Answer:
As the beta of GM (1.3) is more than that of XOM (0.9), GM has more systematic risk than XOM.
The volatility of GM (40%) is higher than that of XOM (30%). Thus, GM has a higher total risk than XOM.
Explanation:
The systematic risk is the risk caused by factors that affect all of the market and are unavoidable. Such a risk is also known as a market risk and is measured by the beta of a stock. The market beta is always 1. A stock having a beta higher than 1 has higher systematic risk than market and a stock having a lower beta than 1 has a lower systematic risk than the market.
As the beta of GM (1.3) is more than that of XOM (0.9), GM has more systematic risk than XOM.
Total risk, on the other hand, is the risk that comprises of both systematic and unsystematic risk. The systematic risk is the market risk as mentioned above while the unsystematic risk is the firm specific risk and is avoidable. The total risk is measured by the standard deviation or volatility of the stock. The stock with higher volatility has higher total risk and vice versa.
The volatility of GM (40%) is higher than that of XOM (30%). Thus, GM has a higher total risk than XOM.
On January 1, 2018, Lizzy's Lemonade issues 5%, 20-year bonds with a face amount of $81,000 for $71,638, priced to yield 6%. Interest is paid semiannually. What amount of interest expense will be recorded on June 30, 2018, the first interest payment date
Answer:
The amount of $2,149.14 will be recorded on June 30, 2018 , the first interest payment date.
Explanation:
The data below were extracted from the above information
Face amount $81,000
rate 5%
Issue price $71,638
Yield 6%
Since we already know that interest is paid semi annually, then ;
Amount of interest expense will be = issue price × yield
= $71,638 × 6% × 1/2
= $2,149.14
Amount of interest expense is therefore $2,149.14, to be recorded on June 30, 2018, the first interest payment date.
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?
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
Steel Tariffs Appear to Have Backfired on Bush
President Bush set aside his free-trade principles last year and imposed heavy tariffs on imported steel to help out struggling mills in Pennsylvania and West Virginia. Some economists say the tariffs may have cost more jobs than they saved, by driving up costs for automakers and other steel users.
Source: The Washington Post, September 19, 2003
Explain how a high tariff on steel imports can help domestic steel producers.
Explain how a high tariff on steel imports can harm steel users.
When a high tariff is placed on steel imports, U.S. steel producers produce______steel and they pay a ________price.
A. less; higher
B. more; lower
C. less; lower
D. more; higher
Answer:
Steel industry in the United States of America has had its up and down over the years. this is especially going by the fact that it is cheaper to import steel from outside America than to buy those produced in U.S. However, high tariff on steel import would enable the domestic steel producers to meet their obligation as well as recoup their investments in the steel industry in U.S.
For example, most construction based organisation would prefer to buy from domestic steel producer if the price and tariff of imported ones makes it extremely difficult to purchase.
On the other-hand, the high tariff placed on steel import could also harm steel users due to the fact that, the quality of steel which they buy from outside U.S would no longer be available to them.
Also, they would be forced to buy at whatever price from domestic producers whether they had need for the steel or not due to high tariff on imported ones.
When a high tariff is placed on steel imports, U.S. steel producers produce more steel and they pay a higher price.
Answer: D. more; higher
Explanation:
A stock has a beta of 1.28, the expected return on the market is 12 percent, and the risk-free rate is 4.5 percent. What must the expected return on this stock be? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Answer:
Expected return on stock =14.1 0%
Explanation:
The Capital Asset pricing Model (CAPM) can be used to determined the expected return on the stock.
According to the Capital Asset pricing Model the expected return on stock is dependent on the level of reaction of the the stock to changes in the return on a market portfolio.
These changes are captured as systematic risk. The magnitude by which a stock is affected by systematic risk is measured by beta.
Under CAPM, Ke= Rf + β(Rm-Rf)
Rf-risk-free rate (treasury bill rate), β= Beta, Rm= Return on market, Ke-return on stock
Using this model, we can work out the return on stock as follows:
DATA
Ke-?
Rf- 4.5%
β-1.2 8
Rm- 12%
Ke = 4.5% + 1.28× (12-4.5)%=14.1 0%
Expected return on stock =14.1 0%
Given money demand, by how much would the Moola central bank need to change the money supply to close the output gap?
Answer:
A. 5%
B. $20
C.-$20
D. $100 increase
E.$2
Explanation:
a. Calculation for the equilibrium interest rate in Moola
When we look at the table we would actually see that Money supply amount of $500 equal the Money demand amount of $500 which means that the equilibrium interest rate will be 5 percent.
b. The level of investment at the equilibrium interest rate.
