Answer:
$94.50
Explanation:
Calculation for the intrinsic value of stock
Using this formula
Intrinsic value of stock=Average P/E multiple oil stock*Amount to earn
Let plug in the formula
Intrinsic value of stock=18*$5.25
Intrinsic value of stock=$94.50
Therefore the Intrinsic value of stock will be $94.50
Consider the following probability distribution of returns for Alpha Corporation:________. Current Stock Price ($) Stock Price in One Year ($) Return R Probability PR $25 $35 40% 25% $25 0% 50% $20 -20% 25% The standard deviation of the return on Alpha Corporation is closest to:_______. a. 22.4% b. 19.0% c. 21.8% d. 19.4%
Answer:
c. 21.8%
Explanation:
Note: B = Year beginning stock, C = Year end stock price, D = Dividend, E = Holding Period return, F= Holding Period return*Probability, G = (Holding Period return - Expected return)^2, H= Probability * (Holding Period return - Expected return)^2
Probability B C D E F G H
25% $25 $35 - 40% 10% 0.12250 0.03063
50% $25 $25 - 0% 0% 0.00250 0.00125
25% $25 $20 - -20% -5% 0.06250 0.01563
Expected return = 5% 4.75%
Holding period return = (Price at year end +dividend -Price at year beginning)/Price at year beginning
Variance = 4.75%
Standard deviation = √(variance)
Standard deviation = √4.75%
Standard deviation = 21.8%
Assume you have a 1-year investment horizon and are trying to choose among three bonds. All have the same degree of default risk and mature in 10 years. The first is a zero-coupon bond that pays $1,000 at maturity. The second has an 6.2% coupon rate and pays the $62 coupon once per year. The third has a 7.2% coupon rate and pays the $72 coupon once per year.
a. If all three bonds are now priced to yield 7% to maturity, what are their prices?
b. If you expect their yields to maturity to be 7% at the beginning of next year, what will their prices be then? What is your before-tax holding-period return on each bond? If your tax bracket is 30% on ordinary income and 20% on capital gains income, what will your aftertax rate of return be on each?
c. If you expect their yields to maturity to be 6% at the beginning of next year, what will their prices be then? What is your before-tax holding-period return on each bond? If your tax bracket is 30% on ordinary income and 20% on capital gains income, what will your aftertax rate of return be on each?
Answer:
a. If all three bonds are now priced to yield 7% to maturity, what are their prices?
zero coupon bond = $1,000 / (1 + 7%)¹⁰ = $508.35
6.2% coupon bond:
PV of face value = $1,000 / (1 + 7%)¹⁰ = $508.35
PV of coupon payments = $62 x 7.0236 (PV annuity factor, 7%, 10 periods) = $435.46
market price = $943.81
7.2% coupon bond:
PV of face value = $1,000 / (1 + 7%)¹⁰ = $508.35
PV of coupon payments = $72 x 7.0236 (PV annuity factor, 7%, 10 periods) = $505.70
market price = $1,014.05
b. If you expect their yields to maturity to be 7% at the beginning of next year, what will their prices be then? What is your before-tax holding-period return on each bond? If your tax bracket is 30% on ordinary income and 20% on capital gains income, what will your aftertax rate of return be on each?
zero coupon bond = $1,000 / (1 + 7%)⁹ = $543.93
before tax holding period return = ($543.93 - $508.35) / $508.35 = 7%
after tax HPR = 7% x 0.8 = 5.6%
6.2% coupon bond:
PV of face value = $1,000 / (1 + 7%)⁹ = $543.93
PV of coupon payments = $62 x 6.5152 (PV annuity factor, 7%, 10 periods) = $403.94
market price = $947.87
before tax holding period return = ($947.87 - $943.81 + $62) / $943.81 = 7%
after tax HPR:
($4.06 x 0.8) / $943.81 = 0.34%
($62 x 0.7) / $943.81 = 4.60%
total = 4.94%
7.2% coupon bond:
PV of face value = $1,000 / (1 + 7%)⁹ = $543.93
PV of coupon payments = $72 x 6.5152 (PV annuity factor, 7%, 10 periods) = $469.09
market price = $1,013.02
before tax holding period return = ($1,013.02 - $1,014.05 + $72) / $1,014.05 = 7%
after tax HPR:
(-$1.03 x 0.8) / $1,014.05 = -0.08%
($72 x 0.7) / $1,014.05 = 4.97%
total = 4.89%
c. If you expect their yields to maturity to be 6% at the beginning of next year, what will their prices be then? What is your before-tax holding-period return on each bond? If your tax bracket is 30% on ordinary income and 20% on capital gains income, what will your aftertax rate of return be on each?
