, the cash register's record shows $1,250, but the count of cash in the cash register is $1,245. The correct entry to record the cash sales is
A) Debit Cash $1,245; Credit Sales $1,245.
B) Debit Cash $1,245; debit Cash Over and Short $5; credit Sales $1,250.
C) Debit Cash $1,250; credit Sales $1,250.
D) Debit Cash $1,250; credit Sales $1,245, credit Cash Over and Short $5.
E) Debit Cash Over and Short $5, credit Sales $5.

Answers

Answer:

B) Debit Cash $1,245; debit Cash Over and Short $5; credit Sales $1,250.

Explanation:

If the cash register's record shows the amount of $1,250 while the count of cash in the cash register shows the amount of $1,245 which means that the Cash is Over and Short by $5.

Therefore the correct entry to record the cash sales is to Debit Cash For $1,245; Debit Cash Over and Short for $5 and Credit Sales for $1,250.

Debit Cash For $1,245

Debit Cash Over and Short $5

($1,250-$1,245)

Credit Sales $1,250

(To record cash sales)

The annual benefits of $4000 every year for three years may be obtained for an investment on a production equipment costing $20,000 with a salvage value of $5,000. If MARR is 6%, choose the right equation to determine the NPW.A) NPW = 20,000(F/P,6%,3) + 4,000(F/A, ^%, 3) + 5000B) NPW = -20000 + 4000(P/A,6%,3) + 5000(P/F,6%,3)C) NPW = 20,000(P/F,6%,3) + 4000(F/A,6%,3) + 5000D) -20000(P/F,6%,3) +4000(P/A,6%,3) + 5000(P/F,6%,3)

Answers

Answer:

The right equation to determine the NPW is:

= B) NPW = -20000 + 4000(P/A,6%,3) + 5000(P/F,6%,3)

Explanation:

a) Data:

Present value cost of production equipment = $20,000

Annual benefits = $4,000

Period of useful life = 3 years

MARR = 6%

Salvage value = $5,000

Present Value Annuity Factor for annual benefits for 3 years at 6% = 2.673

Present Value Factor for Salvage Value after 3 years at 6% = 0.840

Present Value Factor for the initial cost of investment = 1

Therefore, to obtain the NPW of the investment, the correct equation is:

B) NPW = -20000 + 4000(P/A,6%,3) + 5000(P/F,6%,3)

where NPW = Net Present Worth

P/A = Present Value Annuity Factor

P/F = Present Value Discount Factor

homeworklib On January 1, 2024, an investor paid $311,000 for bonds with a face amount of $375,000. The stated rate of interest is 8% while the current market rate of interest is 10%. Using the effective interest method, how much interest income is recognized by the investor in 2024 (assume annual interest payments and amortization)

Answers

Answer:

$37,500

Explanation:

Calculation to determine how much interest income is recognized by the investor in 2024

Using this formula

Interest income=Face amount *Current market rate of interest

Let plug in the formula

Interest income=$375,000*10%

Interest income=$37,500

Therefore how much interest income is recognized by the investor in 2024 is $37,500

On September 1, Ziegler Corporation had 57,000 shares of $5 par value common stock, and $171,000 of retained earnings. On that date, when the market price of the stock is $15 per share, the corporation issues a 2-for-1 stock split. The general journal entry to record this transaction is:

Answers

Answer: No entry required

Explanation:

A stock split does not change the overall value of equity so will not have any effect on the Equity accounts of the company.

Equity is also recorded by its total value in the financial statements and not the number of shares the company has. There will therefore be no entry to record that the number of shares has increased and because the total value does not change, neither does equity.

Which of the four costs relevant to aggregate production planning is the most difficult to accurately measure?

Answers

Answer:

Backordering Costs.

Explanation:

This is the correct answer I hope this helps.

The following four costs are included in the overall production plan:

initial production expensescosts related to variations in manufacturing rateKeeping inventory expenses.Costs of back ordering.What is aggregate production?

An aggregate production function holds constant all other production factors, like as capital, natural resources, and technology, and connects the entire output of an economy to the total amount of labor engaged in that economy.

A stands for the technology component. It is a gauge of overall economic production. K represents the economy's entire non-human capital input. It is expressed in terms of money or monetary units. L represents the total workforce in the economy.