Since we have 5% as the equilibrium interest rate which means that the investment at the equilibrium interest rate will be $20.
c. If we look at table we are going to see that the potential GDP of the amount of $330 and the actual GDP of the amount of $350 are beside the interest rate of 5 percent and we could as well see that actual GDP is lower than potential GDP which means that there is negative recessionary GDP gap.
Hence,
Recessionary GDP gap= Actual GDP - Potential GDP
Recessional GDP gap=Actual GDP $330- Potential GDP=-$20
Therefore-$20 will be the recessionary GDP gap.
d. In order for us to eliminate the recessionary gap, so that actual GDP amount can equal potential GDP , this means we have to increase the money supply to the amount of $600 which will inturn lead to an increase of $100
e. Calculation for the expenditure multiplier,
Expenditure multiplier=(Potential GDP $350-Actual GDP $330)/($20-$10)
Expenditure multiplier=$20/10
Expenditure multiplier=$2
Therefore the Expenditure multiplier will be $2
The question is incomplete as the table is not given.
In economics, demand and supply are the most important factors for any business to analyze the market. There is an inverse relationship between demand and supply. If the demand is high and supply is low then there will be higher prices of the goods.
The Moola central bank needs to change the supply of money by increasing $100 to close the output gap.
Reason:
In order to make the actual GDP amount to be equal to the potential GDP, that means by increasing the money supply of $600 will give the effect of $100 for covering the gap.
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Media selection problems can maximize exposure quality and use number of customers reached as a constraint, or maximize the number of customers reached and use exposure quality as a constraint.
A. True
B. False
Media selection problems can maximize exposure quality and use the number of customers reached as a constraint, or maximize the number of customers reached and use exposure quality as a constraint. Thus the statement is True.
What is Media?Media is referred to as a medium of communication used to exchange information about events happening in the world. This provides information about the issues and challenges rising in the world and creates awareness among the public.
These issues can utilize the number of customers reached as a limitation and can enhance exposure quality by determining how commonly to use each media source. The value of the objective function will be modified by the dual price sum of the restrictions.
Therefore, the statement is True.
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Barb bought a house with 20% down and the rest financed by a 30-year mortgage with monthly payments calculated at a nominal annual rate of interest 8.4% compounded monthly. She notices that one-third of the way through the mortgage she will still owe 200,000. Determine the purchase price of the house.
Answer:
$282,706
Explanation:
Calculation to Determine the purchase price of the house
First step
In order for us to determine the purchase price of the house we would be using TVM Calculation to find the PMT
Hence,
PMT =
PV = 200,000
FV = 0
N = 240
I = 0.084/12
Thus,PMT = $1,723.01
The Second step will be to Calculate the Loan Amount Using TVM Calculation,
PV =
FV = 0
PMT = -1,723.01
N = 360
I = 0.084/12
Thus, PV = $226,164.98
Last step is to Determine the purchase price of the house
Using this formula
Purchase price=PV/(100%-20% down)
Let plug in the formula
Purchase price =226,164.98/(0.80)
Purchase price = $282,706
Therefore the purchase price of the house will be $282,706
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?
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
NIKE, Inc., is the best-known sports shoe, apparel, and equipment company in the world because of its association with athletes such as LeBron James, Roger Federer, and Madison Keys. Some of the items included in its recent statement of cash flows presented using the indirect method are listed here. Indicate whether each item is disclosed in the operating activities (O), investing activities (I), or financing activities (F) section of the statement or use (NA) if the item does not appear on the statement.1. Additions to long-term debt.2. Depreciation3. Additions to equipment.4. Increase (decrease) in notes payable. (The amount is owed to financial institutions.)5. (Increase) decrease in other current assets6. Cash received from disposal of equipment.7. Reductions in long-term debt.8. Issuance of stock.9. (Increase) decrease in inventory.10. Net income
Answer and Explanation:
The statement of cash flow involves 3 kinds of activities mentioned below:
1. Operating activities: Many transactions are based that affect the working capital following net income. It would increase the growth in current assets and a decrease in current liabilities, whereas adding the decrease in current properties and an increase in current liabilities.
This should mitigate any work capital shifts. Furthermore, the cost of depreciation is attributed to the net income and the loss on the sale of assets is attributed while the benefit on the sale of assets is deducted
2. Investing: it monitors activities involving the acquisition and selling of long-term assets. The purchase is cash outflow while the selling is cash inflow
3. Financing activities: it monitors activities that impact on the shareholders' long-term debt and equity balance. Share issue is cash inflow whereas cash outflows are redemption and dividend.