zero coupon bond = $1,000 / (1 + 6%)⁹ = $591.90
before tax holding period return = ($591.90 - $508.35) / $508.35 = 16.44%
after tax HPR = 16.44% x 0.8 = 13.15%
6.2% coupon bond:
PV of face value = $1,000 / (1 + 6%)⁹ = $591.90
PV of coupon payments = $62 x 6.8017 (PV annuity factor, 6%, 10 periods) = $421.71
market price = $1,013.61
before tax holding period return = ($1,013.61 - $943.81 + $62) / $943.81 = 13.96%
after tax HPR:
($69.80 x 0.8) / $943.81 = 5.92%
($62 x 0.7) / $943.81 = 4.60%
total = 10.52%
7.2% coupon bond:
PV of face value = $1,000 / (1 + 6%)⁹ = $591.90
PV of coupon payments = $72 x 6.8017 (PV annuity factor, 6%, 10 periods) = $489.72
market price = $1,081.62
before tax holding period return = ($1,081.62 - $1,014.05 + $72) / $1,014.05 = 13.76%
after tax HPR:
($67.57 x 0.8) / $1,014.05 = 5.33%
($72 x 0.7) / $1,014.05 = 4.97%
total = 10.30%
You own a bond that pays $64 in interest annually. The face value is $1,000 and the current market price is $1,062.50. The bond matures in 30 years. What is the yield to maturity? (round your answer to two decimal places)
Answer:
the yield to maturity of this bond is 5.7%
Explanation:
given data
pays interest annually C = $64
face value F = $1,000
current market price P = $1,062.50
bond matures n = 30 years
solution
we get here yield to maturity that is express as
yield to maturity =
yield to maturity = [C+ (F-P) ÷ n] ÷ [(F+P) ÷ 2 ] .................1
put here value and we get
yield to maturity = [tex]\frac{64+(1000-1062.50)}{11}[/tex] ÷ [tex]\frac{(1,000+1,062.50)}{2}[/tex]
yield to maturity = 0.057
so that the yield to maturity of this bond is 5.7%
Why should the people on the RA team be different from the people responsible for correcting deficiencies?a. to avoid potential losses.
b. to increase profitability.
c. to avoid conflicts of interest.
d. to increase survivability.
Answer:
The correct answer is the option C: To avoid conflicts of interest.
Explanation:
To begin with, the term of risk assesstment refers to the process of identifying and analyzing possible future threats that may cause harm to the individuals or the assets of the company and from there on to evalute possible solutions to those situation that the company does not want to. Moreover, the risk manager is the one who should take care of those aspects and therefore that an RA team is the one that is being under his commands and should focus on the fact of identifying and analyzing the problems as well as evaluating instead of correcting some of those deficiencies and therefore that they need to have a different mind in the theme because they need to avoid conflicts of interest with the other team that is responsible from correcting.
Issued common stock to owners in exchange for $26,000 cash. Purchased $6,500 of equipment, paying $1,950 cash and signing a promissory note for $4,550. Received $11,700 in cash for consulting services performed in January. Purchased $1,950 of supplies on account; all of the supplies were used in January. Provided consulting services on account in the amount of $20,800. Paid $975 on account. Paid $3,900 to employees for work performed during January. Received a bill for utilities for January of $4,400; the bill remains unpaid. What is the amount of total revenue to be reported on the income statement for the month of January
Answer:
Explanation:
2333
Why is it important now for HR management to transform from being primarily administrative and operational to becoming more of an overall strategic contributor to the organization?