These are the four cost which are most difficult to measure aggregate production.

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the definition of entrepreneurship holds the promised of ​

Answers

Answer:

Entrepreneurship is the pursuit of opportunity beyond resources controlled. ... Merriam-Webster gives a definition that's closer to what most of us would probably offer the English learner: an entrepreneur is “a person who starts a business and is willing to risk loss in order to make money."

Explanation:

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Georgetown Retail Outlet provided the following financial information: Accounts Receivable balance as of 1/1/2017 $110,000 Accounts Receivable balance as of 12/31/2017 $120,000 Net Credit Sales for the year 2017 $839,500 Cost of Goods Sold for the year 2017 $486,910 Calculate Accounts Receivable Turnover.a. 7.30 days.b. 344.83 days.c. 01.06 days.d. 50.00 days.

Answers

Answer: 7.3 times

Explanation:

The Accounts Receivable Turnover Ratio is an activity ratio that shows how well a company collects the debts owed to it as well as how well it gives out credit.

It is calculated by the formula:

= Net Credit sales / Average Accounts Receivable

= 839,500 / ( (110,000 + 120,000) / 2)

= 839,500 / 115,000

= 7.3 times

Classify the following markets as perfectly competitive, monopolistic, or monopolistically competitive, and explain your answers.

a. wooden no. 2 pencils
b. copper
c. local telephone service
d. peanut butter
e. lipstick

Answers

If you want to answer asked Siri

INTC just paid an annual dividend of $3.40 a share and is expected to increase that amount by 2.2 percent per year. If you are planning to buy 1,000 shares of INTC in two years, how much should you expect to pay per share if the market rate of return for this type of security is 14.8 percent at the time of your purchase

Answers

Answer:

the price of the share is $28.18 per share

Explanation:

The computation of the price of the share is given below

Dividend at year 1

= 3.4% ×(1 + 2.2%)

= 3.4748

Dividend at year 2

= 3.4748 × (1 + 2.2%)

= $3.55

Now the price of the share is

= ($3.55) ÷ (14.8% - 2.2%)

= $28.18 per share

Hence, the price of the share is $28.18 per share

Securitas Financial Services is contemplating purchasing and installing a new, expensive computer network. This is the type of expenditure that would be included in a(n) __________ budget. Multiple Choice capital cash operating asset

Answers

Answer:

capital budget.

Explanation:

From the question we are informed about scenerio whereby Securitas Financial Services is contemplating purchasing and installing a new, expensive computer network. This is the type of expenditure that would be included in capital budget.

Capital budgeting can be regarded as process that is been taken by a business in order to carry out evaluation of potential major projects or potential investments. An instance of this project whereby capital budgeting would be required before approval or rejection is Construction of a new plant, another one is carrying out big investment outside the venture.

Job candidates are leaving an office every 50 minutes. Each candidate goes through three activities during the office visit: verification, written test, and interview. Verification takes 1 minute, the written test takes 40 minutes, and the interview takes 10 minutes. Assume there is only one resource dedicated to each activity. What is the utilization of the bottleneck resource?

Answers

Answer:

80%

Explanation:

Calculation to determine the utilization of the bottleneck resource

First step is to calculate the Flow rate

Flow rate = 1/50

Flow rate = 0.02 customer per minute.

Second step is to calculate the Bottleneck capacity

Bottleneck capacity = Min(1, 1/40, 1/10)

Bottleneck capacity= 0.025 customer per minute.

Now let determine the Utilization of the bottleneck resource using this formula

Utilization of the bottleneck resource = Flow rate/Capacity

Let plug in the formula

Utilization of the bottleneck resource= 0.02/0.025

Utilization of the bottleneck resource= 80%.

Therefore the utilization of the bottleneck resource is 80%

George wants to retire at 65 with $1,000,000 in savings. He plans to deposit a lump sum on his birthday each year. How much will he need to invest each year if he starts saving at 25

Answers

Answer:

Annual saving = 6460

Explanation:

Below is the calculations:

Future value of amount = $1000000

He starts saving at 25 years, then the Years of saving = 40.

Let the interest earned on the saving account = 6%

Thus annual saving = 1000000(F/A, 6%, 40)

Annual saving = 1000000(0.00646)

Annual saving = 6460

Therefore the annual saving will be 6460 dollars.