Therefore based on the above explanation, the classification is as follows
1 Financing Activity
2. Operating activity
3 Investing activity
4 Financing Activity
5 Operating activity
6 Investing activity
7 Financing Activity
8 Financing Activity
9 Operating activity
10 Operating activity
On July 1, 2017, Lopez Company paid $1,400 for six months of insurance coverage. No adjustments have been made to the Prepaid Insurance account, and it is now December 31, 2017. Zim Company has a Supplies account balance of $5,400 on January 1, 2017. During 2017, it purchased $2,200 of supplies. As of December 31, 2017, a supplies inventory shows $900 of supplies available. Prepare the journal entries to reflect expiration of the insurance and correctly report the balance of the Supplies account and the Supplies Expense account as of December 31, 2017.
Answer:
Lopez Company
the journal entries to record prepaid insurance:
July 1, 2017, 6 months of insurance are prepaid
Dr Prepaid insurance 1,400
Cr Cash 1,400
the adjusting entry made on December 31 to record insurance expense:
December 31, 2017, insurance expense
Dr Insurance expense 1,400
Cr prepaid insurance 1,400
Zim Company
supplies account initial balance $5,400
then it purchased $2,200 worth of supplies during the year
final account balance $900
supplies expense = $5,400 + $2,200 - $900 = $6,700
Adjusting journal entry:
December 31, 2017, supplies expense
Dr Supplies expense 6,700
Cr Supplies 6,700
Ending balances:
Supplies expense account $6,700Supplies account $900The statement of cash flows reports all but which of the following: Multiple Choice The financial position of the company at the end of the accounting period. Cash flows from financing activities. Cash flows from operating activities. Cash flows from investing activities. Significant noncash financing and investing activities.
Answer:
The financial position of the company at the end of the accounting period.
Explanation:
The cash flow statement is the statement that includes all the cash payment and cash receipts transactions held in the business. There are mainly three types of activities i.e operating activities, investing activities, and the financing activities
Also, it involves Significant noncash financing and investing activities.
but it does not reported the financial position of the business at the end of the accounting period
Hence, the first option is correct
Greater pricing power is most likely to result from greater:A. unused capacity.B. market concentration.C. volatility in market share.
Answer:
B. market concentration
Explanation:
The answer is that greater pricing power is most likely to result from greater market concentration because this means that there are few competitors in the market which allows to have more power to establish prices.
The other options are not right because unused capacity indicates that there is a lot of competition in the market which doesn't allow to have the power to establish prices and volatility in market share means that there is not a firm position in the market that allows to have greater pricing power.
1. The "four Ms" of cause-and-effect diagrams are:______.
a. mentality, motivation, management, and manpower.
b. material, methods, men, and mental attitude.
c. material, machinery/equipment, manpower, and methods.
d. material, management, manpower, and motivation.
e. named after four quality experts.
2. A Systematic Approach to Capacity Decisions includes:A. Evaluate the alternativesB. Identify gapsC. Estimate capacity requirementsD. Develop alternativesE. All are correct
Answer:
1. C. c. material, machinery/equipment, manpower, and methods.
2. E. All are correct
Explanation:
1. The cause-and-effect diagram also known as the Ishikawa diagram is used by organizations to find out the likely causes of unwanted problems. This diagram traces the roots of problems and helps managers discover the potential causes of these problems. The four M's that form the bone of the diagram to which other causes are traced include the;
a. material, which is about the products used in the production process and potential problems that can be attributed to them.
b. machinery/equipment, which is about the plant and likely problems that can arise from their use.
c. manpower, which is about the personnel used in the production process, and,
d. methods, which is about the systems adopted by the organization.
2. A systematic approach to capacity decisions include;
a. Estimation of capacity requirements
b. Identification of gaps by comparing the expected requirements with available capacity.
c. Develop alternative plans and methods that would help to reduce the gaps.
d. Evaluate the alternatives taking into consideration their qualitative and quantitative attributes.
1. The "four Ms" of cause-and-effect diagrams are material, machinery/equipment, manpower, and methods. Thus, option C is correct.
2. A Systematic Approach to Capacity Decisions includes all of the options. Thus, option E is correct.
Due to the high demand for a given good or service on the market, firms often employ capacity management as a method to maximize production efficiency. Its objectives include locating and resolving manufacturing process bottlenecks and accelerating output through resource optimization and the removal of time and capacity restrictions.