How have you seen this implemented in your workplace/former workplace?
Explanation:
Human resource management is increasingly relevant for a company to be successful, competitive and well positioned in the market. It is correct to affirm that it is important that HR ceases to be basically administrative and operational to become a general strategic contributor in a company due to the fact that management is going through a phase in which organizations have well-defined social and environmental responsibilities most demanded in a competitive and globalized world.
Therefore, the valorization of human capital in an organization is increasingly essential and strategic, because through professionals satisfied with their working conditions, well trained and motivated, the objectives are achieved more effectively, there is a greater attraction of quality professionals, greater innovation, greater productivity, continuous improvement of processes and the creation and maintenance of an organizational culture focused on ethical and collaborative practices in order to achieve organizational objectives.
Burnett Corp. pays a constant $8.90 dividend on its stock. The company will maintain this dividend for the next 12 years and will then cease paying dividends forever. If the required return on this stock is 11 percent, what is the current share price?
Answer:
Price today = $57.78196973 rounded off to $57.78
Explanation:
The dividends paid by the stock can be said to be in the form of an annuity as the dividend payment is constant, it occurs after equal interval of time and it is expected for a finite or limited period of time. These satisfy the conditions of being an annuity. We assume that the dividend are paid at the end of the year and this is in form of an ordinary annuity.
To calculate the present value of the stock today, we will use the formula for present value of ordinary annuity. The formula for present value of annuity is attached.
Price today = 8.9 * [ (1 - (1+0.11)^-12) / 0.11 ]
Price today = $57.78196973 rounded off to $57.78
Hollister Company amended its defined benefit pension plan at the beginning of 2020 and recognized prior service cost of $1,700,000.
The company has collected the following additional information for the year 2020:
Service cost $400,000
Interest on the PBO 190,000
Amortization of prior service cost 170,000
Actual and expected return on plan assets 110,000
Plan funding was $700,000
Benefit payments to retirees totaled $390,000
The net increase to the PBO for 2020 is:_________.
a. $ 770,000.
b. $ 1,900,000.
c. $ 1,730,000.
d. $ 650,000.
Answer: b. $ 1,900,000
Explanation:
The Net Increase in PBO can be calculated by the formula;
= Prior service cost + Service cost + Interest on the PBO - Benefits paid
= 1,700,000 + 400,000 + 190,000 - 390,000
= $1,900,000
Trent is a skilled sketch artist who wants to create images for his online portfolio. He is even
toying with including live "watch me draw" videos for audiences, but he doesn't want to use a
webcam. Which piece of technology will most quickly and efficiently allow him to translate the
physical act of him drawing into a digital image?
O a scanner
o a digital tablet
O a stock image
O photo editing software
Answer:
A digital tablet
Explanation:
A company’s marketing executives should assess the __________ in terms of a general analysis of a business problem or opportunity the company is facing.a. business situationb. 5Cs
c. STP
d. ARA
Answer:
a is your answer
Explanation:
Why is credit an important part of the economy?
A. It allows people and businesses to pay off expensive purchases
over time.
B. It helps workers find higher-paying jobs that take advantage of
their skills.
C. It encourages businesses to sell products both domestically and
internationally
D. It prevents banks from charging companies interest on long-term
loans.
Answer:
A. It allows people and businesses to pay off expensive purchases
over time.
Explanation:
A credit facility is an arrangement where a buyer obtains goods or services and pays for them over a long time. Credit contrasts cash payment, where the buyer pays make full payment for a product when acquiring it.
Credit allows a business to acquire expensive items and assets. Should a business be in need of something that it cannot afford to pay on a cash basis, it can negotiate favorable credit terms with the seller. Payments for such an item are spread over an agreed period. The buyer pays through small and affordable installments until they clear the debt.
Customer groups represent different segments if: ___________.a. Their needs require different products/services or different prices. b. Other elements of the canvas need to change in order to reach them. c. They can be categorized into different groups. d. Distinctions only matter if tailoring parts of the business to reach some customers makes it more difficult to reach other customers.