The following costs were incurred in May:

Direct materials $42,200
Direct labor $32,800
Manufacturing overhead $25,400
Selling expenses $18,800
Administrative expenses $40,200

Conversion costs during the month totaled: __________

Answers

Answer:

the conversion cost is $58,200

Explanation:

The computation of the conversion cost is shown below:

The conversion cost is

= Direct Labor + Manufacturing Overhead

= $32,800 + $25,400

= $58,200

Hence, the conversion cost is $58,200

It is the combination of the direct labor and the manfacturing overhead

DMC Company manufactures a standard and a custom version of a boat engine. Overhead costs include a significant amount of indirect labor and other costs related to moving materials and setting up machines for each batch of engines that are produced. The rest of the overhead is mostly facility-based. The actual activity for a year was as follows:

Total Standard engines Custom engines
Engines produced 3,000 2,500 500
Machine hours 6,000 4,800 1,200
Batches of products 200 100 100

DMC has used machine hours in the past to allocate all overhead costs. Which of the following statements is true given the data above, if DMC used machine hours as the allocation base for the current year?

a. DMC under allocated overhead costs to the standard engines.
b. DMC paid more for overhead costs than if it used activity-based costing.
c. DMC over allocated the overhead costs to the standard engines.

Answers

Answer:

Hence the correct option is option c. DMC over-allocated the overhead costs to the standard engines.

Explanation:

DMC over-allocated the overhead costs to the quality engines

All overheads have now been allocated within the ratio of machine-hours used i.e. 4:1

If however, ABC system were used, overheads associated with found out would are allocated within the ratio of batches i.e. 1:1

And hence, more overheads would are allocated to custom engines and fewer to plain engines.

The amount purchased overheads will remain equivalent. The systems are only used for the allocation of overheads.

A foreign company has offered to buy 75 units for a reduced sales price of $320 per unit. The marketing manager says the sale will not affect the company's regular sales. The sales manager says that this sale will require variable selling and administrative costs. The production manager reports that it would require an additional $20,000 of fixed manufacturing costs to accommodate the specifications of the buyer. If Fruit Computer Company accepts the deal, how will this impact operating income

Answers

Answer:

an increase in the operating income by $16,322

Explanation:

The computation of the impact in the operating income is given below:

Variable cost of 75 units (1300000 × 75 ÷ 12700)   7,678

Sale price of 75 units (75 × 320)  24,000

Increase in operating income (24000 - 7678)   $16,322

hence, the impact in the operating income is that there is an increase in the operating income by $16,322

Suppose you pay $50 to enter into a raffle with $1,000 prize. If you have a 3% chance of winning comma the expected value of your ticket is________.

Answers

Answer:

$-20

Explanation:

Calculation to determine the expected value of your ticket

Using this formula

Expected Value =∑ payoff *Probability

Let plug in the formula

Expected value of ticket =950 ∗.03+(−50) ∗(100%-3%)

Expected value of ticket =950 ∗.03+(−50) ∗.97

Expected value of ticket=−20.

Therefore the expected value of your ticket is $-20

The expected value of your ticket is -$20.

What is the expected value?

The expected value is the summation of the multiplication of some random values with their probabilities of occurring.

The expected value estimates the chance that a favorable outcome will result.

Note that the cost of entering the raffle must be incurred whether the prize is won or not.

Data and Calculations:

Cost for raffle = $50

Prize for raffle = $1,000

Probability of winning = 3%

Probability of losing = 97% (100% - 3%)

Expected value of winning = -$20 ($1,000 x 3% -$50)

Thus, the expected value of your ticket is -$20.

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When high-tech start-up Minx first hit the technology scene, it created a big splash. Its music streaming and voice control technology promised to revolutionize the field. It attracted $500,000 in seed money, suggesting that it could hire the best talent and create amazing new products. But Minx quickly fell off the fast track. It spent nearly $400,000 on a Bluetooth product that sold only 28 units. In addition, a botched security update resulted in the company's having to conduct a nationwide recall of one of its smart products. Yet, other products have been successful, and the company is not facing bankruptcy. Initially, Minx offered amazing perks to attract the best and brightest talent. It provided an in-house chef with free gourmet meals, unlimited snacks, on-site acupuncture, and free yoga classes. Its offices were pet-friendly, and new employees received a $10,000 cash signing bonus. To counter the long hours that the tech world notoriously demands of its workers, Minx offered relaxation areas with table tennis and foosball tables. Unfortunately, bad times have made it necessary for Minx to pull back on its employee perks. Although no staff people are being released, the in-house chef has to go, along with on-site acupuncture, yoga classes, and the $10,000 signing bonus. However, it's still a good place to work, and camaraderie is high.