It aids businesses in overcoming difficulties related to creating long-term organizational strategies, managing supply chain operations, and satisfying short- and medium-term client demand. In order to guarantee that it accomplishes the manufacturing output within the allotted time, an organization must analyze the availability of its resources while doing this. In sectors including manufacturing, retail, services, and information technology, this practice is widespread.
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Delta Insurance Company has a surplus-share treaty with Eversafe Reinsurance. Delta has a retention limit of $200,000, and nine lines of insurance are ceded to Eversafe. How much will Eversafe pay if a $1,600,000 building insured by Delta suffers an 40 precent loss? 1. A) $600,000 2. B) $700,000 3. C) $720,000 4. D) $800,000
Answer:
Delta is responsible for insuring $200,000 / $1,600,000 = 1/8 of the building
Eversafe is responsible for 1 - 1/8 = 7/8
the loss = $1,600,000 x 40% = $640,000
Delta will pay 1/8 x $640,000 = $80,000
Eversafe will pay $640,000 - $80,000 = $560,000
in order for Eversafe to pay:
$600,000, the total loss = $685,714, or 42.86% of the building$700,000, the total loss = $800,000, or 50% of the building$720,000, the total loss = $822,857, or 51.43% of the building$800,000, the total loss = $914,286, or 57.14% of the buildingInvesting activities on the statement of cash flows generate cash inflows and outflows related to borrowing from and repaying principal to creditors and completing transactions with the company’s owners such as selling or repurchasing shares of common stocks and paying dividends.
A. True
B. False
Answer: False
Explanation:
The cash flow from investing activities is a cash flow section that shows cash generated or the cash that is spent which relates to activities involving investment and this include buying physical assets, the investments in securities, or sale of assets or securities.
Therefore, the above analysis I the question is wrong.
How much will be in the Prepaid Insurance account at the end of the year, after the adjusting entries have been prepared and posted
Answer: $8,400
Explanation:
The $9,600 is for 2 years in advance. This can be apportioned per month at a rate of;
= 9,600/24
= $400 per month.
October to the end of the year is 3 months so;
= 400 * 3
= $1,200 will be recorded for the year.
Prepaid Insurance will therefore reduce to;
= 9,600 - 1,200
= $8,400
The face value is $81,000, the stated rate is 10%, and the term of the bond is eight years. The bond pays interest semiannually. At the time of issue, the market rate is 8%. What is the present value of the bond at the market rate?
Present value of $1:
4% 5% 6% 7% 8%
15 0.555 0.481 0.417 0.362 0.315
16 0.534 0.458 0.394 0.339 0.292
17 0.513 0.436 0.371 0.317 0.270
18 0.494 0.416 0.350 0.296 0.250
19 0.475 0.396 0.331 0.277 0.232
a. $91,561
b. $47,773
c. $43,673
d. $84,788
Answer:
The Present Value of the bond at the market rate = $90,438.36
Explanation:
The value of the bond is the present value(PV) of the future cash receipts expected from the bond. The value is equal to present values of interest payment plus the redemption value (RV).
Value of Bond = PV of interest + PV of RV
The value of bond can be worked out as follows:
Step 1
PV of interest payments
Semi annul interest payment
= 10% × 81000 × 1/2 = 4050
Semi-annual yield = 8%/2= 4 % per six months
Total period to maturity (in months)
= (2 × 8) = 16 periods (Note the bond term is 8 yeras)
PV of interest = 4050 × (1-1.04^(-16))/0.04 = 47,191.79
Step 2
PV of Redemption Value
Assuming a redemption value equals to the nominal value =
PV of RV = 81,000 × 1.04^-16 = 43,246.56
Step 3 :Total Present Value
Total prent value = 43,246.56 + 47,191.79721 = 90,438.36
The Present Value of the bond at the market rate = $90,438.36
Lindley Corp.'s stock price at the end of last year was $33.50, and its book value per share was $25.00. What was its market/book ratio
Answer:
1.34
Explanation:
Computation for the market/book ratio
Using this formula
Market/book ratio=Stock price/Book value per share
Let plug in the formula
Market/book ratio=$33.50/$25.00
Market/book ratio=1.34
Therefore the Market/book ratio will be 1.34.
Unemployment numbers drop as more jobless Americans find positions in local businesses. Which determinant of aggregate demand causes the change
Answer: Consumer Spending
Explanation:
As more Americans find jobs, they will be able to earn an income. As they do so they will be able to spend more on goods and services in the economy thereby increasing Consumption spending which is the largest determinant of Aggregate Demand.
As a result of this increase in Consumption, Aggregate demand will change by increasing as well.