Answer:
a. Their needs require different products/services or different prices
Explanation:
A customer segment is a term in business that is used to describe a group of consumers with identical or related needs, behaviors, or other characteristics. For example Mass Market, Niche Market, etc.
However, customer groups represent separate segments based on the following:
1. their needs mandate and justify a distinct offer
2. they are sold through various distribution means.
3. they need different types of connection or arrangement.
4. they are ready to pay for various items of the offer
Why is it important to know the cost of inspection in a particular areas of business organization?
Explanation:
Every regulated organization understands the need to implement a quality system. In fact, it’s a “shall” clause for all life sciences companies to ensure they are in compliance with industry regulations. The focus of any effective quality system is, and rightly so, all about ensuring patient safety. From there, as the organization matures, its people, processes and technology evolve from a compliance, to a correction, to a prevention mindset, eventually resulting in increased quality brand recognition and shareholder value.
In the real world, companies need to engage quality system processes, such corrective and preventive action (CAPA), as the lifeline to feed improvements through the change management processes into the product lifecycle, from design inputs to manufacturer and supplier outputs.
Defining the cost of quality
As we look at process and product improvements, quantifying the “quality” costs to the organization is defined as the Cost of Quality (COQ). Why quantify the quality data? The COQ categorizes these costs so the organization can see how moving from a quality assurance (control and correction) focus to a focus on prevention helps to reduce the cost of nonconformances.
The American Society of Quality (ASQ) uses the following formula to calculate the COQ:
Cost of Quality (COQ) = Cost or Poor Quality (COPQ) + Cost of Good Quality (COGQ)
The COPQ contains all the costs of nonconformances that are both internal and external to the organization; whereas, the COGQ contains the cost of quality conformance, including any costs associated with both appraisal and prevention.
Some examples would be:
COPQ – Internal Costs (defects occurring and managed within the organization)
Scrap, Rework, Re-inspection
COPQ – External Costs (defects that reach the consumer)
Adverse Event Reporting, Warranty, Corrections and Removals, Product Liability, loss of brand reputation
COGQ – Appraisal Costs (controls put in place by the organization)
Inspection (purchased, manufactured), Testing (acceptance, field), Quality Audits, Calibration
COGQ – Prevention Costs (activities to eliminate defects from ever occurring)
SPC (statistical process control), Quality Planning, Quality Training, investment in quality-related information systems
What is the cost to your organization?
In the life sciences industry, analysts have stated that less than 50 percent of companies really know what the COQ is for their organization. However, ASQ, Crosby, and FDA Case for Quality show that the COQ for an organization can range from 3 – 25% of a company’s revenue. The good news is that there are known strategies that can be put in place to drive down the COQ which will have a direct positive impact on the profitability of your organization, and it’s all within your control.
Strategies for cost improvements
Every company is at a different point in the evolution of its people, processes and technology implementations, and even its understanding of its key metrics/performance indicators or COQ. Management could consider leveraging the following strategies to reduce their company’s COPQ and positively impact its quality and profitability performance.
Improve supplier relationships for both product and process improvements
Collaborate during design process, engage suppliers in the corrective action process (from incoming, manufacturing or customer-reported problems), develop supplier scorecards, audit suppliers based on their product/process risk levels
A company's income before interest expense and income taxes is $350,000 and its interest expense is $100,000.Its times interest earned ratio is:_________.A) 0.29B) 3.50C) 2.50D) 1.75E) 0.50
Answer:
B) 3.50
Explanation:
The computation of the times interest earned ratio is shown below:
As we know that
Times interest earned ratio is
= Income before interest expense and income taxes ÷ interest expenses
= $350,000 ÷ $100,000
= 3.50
Hence, the times interest earned ratio is 3.50
Therefore the correct option is b.