Required:
As a communications trainee in the CEO's office, you have been asked to draft an intranet post or a memo to employees announcing the bad news. Explain the cutbacks that affect current employees. Employ the bad-news techniques taught in this chapter. What could soften this bad news?

Answers

Answer:

The responses can be defined as follows:

Explanation:

Whenever we enter an organization, we engage but we see that now the organization and ourselves have shared objectives. You operate as a team, create market value and affect the behavior of those you call customers. This is Minx's aim since day 1, and so far nothing had changed. Irrespective of the problems we face, we will prevail together again and escape from difficult situations.

That is why I send this note to inform you and in these tough economic times, we are reducing some facility's all-around idea of creating a more stable and sustainable atmosphere. In the following few months, we will eliminate some amenities including chefs, in-house acupuncturists, yoga sessions, and a prize fee of $10,000. Notwithstanding the difficulty, we would not implement personnel-related actions, such as redundancies and a decrease of employees.

Despite the reduction, I think that we will recover which is merely a temporary solution to tackle the financial storm. Your high-performing culture, comradeship, mutual care, team chemistry should dominate since we have done in the past. We didn't convey my appreciation for having people like you in our team and from this difficult period, we'll only gain strength. We looking forward more to your contributions and thoughts.

According to the National Information Infrastructure Protection Act of 1996, the severity of the penalty for computer crimes depends on the value of the information obtained and whether the offense is judged to have been committed for each of the following except __________.
a. to harass
b. for purposes of commercial advantage
c. in furtherance of a criminal act
d. for private financial gain

Answers

Answer:

Option a: To harass

Explanation:

The National Information Infrastructure Protection Act of 1996 did modified which computer fraud and abuse act.

Computer Crime

This is simply regarded as any form of violations of criminal law regarding the knowledge of computer technology for their perpetration, investigation, or prosecution.  It is often called cybercrime. The Computer Fraud and Abuse Act (CFAA) is set up by the government as a federal law stating and showing the civil liability for gaining unauthorized access to a computer and causing damage to any computer. it  acts, states and formalizes laws to fight threats from computer related acts and offenses.

The forms of cybercrime against individuals includes  harassment, Phishing, Pharming, Fraud, and Identity Theft.

Expected Return American Eagle Outfitters (AEO) recently paid a $.42 dividend. The dividend is expected to grow at a 15.90 percent rate. At the current stock price of $24.47, what is the return shareholders are expecting?

Answers

Answer:

17.89%

Explanation:

according to the constant dividend growth model

price = d1 / (r - g)

d1 = next dividend to be paid

r = cost of equity

g = growth rate

24.47 = (0.42 x 1.1590) / (r - 0.1590)

24.47 x (r - 0.1590) = 0.487

(r - 0.1590) =0.01989

r = 0.1789 = 17.89%

Two countries produce coffee and blueberries. Nicaragua can produce either 25 thousand pounds of coffee or 100 thousand pounds of blueberries per year. Colombia can produce either 20 thousand pounds of coffee or 40 thousand pounds of blueberries per year.

Initially the two countries do not trade. Nicaragua produces 7 thousand pounds of coffee and 72 thousand pounds of blueberries. Colombia produces 7 thousand pounds of coffee and 26 thousand pounds of blueberries. Suppose the countries completely specialize and decide to trade 9 thousand pounds of coffee for 27 thousand pounds of blueberries.

Suppose the countries completely specialize and decide to trade 9 thousand pounds of coffee for 27 thousand pounds of blueberries. After trade, Nicaragua can consume _____________ thousand more pounds of coffee and ____________ thousand more pounds of blueberries. After trade, Colombia can consume_____________ thousand more pounds of coffee and thous and _______________more pounds of blueberries in comparison to the pre- trade consumption.