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
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.
Read the scenario, and answer the question.You are a manager attending a presentation about conflict resolution. You notice that the speaker seems at ease and comfortable in front of a large audience. You are to talk to the speaker and ask her what she does to be so relaxed. After the presentation, you decide Choose the best response the speaker could give in the scenario above.
a. I read from my notes and make sure the room is darkened.
b. I just go into a room and say what is on my mind.
c. I rehearse repeatedly and practice stress reduction techniques
Answer: I rehearse repeatedly and practice stress reduction techniques
Explanation:
The best response that the speaker can give will be that "rehearse repeatedly and practice stress reduction techniques".
By rehearsing repeatedly and practice stress reduction techniques, one will be at ease and comfortable in front of a large audience.
a. What were HCA's liabilities-to-assets ratios and times-interest-earned ratios in the years 2005 through 2009?
b. What percentage decline in EBIT could HCA have suffered each year between 2005 and 2009 before the company would have been unable to make interest payments out of operating earnings, where operating earnings is defined as EBIT?
c. How volatile have HCA's cash flows been over the period 2005 - 2009?
d. Calculate HCA's return on invested capital (ROIC) in the years 2005 - 2009.
HCA INC
ANNUAL INCOME STATEMENT
($ MILLIONS, EXCEPT PER SHARE)
Dec09 Dec08 Dec07 Dec06 Dec05
Sales $ 30,052 $ 28,374 $ 26,858 $ 25,477 $ 24,455
Cost of Goods Sold 24,826 24,023 22,480 21,448 20,391
Gross Profit 5,226 4,351 4,378 4,029 4,064
Depreciation 1,425 1,416 1,426 1,391 1,374
Operating Profit 3,801 2,935 2,952 2,638 2,690
Interest Expense 1,987 2,021 2,215 955 655
Non-Operating Income/Expense 188 256 661 179 412
Pretax Income 2,002 1,170 1,398 1,862 2,327
Total Income Taxes 627 268 316 625 725
Minority Interest 321 229 208 201 178
Net Income $ 1,054 $ 673 $ 874 $ 1,036 $ 1,424
ANNUAL BALANCE SHEET
ASSETS Dec09 Dec08 Dec07 Dec06 Dec05
Cash & Equivalents $ 312 $ 465 $ 393 $ 634 $ 336
Net Receivables 3,692 3,780 3,895 3,705 3,332
Inventories 802 737 710 669 616
Other Current Assets 1,771 1,319 1,207 1,070 931
Total Current Assets 6,577 6,301 6,205 6,078 5,215
Gross Plant, Property & Equipment 24,669 23,714 22,579 21,907 20,818
Accumulated Depreciation 13,242 12,185 11,137 10,238 9,439
Net Plant, Property & Equipment 11,427 11,529 11,442 11,669 11,379
Investments at Equity 853 842 688 679 627
Other Investments 1,166 1,422 1,669 1,886 2,134
Intangibles 2,577 2,580 2,629 2,601 2,626
Deferred Charges 418 458 539 614 85
Other Assets 1,113 1,148 853 148 159
TOTAL ASSETS 24,131 24,280 24,025 23,675 22,225
LIABILITIES
Long Term Debt Due In One Year 846 404 308 293 586
Accounts Payable 1,460 1,370 1,370 1,415 1,484
Taxes Payable - 224 190 - -
Accrued Expenses 2,007 1,912 1,981 1,868 1,825
Total Current Liabilities 4,313 3,910 3,849 3,576 3,895
Long Term Debt 24,824 26,585 27,000 28,115 9,889
Deferred Taxes - - - 390 830
Minority Interest 1,008 995 938 907 828
Other Liabilities 2,825 2,890 2,612 1,936 1,920
TOTAL LIABILITIES 32,970 34,380 34,399 34,924 17,362
Preferred Stock 147 155 164 125 -
Common Stock 1 1 1 1 4
Capital Surplus 226 165 112 - -
Retained Earnings (9,213) (10,421) (10,651) (11,375) 4,859
Common Equity (8,986) (10,255) (10,538) (11,374) 4,863
TOTAL EQUITY (8,839) (10,100) (10,374) (11,249) 4,863
TOTAL LIABILITIES & EQUITY $ 24,131 $ 24,280 $ 24,025 $ 23,675 $ 22,225
Answer:
HCA
a. HCA's Liabilities-to-assets ratios and times-interest-earned ratios in the years 2005 through 2009:
1. Liabilities-to-assets ratios = Total liabilities/Total Assets
Dec. 09 Dec. 08 Dec. 07 Dec. 06 Dec. 05
136.63% 141.60% 143.18% 147.51% 78.12%
2. Times-interest-earned ratios = EBIT/Interest Expense
Dec. 09 Dec. 08 Dec. 07 Dec. 06 Dec. 05
1.91 times 1.45 times 1.33 times 2.76 times 4.11 times
b. The percentage decline in EBIT that HCA could have suffered each year between 2005 and 2009 to make it unable to make interest payments out its operating earnings, where operating earnings is defined as EBIT:
Dec. 09 Dec. 08 Dec. 07 Dec. 06 Dec. 05
191% 145% 133% 276% 411%
c. The volatility of HCA's cash flows over the period 2005 to 2009:
The standard deviation of the cash flows (cash and cash equivalents) is 115, showing that there is so much volatility in the cash flows.