We simply applied the above formula so that the correct value could come
And, the same is to be considered
The EU regulates taxes on Internet sales and the amount of pollution differently than the U.S. government. U.S. companies doing business in the EU:A. Are required to comply with EU regulations only if their main headquarters are located within the European Union B. Must pay taxes to the EU when conducting all business globally if they wish to do any business in the EU. C. Must comply with EU regulations when doing business in the European Union only D. Are never required to comply with EU regulations as long as they are headquartered in the United States E. Have the option to conduct business under either EU or U.S. regulations
Answer: C. Must comply with EU regulations when doing business in the European Union only.
Explanation:
European Union tax and pollution laws are meant to bind only the area in the EU and not other areas. For instance, a Nebraska state law that is not law in other parts of the country only covers Nebraska and so can only be enforced there.
The same logic goes for the EU. Their laws are only applicable if you are in their area of control. This means that U.S. companies doing business in the EU must comply with EU regulations when doing business in the EU only.
Stephen is a day trader who constantly buys and sells only medical-related stocks. Stephen has _____ asset allocation strategy and a(n) _____ security selection strategy.
Answer: a passive; active
Explanation:
When a person or institution is said to have a passive asset allocation strategy it means that they either trade the same assets over and over or apply the same weighting to the asset class every time. Stephen only trades medical-related stocks so is using passive allocation.
An active security selection strategy means that the person or institution constantly changes and trades the stocks in their portfolio much like Stephen does when he constantly trades stock. Stephen is therefore using an active security selection strategy.
Escalation bias refers to the situation in which:_______. a. investors put more money into a failure rather than into a success. b. investors tend to follow the herd. c. investors have a propensity to sell winners too soon and hang on to losers too long. d. investors ignore bad news and overemphasize good news. e. investors are all noise traders.
Answer:
a. investors put more money into a failure rather than into a success.
Explanation:
The escalation bias is a part of behavioral finance. In this the investor is not accepting their mistake if they had done any kind of mistake. Rather accepting it they put more money in the asset that performed poorly also at the same time the bad news is ignored by them, they only focused to invest more and more in the stocks
hence, the correct option is a
Equipment costing $17,500 with an estimated salvage value of $1,180 and an estimated life of 4 years was purchased on October 31, 2019. Using the straight-line depreciation method, what is the amount of depreciation expense to be recorded at December 31, 2019?
Answer:
the depreciation expense recorded is $680
Explanation:
The computation of the depreciation expense under the straight-line method is shown below:
= (Purchase cost - residual value) ÷ (estimated life)
= ($17,500 - $1,180) ÷ ( 4 years)
= $4,080
Now the 2 months depreciation is i.e. from November to December
= $4,080 × 2 months ÷ 12 months
= $680
Hence, the depreciation expense recorded is $680
The next dividend payment by Skippy, Inc., will be $2.95 per share. The dividends are anticipated to maintain a growth rate of 4.8 percent, forever. If the stock currently sells for $53.10 per share, what is the required return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Answer:
10.35%
Explanation:
The next dividend payment for skippy incorporation is $2.95
The growth rate is 4.8%
The stock currently sells for $53.10
Therefore the required return can be calculated as follows
R= 2.95 /53.10 + 4.8/100
= 0.0555 + 0.048
= 0.1035 × 100
= 10.35%
Answer:
Explanation:
Dividend Yield =$0.50$2.95×100=16.9%.
For the first week of the month, the Flour Shop Bakery budgeted to sell 100 cakes at $35 each. They actually sold 105 cakes at $40 each. The selling-price variance is:_________.a) $525 favorable.b) $525 unfavorable.c) $700 favorable.d) $700 unfavorable.
Answer:
a) $525 favorable
Explanation:
The computation of the selling price variance is shown below:
The Selling price variance is
= Actual quantity sold × (actual selling price - expected selling price)
= 105 cakes × ($40 - $35)
= 105 cakes × $5
= $525 favorable
Hence, the selling price variance is $525 favorable
Therefore the correct option is a.