Answers

Answer:

Columbia has more than 4 coffee & 1 more berry.  

2) Nicaragua has more than 2 coffee & (100-27)= 73 berry, so 1 more berry.

Explanation:

                     Coffee  Berry

Columbia          20             40

Nicaragua          25              100

So Columbia has Comparative ADVANTAGE in Coffee,  

So it specializes in Coffee,   & Nicaragua specializes in Berry  

Initial consumption levels:  

In Columbia ( Coffee, Berry)= (7,26)  

In Nicaragua, (7,72)  

so if Columbia trades 9 Coffee for 27 Berry  

it can have (20-9) = 11 coffee, with 27 Berry  

1) Columbia has more than 4 coffee & 1 more berry.  

2) Nicaragua has more than 2 coffee & (100-27)= 73 berries, so 1 more berry.

Write a Story for Kumquat​

Answers

When I was a kid, growing up on Friends Ave, I absolutely loved kumquats. We didn't have a tree, but there was a family a few streets down that did and I was brave enough to go and knock on their door and ask if we could pick some. They are quite tart and borderline sour, but wonderfully delicious. The skin is mild, which perfectly compliments the inside. I see them at the markets here, but I never buy them because they are a bit expensive and besides, it's much more thrilling when you can pick them yourself. Several months ago I started working for a wonderful family in Beverly Hills as a personal assistant one day a week. While I was up there yesterday, we went out walking in the backyard and there I saw the sweetest little kumquat tree. Now, I had heard about the kumquats before from one of the housekeepers who I once saw making some delightful kumquat-ginger jam. She even gave me a little spoonful to try, which was amazing. I was told I was more than welcome to pick some for myself. You mean it? I get to pick my very own?? So I did. Twenty-plus years later, I finally got to pick my very own kumquats again. It was such a thrill. I eat them whole and have been snacking on them for 2 days. They also had some loquat trees which I had never heard off before, but I picked one or two of those and I'm still undecdided on whether or not I like them. The texture reminds me a lot of an apricot, but with 2-3 medium sized seeds in the middle. I picked a few limes and two pumellos and love having all this fruit around.


THE END

Mitchell waited until July 5, 2019, to file his 2018 Form 1040 return. He did request an extension and paid 90% of the anticipated balance due on April 15, 2019. His remaining balance due on his 2018 return is $88. What is his failure to file penalty

Answers

Answer:

The answer is "$0".

Explanation:

Following are the Tax code of the IRS, taxpayers high school ask that their return on their tax return be extended on a deadline but must thus pay at least 90% of all tax owed, so how they can suffer the nonpayment penalty.

All remainder of the taxes being paid should be paid by the additional due date set by the taxpayer. Companies will have to pay the tax interest just after the due date if they do not pay.

For this reason, M requires timely prolongation and pays 90% of the remainder by the due date. Therefore, 'M' won't be obliged to pay any taxman's failure-to-pay penalty. Therefore, M fails to file $0.

Suppose Dansko Integrated has the following results related to cash flows for 2020:

Net Income of $6,800,000
Increase in Accounts Payable of $200,000
Decrease in Accounts Receivable of $800,000
Depreciation of $1,600,000
Increase in Inventory of $300,000
Other Adjustments from Operating Activities of $400,000

Assuming no other cash flow adjustments than those listed above, create a statement of cash flows with amounts in thousands.

Required:
What is the Net Cash Flow from Operating Activities?

Answers

The Net Cash Flow from Operating Activities is $9,500,000.

Net Operating Activities

Net Income            $6,800,000                                              

Adjustment:

Increase in Accounts Payable of $200,000

Decrease in Accounts Receivable  $800,000

Depreciation of $1,600,000

Less Increase in Inventory ($300,000)

Other Adjustments from Operating Activities of $400,000

Net Cash Flow from Operating Activities $9,500,000

Therefore the Net Cash Flow from Operating Activities is $9,500,000.