d. HCA's return on invested capital (ROIC) in the years 2005 - 2009:
= Net Income - Dividend / Total Liabilities + Equity x 100
ROIC = 4.37% 2.77% 3.64% 4.38% 6.41%
Explanation:
a) Data and Calculations:
HCA INC
ANNUAL INCOME STATEMENT
($ MILLIONS, EXCEPT PER SHARE)
Dec. 09 Dec. 08 Dec. 07 Dec. 06 Dec. 05
Sales $ 30,052 $ 28,374 $ 26,858 $ 25,477 $ 24,455
Cost of Goods Sold 24,826 24,023 22,480 21,448 20,391
Gross Profit 5,226 4,351 4,378 4,029 4,064
Depreciation 1,425 1,416 1,426 1,391 1,374
Operating Profit 3,801 2,935 2,952 2,638 2,690
Interest Expense 1,987 2,021 2,215 955 655
Non-Operating
Income/Expense 188 256 661 179 412
Pretax Income 2,002 1,170 1,398 1,862 2,327
Total Income Taxes 627 268 316 625 725
Minority Interest 321 229 208 201 178
Net Income $ 1,054 $ 673 $ 874 $ 1,036 $ 1,424
ANNUAL BALANCE SHEET
ASSETS Dec. 09 Dec. 08 Dec. 07 Dec. 06 Dec. 05
Cash & Equivalents $ 312 $ 465 $ 393 $ 634 $ 336
Net Receivables 3,692 3,780 3,895 3,705 3,332
Inventories 802 737 710 669 616
Other Current
Assets 1,771 1,319 1,207 1,070 931
Total Current
Assets 6,577 6,301 6,205 6,078 5,215
Gross Plant, Property
& Equipment 24,669 23,714 22,579 21,907 20,818
Accumulated
Depreciation 13,242 12,185 11,137 10,238 9,439
Net Plant, Property
& Equipment 11,427 11,529 11,442 11,669 11,379
Investments
at Equity 853 842 688 679 627
Other Investments 1,166 1,422 1,669 1,886 2,134
Intangibles 2,577 2,580 2,629 2,601 2,626
Deferred Charges 418 458 539 614 85
Other Assets 1,113 1,148 853 148 159
TOTAL ASSETS 24,131 24,280 24,025 23,675 22,225
LIABILITIES
Long Term Debt Due
In One Year 846 404 308 293 586
Accounts
Payable 1,460 1,370 1,370 1,415 1,484
Taxes Payable - 224 190 - -
Accrued
Expenses 2,007 1,912 1,981 1,868 1,825
Total Current
Liabilities 4,313 3,910 3,849 3,576 3,895
Long Term
Debt 24,824 26,585 27,000 28,115 9,889
Deferred Taxes - - - 390 830
Minority
Interest 1,008 995 938 907 828
Other
Liabilities 2,825 2,890 2,612 1,936 1,920
TOTAL LIA-
BILITIES 32,970 34,380 34,399 34,924 17,362
Preferred
Stock 147 155 164 125 -
Common
Stock 1 1 1 1 4
Capital
Surplus 226 165 112 - -
Retained
Earnings (9,213) (10,421) (10,651) (11,375) 4,859
Common
Equity (8,986) (10,255) (10,538) (11,374) 4,863
TOTAL
EQUITY (8,839) (10,100) (10,374) (11,249) 4,863
TOTAL LIABILITIES &
EQUITY $24,131 $ 24,280 $ 24,025 $ 23,675 $ 22,225
ii) Liabilities-to-assets ratio:
Dec. 09 Dec. 08 Dec. 07 Dec. 06 Dec. 05
Liabilities 32,970 34,380 34,399 34,924 17,362
Assets 24,131 24,280 24,025 23,675 22,225
136.63% 141.60% 143.18% 147.51% 78.12%
iii) Times Interest Earned:
Operating Profit 3,801 2,935 2,952 2,638 2,690
Interest Expense 1,987 2,021 2,215 955 655
1.91 times 1.45 times 1.33 times 2.76 times 4.11 times
iv) Volatility: This is the degree of change of the cash flows, showing its tendency to change from one period to the other. As calculated, the volatility is very high, showing that the cash flows have higher risk of change. See below:
Dec. 09 Dec. 08 Dec. 07 Dec. 06 Dec. 05
Cash & Equivalents $ 312 $ 465 $ 393 $ 634 $ 336
Mean = $428
Deviation from mean -116 37 -35 206 -92
Squared deviation 13,456 1,369 1,225 42,436 8,464
Sum of squared deviation = 66,950
Mean = 13,390
Square root of mean or Standard Deviation = 115
v) Return on Invested Capital = Net Income/Total liabilities + Equity
Dec. 09 Dec. 08 Dec. 07 Dec. 06 Dec. 05
Net Income $ 1,054 $ 673 $ 874 $ 1,036 $ 1,424
TOTAL LIABILITIES &
EQUITY $24,131 $ 24,280 $ 24,025 $ 23,675 $ 22,225
ROIC = 4.37% 2.77% 3.64% 4.38% 6.41%