We simply applied the above formula so that the correct value could come
And, the same is to be considered
Flexible Budget for Selling and Administrative Expenses for a Service Company. Cloud Productivity Inc. uses flexible budgets that are based on the following data:
Sales commissions 14% of sales
Advertising expense 18% of sales
Miscellaneous administrative expense $7,000 per month plus 12% of sales
Office salaries expense $29,000 per month
Customer support expenses $13,000 per month plus 20% of sales
Research and development expense $30,000 per month
Prepare a flexible selling and administrative expenses budget for March for sales volumes of $400,000, $500,000, and $600,000.
Cloud Productivity Inc.
Flexible Selling and Administrative Expenses Budget
For the Month Ending March 31, 2016
Total sales $400,000 $500,000 $600,000
Variable cost:
Sales commissions
Advertising expense
Miscellaneous administrative expense
Customer support expense
Total variable cost
Fixed cost:
Miscellaneous administrative expense
Office salaries expense
Customer support expense
Research and development expense
Total fixed cost
Total selling and administrative expenses
Answer:
Total selling and administrative expenses budget for March are as follows:
For sales volumes of $400,000 = $327,000
For sales volumes of $500,000 = $389,000
For sales volumes of $600,000 = $451,000
Explanation:
Note: See the attached excel file for the flexible selling and administrative expenses budget for March
A flexible budget can be described as a budget that changes with the level or volume of activity of a company.
In this question, sales volume is used as the level of activity and a flexible selling and administrative expenses budget for March for sales volumes of $400,000, $500,000, and $600,000 is prepared in the attached excel file.
Blankenship Company operates a factory with two departments, X and Y. The utilities to heat and light the manufacturing facility would most likely be allocated to departments X and Y on the basis of:a. Square Footage occupiedb. Machine Hoursc. Direct labor hoursd. Units sold
Answer:
a. Square Footage occupied
Explanation:
Machine hours is the cost drive of utilities (cost object); it is not the basis of allocation. Direct labor hours is the cost drive of utilities (cost object); it is not the basis of allocation. Unit sold is the basis of allocation of advertising; it is not the allocation bases of utilities.
Utilities expenses such as heat, water, and lighting are generally allocated based area occupied by the department. Hence, the option “square footage occupied” is the correct answer.
Which of the following summarizes the AIDA steps in the persuasive process? A. Get attention, insinuate action, create desire, initiate acceptance B. Get acceptance, invite questions, designate action, encourage attention C. Get attention, arouse interest, create desire, encourage action D. Get attention, initiate action, discuss benefits, create acceptance
Answer:
C. Get attention, arouse interest, create desire, encourage action
Explanation:
Remember, AIDA which stands for Awareness, Interest, Desire, Action refers to a step process that explains the main thought process an individual passes through before they finally decide to buy a product or service.
The persuasive process begins:
First with getting attention or awareness for the product or service. Next, arouse interest in the minds of potential customers, this, in turn, creates desire, which leads to the final step; encourage action to buy the product or service.
A change in which of the following will cause the aggregate demand curve to shift?
A)
energy costs
B)
productivity of workers
C)
regulations
D)
consumer spending
Answer:
D) consumer spending
Explanation:
The aggregate demand is the total of all goods and services that consumers are willing and able to buy in the economy in a given period. It is the demand for all goods and services in the entire country per period. Price variation usually causes movements along the demand curve.
Other factors that influence governments, firms, and household expenditures cause the aggregate demand curve to shift. A change in consumer spending will reduce the number of goods demanded. The aggregate demand will shift inwards.
The demand curve for a monopolist differs from the demand curve faced by a competitive firm because the demand curve for: A. a monopolist lies below its marginal revenue curve. B. a monopolist is the market demand curve. C. a competitive firm is inelastic. D. a competitive firm lies above its marginal revenue curve.
Answer:
B. a monopolist is the market demand curve
Explanation:
As we know that the under monopoly market the firm and the industry are similar to each other also the monopolist determined the price due to this he is a price taker and price maker and the curve of the demand would be downward that shifted from left to right
Therefore in the given situation, the option B is correct
And the rest of the options are wrong
On June 8, Williams Company issued an $87,600, 9%, 120-day note payable to Brown Industries. Assuming a 360-day year, what is the maturity value of the note?