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Growing, Inc. is a firm that is experiencing rapid growth. The firm yesterday paid a dividend of $7.70. You believe that dividends will grow at a rate of 25.0% per year for two years, and then at a rate of 5.0% per year thereafter. You expect the stock will sell for $35.09 in two years. You expect an annual rate of return of 23.0% on this investment. If you plan to hold the stock indefinitely, what is the most you would pay for the stock now

Answers

Answer:

$38.98

Explanation:

The maximum amount a rational investor would pay for the stock is the present value of its future dividends and the present value of the terminal value of dividends beyond year 2(the price at the end of year 2) discounted at the investor's rate of return which is 23.0%

Year 1 dividend=$7.70*(1+25.0%)=$9.63

Year 2 dividend=$9.63*(1+25.0%)=$12.04

Share price at the end of year 2=$35.09(the 5.0% is of no use since terminal value beyond has been given)

price of the stock=$9.63/(1+23.0%)^1+$12.04/(1+23.0%)^2+$35.09/(1+23.0%)^2

price of the stock=$38.98  

The LIFO inventory cost flow assumes that the cost of the newest goods purchased are: A. assumed to be the first ones sold. B. assumed to be the first ones included ending inventory. C. not included in cost of goods sold or ending inventory. D. assumed to be the last ones to be sold.

Answers

Answer: A. assumed to be the first ones sold.

Explanation:

Last in, first out is a method that's used in inventory such that the items that are produced recently will be the ones that will be sold first.

Using this method means that the goods recently produced or bought will be the first to be sold and recorded as cost of goods sold. This therefore means that the report on the inventory will be the lower cost of the old products.

Therefore, the LIFO inventory cost flow assumes that the cost of the newest goods purchased are assumed to be the first ones sold.

Holmes Company produces a product that can be either sold as is or processed further. Holmes has already spent $96,000 to produce 2,425 units that can be sold now for $81,500 to another manufacturer. Alternatively, Holmes can process the units further at an incremental cost of $255 per unit. If Holmes processes further, the units can be sold for $415 each. Should Holmes sell the product now or process it further

Answers

Answer: Holmes should process it further to make a profit of $306,496

Explanation:

If Holmes sells now, the selling price would be:

= Amount sold for / No. of units

= 81,500 / 2,425

= $33.61

If the company processes further and sells at $415, they will get a profit per unit of:

= 415 - 255

= $160 per unit

Incremental revenue is:

= (160 - 33.61) * 2,425 units

= $306,495.75

Holmes should process it further.

Binder Corp. has invested in new machinery at a cost of $1,450,000. This investment is expected to produce cash flows of $640,000, $715,250, $823,330, and $907,125 over the next four years. What is the payback period for this project

Answers

Answer:

2.12 years

Explanation:

The calculation of the payback period is given below:

Year           CF             Cumulative CF

0         $(1,450,000)       $(1,450,000)

1            640,000            (810,000)

2           715,250            (94,750)

3           823,330           728,580

4           907,125           1,635,705

Now payback period is  

= 2 + ($94,750 ÷$823,330)

= 2.12 years

Consider the P/E ratios of the following companies: Company A: 7.4 Company B: 11.3 Company C: 14.8 Company D: 9.1 Among these four companies, Company C has the __________. highest relative value highest dollar price lowest relative value lowest net income

Answers

Answer:

highest relative value highest dollar

Explanation:

The price to earning ratio is a financial metric used to value a company. it compares the price of a stock to the earnings of the stock. the higher the metric is, the higher the valuation of the firm

price to earning ratio (P / E) = market value per share / earnings

The higher the P/E, the higher the relative value of the firm relative to other firms. This is because investors are confident about the prospects of growth of the firm and are willing to pay a higher price for the stock of the company

Types of P/E ratio

1. trailing p/e - it is calculated by dividing current share price by the earnings per share for the past 12 months

2. forward p/e - it is calculated by dividing current share price by the estimated per share earnings for the next 12 months

Which of the following statements regarding EBITDA is correct: Select one: a. A defined term in GAAP b. None of the listed answers c. A proxy for net income d. A proxy for operating income e. All of the listed answers

Answers

Answer:

b. None of the listed answers

Explanation:

EBITDA means earnings before interest , tax, depreciation and amortization, whereas operating is the gross profit minus all operating costs, since depreciation and amortization, which are operating costs would have been deducted in arriving at EBITDA, it means operating income and EBITDA are not the same.

Net income is gross profIt minus interest,tax ,depreciation and amortization, hence, it is a far cry from EBITDA.

Note also EBITDA is not recognized by generally accepted accounting principles (GAAP) as a performance measure

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