At the beginning of 2023, the Mackinac Company purchased a machine for $510,000 (salvage value of $60,000) that had a useful life of 6 years. The bookkeeper used straight-line depreciation, but failed to deduct the salvage value in computing the depreciation base. Depreciation has been recorded through 2025. The errors were discovered on 1/10/26; the 2025 books are still open. Correcting journal entries would include what entry to 1/1/25 Retained Earnings?
Answer:
$10,000 credited
Explanation:
DATA
Machine cost = 510,000
Salvage value = $60,000
Useful life = 6 years
Depreciation = $60,000/6years
Depreciation = $10,000
It means that we have overstated depreciation expense for the year with the amount of $10,000.
Retained earnings will be credited by $10,000 As the depreciation expense was overstated mistakenly by $10,000
Karya Company produces a handcrafted musical instrument called a gamelan. The gamelans are sold for a unit price of $839 Selected data for the company's operations last year follow: Units in beginning inventory 0 Unit produced 11,000 Units sold 7,000 Variable cost per unit: Direct materials $150 Direct labor $450 Variable manufacturing overhead $47 Variable selling and administrative $19 Fixed costs: Fixed manufacutring overhead $790,000 Fixed selling and administrative $620,000 What are the unit product costs under absorption and variable costing system
Answer:
Results are below.
Explanation:
Giving the following information:
Unit produced 11,000
Variable cost per unit:
Direct materials $150
Direct labor $450
Variable manufacturing overhead $47
Fixed costs:
Fixed manufacturing overhead $790,000
The absorption costing method includes all costs related to production, both fixed and variable. The unit product cost is calculated using direct material, direct labor, and total unitary manufacturing overhead.
The variable costing method incorporates all variable production costs (direct material, direct labor, and variable overhead).
Variable costing:
Unitary cost= 150 + 450 + 47= $647
Absorption costing:
Unitary fixed overhead= 790,000/11,000= $71.82
Unitary cost= 647 + 71.82= $718.82
Explain whether each of the following events shifts the short-run aggregate-supply curve, the aggregate-demand curve, both, and neither. Households decide to save a larger share of their income. Florida orange groves suffer a prolonged period of below-freezing temperatures. Increased job opportunities overseas cause many people to leave the country.
Answer:
1. Households decide to save a larger share of their income. - Aggregate-Demand Curve
If households in the economy started saving more of their money then this would leave less money for consumption which is one of the components of Aggregate Demand. When Consumption decreases so also will Aggregate Demand thereby shifting the Aggregate-Demand Curve to the left.
2. Florida orange groves suffer a prolonged period of below-freezing temperatures. - Short-run Aggregate Supply Curve
With the Florida Orange Groves suffering from below freezing temperatures, the oranges will not grow as much leading to a poor harvest. This will reduce the supply of oranges in the economy and shift the short-run Aggregate supply curve left.
3. Increased job opportunities overseas cause many people to leave the country. Both Aggregate-Demand Curve and Short-run Aggregate Supply Curve.
With less people in the Economy, there will be less people spending on goods and services which will cause the Aggregate Demand curve to shift to the left.