A partially amortizing mortgage is made for $180,000 for a term of 30 years. The borrower and lender agree that a balance of $40,000 will remain and be repaid as a lump sum at that time. If the interest rate is 6.50%, what must the monthly payment be over the 30 year period?
a. $1,101.56
b. $1,137.72
c. $5,285.36
d. $11,700.00
Answer:
Monthly payment= $1,137.8
Explanation:
Giving the following information:
PV= 180,000
n= 30*12= 360
i= 0.065/12= 0.005417
To calculate the monthly payment, we need to use the following formula:
Monthly payment= (PV*i) / [1 - (1+i)^(-n)]
Monthly payment= (180,000*0.005417) / [1 - (1.005417^-360)]
Monthly payment= $1,137.8
Production possibilities frontiers usually curve out and away from the origin. The implication of this curvature is that:_________
a. the opportunity cost of producing a good stays the same regardless of how much of that good is produced.
b. the opportunity cost of producing a good goes down as more of that good is produced.
c. some resources are better at producing one good while other resources are better at producing alternative goods.
d. technological change is present.
e. as resources are used to produce one good, fewer resources are available to produce another good.
Answer:
The right response is Option C (Some resources..............goods).
Explanation:
It should be remembered whether PPF seems to be concave to something like the root, representing growing opportunity costs, in other words whenever one starts going down upon this PPF, the inventory cost between one item which requires to be substituted improves throughout addition maximize enhance the production of both of these commodities. The program is given when continuous and along output prospect boundary.Some other options offered are not relevant to the case described. So the solution here was the right one.
One of your team members is struggling with preparation of balance sheet and he needs your assistance in completing it. He has come up with following missing information. You are required to complete this Balance sheet.
Assets Liabilities & Equity
Cash $ 100,000 Current Liabilities
Receivables Long Term Debt
Inventory Total Debt
Plant Common Equity $ 600,000
Total Assets Total Claims
Additional Information:
Current Ratio is 2.5 ; Average Collection Period is 54 days ; Total Debt to Total Assets 40 percent ; Total Asset Turnover is 2 ; Inventory Turnover 5.
Answer:
Balance sheet
Cash $100,000 Current Liabilities $320,000
Receivables $300,000 Long Term Debt $80,000
Inventory $400,000 Total Debt $400,000
Plant $200,000 Common Equity $600,000
Total Assets $1,000,000 Total Claims $1,000,000
Explanation:
a) Total Debt to Total Assets 40 percent:
This means that Equity = 60% (100 - 40%)
If Equity is 60% = $600,000, total claims or assets will be equal to $600,000/60% = $1,000,000
Therefore, total debt = $400,000 (40% of $1,000,000)
b) Total Asset Turnover is 2:
If total assets = $1,000,000 and the total asset turnover is 2 or Turnover/Assets = 2, where total assets = $1,000,000,
Therefore, Turnover = $2,000,000 ($1,000,000 * 2)
c) Inventory Turnover is 5:
Inventory Turnover = Turnover/Inventory = 5
= $2,000,000/Inventory = 5
Inventory = $2,000,000/5 = $400,000
d) Average Collection Period is 54 days:
= Accounts Receivable/Sales x 365 = 54
Accounts Receivable = $2,000,000/365 * 54 = $296,000 or approximately $300,000
Current assets:
Cash = $100,000
Receivables $300,000
Inventory = $400,000
Total = $800,000
e) Current liabilities = Current assets/2.5
= $800,000/2.5
= $320,000
f) Plant = Total assets - current assets
= $1,000,000 - $800,000
= $200,000
g) Long term debt = Total debt - Current liabilities
= $400,000 - $320,000
= $80,000
Last month the balance on your credit account was $785. Your new balance is $540. What percent of your total balance did you pay?
Answer:
31.21%
Explanation:
The balance last month was $785
The new balance is $540
It means a payment of $785- $540 was made
=$785 - $540
=$245
As a percentage
=$245/$785 x 100
=0.3121 x 100
=31.21%
Answer: 31%
Explanation: I just got it right