Also with people leaving the country, the labor force will decrease which will mean that less people are available to produce goods and services so the short-run Aggregate supply curve will shift left.
Labor productivity growth can be attributed to: a. improvement in technology. b. a decline in university attendance. c. an increase in population growth. d. a decline in the physical capital per worker.
Answer:
The answer is A. improvement in technology
Explanation:
Labor productivity growth is not relevant to a decline in university attendance.
Applying the Malthusianism theory, an increase in population growth can't lead to labor productivity growth because while that population growth is potentially exponential, the growth of resources is linear.
Finally, the physical capital per worker is the quantity of equipment and input resources that are used to produce output goods and services. It has no direct influence to the labor productivity growth.
Che MFG Company experiences the following cost behavior patterns each week
Fixed costs: supervisor's salary $1,200; factory rent $2,900
Mixed costs: utilities $1,700+ $5.75 per unit
Variable costs per unit manufacturing labor wages $21.00; supplies used in production $9.00; packaging cost $2.75, warranty cost $4
Required: Compute total costs to be incurred for a week with 2,770 units of activity. (Do not round intermediate calculations.)
Total cost___________
Answer:
Total cost= $123,525
Explanation:
Giving the following information:
Fixed costs: supervisor's salary $1,200; factory rent $2,900
Mixed costs: utilities $1,700+ $5.75 per unit
Variable costs per unit manufacturing labor wages $21.00; supplies used in production $9.00; packaging cost $2.75, warranty cost $4
We need to determine the total cost of 2,770 units:
Total variable cost= 5.75*2,770 + 21*2,770 + 9*2,770 + 2.75*2,770 + 4*2,770
Total variable cost= $117,725
Total fixed costs= 1,200 + 2,900 + 1,700= $5,800
Total cost= 117,725 + 5,800= $123,525
Solve the consumer’s problem for John’s optimal demand for Germ-X and Purell. (You should find actual numbers representing the quantity of Germ-X chosen and the quantity of
Answer:
Hello your question is incomplete below is the missing part and the needed diagram
suppose John is shopping and has $20 to spend on hand sanitizer. He can go with Germ-X (G) at $1 per fluid ounce (pG=1), or he can purchase purell (P) at $1.25 per fluid ounce (Pp=1.25). His utility function for the two different hand sanitizers is as follows:
U = G +1.1P
where G and P are measured in fluid ounces.
Solve the consumer’s problem for John’s optimal demand for Germ-X and Purell. (You should find actual numbers representing the quantity of Germ-X chosen and the quantity of purell chosen
ANSWER: The solution = (Germ-x,Purell ) = (20,0).
Explanation:
The consumers problem for John's optimal demand for Germ-x and Purell as seen in the diagram can solved by John going maximizing his utility given the constraint of the budget,
that means that John will purchase/spend the constrained budget of ($20) on Germ-x since the unit price of Germ X is at $1 while Purell's unit price is at $1.25 per fluid ounce
E Corporation produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 44,000 units per month is as follows:
Per Unit
Direct materials $44.60
Direct labor $8.50
Variable manufacturing overhead $1.50
Fixed manufacturing overhead $18.10
Variable selling & administrative expense $2.60
Fixed selling & administrative expense $12.00
The normal selling price of the product is $94.10 per unit. An order has been received from an overseas customer for 2,400 units to be delivered this month at a special discounted price. This order would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $1.60 less per unit on this order than on normal sales.
Suppose there is ample idle capacity to produce the units required by the overseas customer and the special discounted price on the special order is $80.40 per unit. The monthly financial advantage (disadvantage) for the company as a result of accepting this special order should be:_______
Answer:
financial advantage for accepting special order = $59,520
Explanation:
relevant production costs for special order (2,400 units):
direct materials $44.60
direct labor $8.50
variable manufacturing overhead $1.50
variable selling & administrative expense $1
total costs per unit = $55.60
total revenue from special order = 2,400 x $80.40 = $192,960
relevant costs associated to special order = 2,400 x $55.60 = ($133,440)
financial advantage for accepting special order = $59,520
The owner of a leased property conveys possession of the property to the tenant providing them with uninterrupted us of the property without interference from the owner. This is known as
Answer:
Quiet enjoyment
Explanation:
Quiet enjoyment is a clause in lease agreement that provides a guarantee that the tenant will occupy the property in peace without interference from any other claimants or the landlord.
For example this clause protects a tenant from being removed from a property by someone of higher rank or authority like an agent.
The law recognises quiet enjoyment even when it is not stated explicitly in a lease agreement. It is assumed that every tenant has a right to quiet enjoyment
