Explanation:
The most appropriate attribute of the national competitive advantage of Porter's theory is factor endowments.
This attribute corresponds to the one that can most significantly impact the competitive position that a company will have in the market, as it refers to the conditions that a company will have to develop its essential factors such as labor, technology, capital, etc., these factors being totally influenced by the local economy and its favorable conditions for the flow of business.
For this reason, it is necessary to have government incentives for public and private companies through the development of economic policies that favor the competitiveness of companies and the improvement of their factors, increasing their quality and efficiency.
This activity is important because as world trade has grown, more companies have entered the global market. Once a firm decides to enter the global market, it must choose which means of market entry is the most appropriate. The global market entry strategies vary greatly on the dimensions of financial commitment, risk, marketing control, and profit potential.
The goal of this exercise is to demonstrate your understanding of the different types of global market entry strategies: exporting, licensing, joint venture, and direct investment. Roll over each company name to read the description of the firm's strategy, then drop it onto the correct global market entry strategy within the graphic.
1. Yoplait
2. Moodmatcher lipstick
3. McDonald's
4. Ericsson and CGCT
5. Boeing
6. Nissan
A. Indirect Exporting
B. Direct Exporting
C. Licensing
D. Franchising
E. Joint Venture
F. Direct Investment
Answer:
Throughout the clarification subsection below, the definition of the questionnaire provided is defined.
Explanation:
Indirect Exporting and Moodmatcher lipstickRationale: A organization like Moodmatcher lipstick manufactures the understood as a tool and promotes this through an intermediary throughout numerous governments or foreign.
Direct Exporting and BoeingRationale: A business including Boeing creates the goods domestically which exports anything without an intermediary throughout foreign nations.
Licensing and YoplaitRationale: In return for royalty as well as the fee, a business like Yoplait sells the rights to copyright, trademark, proprietary information, and perhaps other prized intellectual property.
Franchising and McDonald'sRationale: Companies including McDonald's are licensed to launch new franchises which are one of the quickest expanding methods for market entry.
Joint Venture Ericsson and CGCTRationale: The Swedish networking group Ericsson has entered into a joint venture partner CGCT, another French switching group.
Direct Investment and NissanRationale: A domestic company such as Nissan invests in some kind of an international subsidiary and retains it.
Trade Mart has recently had lackluster sales. The rate of inventory turnover has dropped, and the merchandise is gathering dust. At the same time, competition has forced 's suppliers to lower the prices that will pay when it replaces its inventory. It is now December 31, , and the net realizable value of 's ending inventory is below what the company actually paid for the goods, which was . Before any adjustments at the end of the period, the Cost of Goods Sold account has a balance of . Read the requirementsLOADING.... Requirement a. What accounting action should take in this situation? should apply the ▼ average-cost method first in, first out method last in, first out method lower-of-cost-or-market rule to account for inventories. The net realizable value of ending inventory is ▼ equal to less than more than 's actual cost, so must write the inventory ▼ down up to net realizable value.
Answer:
the numbers are missing, so i looked for a similar question to fill in the blanks:
Trade Mart has recently had lackluster sales. The rate of inventory turnover has? dropped, and the merchandise is gathering dust. At the same time, competition has forced Trade Mart's suppliers to lower the prices that Trade Mart will pay when it replaces its inventory. It is now December 31, 2016, and the current replacement cost Trade Mart's ending inventory is $75,000 below what Trade Mart actually paid for the goods, which was $200,000.
Before any adjustments at the end of the? period, the Cost of Goods Sold account has a balance of $$820,000.
a. What accounting action should take in this situation?
lower-of-cost-or-market rule to account for inventories.the adjustment entry should be:
Dr Cost of goods sold 75,000
Cr Inventory 75,000
b. The net realizable value of ending inventory is?
equal to actual cost, so must write down inventory to match net realizable valueEnding inventory = $200,000 - $75,000 = $125,000
Real options Projects are also often embedded with different options that can help making decisions under uncertainty. There are techniques used to evaluate these embedded options which are called real options. The models used to value these options are based on the type of the real option available for the project.
A real option embedded in a capital project gives the investing firm the right but not the obligation to buy, sell, or transform an asset at a set price during a specified period of time.
a. True
b. False
The managers of Atlanta Aeronautics Co. have included a shutdown option into the design of a proposed capital investment project:
I. This option provides a firm with the flexibility to make potentially profitable investments in the future that would not have been possible if the initial project had not been undertaken
II. This option allows a firm to temporarily terminate operations in order to prevent experiencing negative cash flows.
III. This option allows a project to be expanded if demand turns out to be greater than expected.
IV. This option allows the outputs of the production process to be altered if market conditions change during a project's life. Which of the listed statements best describes a shutdown option?
Statement II
Statement I
Statement III
Statement IV
None of the statements listed above describes a shutdown option.
Real option analysis adds value to a project when it is used for which of the following?
a. Modifying the way that decision makers perceive flexibility in capital budgeting activities
b. Expanding the way that managers view risk and uncertainty, seeing them as phenomena to be appreciated and exploited rather than feared and avoided.
c. Making managerial decision making less deliberate and analytical
d. Making managers aware of the consequences of their decisions and actions on the creation or destruction of value for a capital project.
Answer:
i) TRUE
ii) II
iii) All except option 3
Explanation:
i) A real option embedded in a capital project gives the investing firm the right but not the obligation to buy, sell, or transform an asset at a set price during a specified period of time. TRUE
ii) The statement that best describes a shutdown is : This option allows a firm to temporarily terminate operations in order to prevent experiencing negative cash flows
iii) . Modifying the way that decision makers perceive flexibility in capital budgeting activities ;
Expanding the way that managers view risk and uncertainty, seeing them as phenomena to be appreciated and exploited rather than feared and avoided.
Making managers aware of the consequences of their decisions and actions on the creation or destruction of value for a capital project.
Agency conflicts between managers and shareholders
Remember, an agency relationship can degenerate into an agency conflict when an agent acts in a manner that is not in the best interest of his or her principal. In large corporations, these conflicts most frequently involve the enrichment of the firm’s executives or managers (in the form of money and perquisites or power and prestige) at the expense of the company’s shareholders. This usurping and reallocation of shareholder wealth is most likely to occur when shareholders do not have sufficient information about the decisions and actions being made by the firm’s management.
Consider the following scenario and determine whether an agency conflict exists:
William and Abigail equally own and manage A New Beginning (ANB), a store that sells preowned clothing and furniture. William is responsible for ANB’s back-office activities, and Abigail staffs the store and makes deliveries to customers. Both have equal decision-making authority and, under the terms of their partnership agreement, both are prohibited from making personal purchases using company funds without prior approval of the other partner. William, without Abigail’s knowledge, used the company’s bank account recently to purchase a new sports car. William has acknowledged that the car will not be used to support the business.
Is this a potential agency conflict between William and Abigail?
No; William and Abigail are both authorized to spend ANB’s money, so no conflict of interest can occur.
No; William and Abigail co-own and co-manage ANB and have a partnership agreement that makes them equal, so an agency conflict cannot exist.
Yes; William is misappropriating some of Abigail’s wealth by unilaterally purchasing a nonbusiness asset using ANB’s funds.
Yes; it should have been Abigail who purchased the car.
Consider the following scenario and determine whether an agency conflict exists:
Five years ago, Caesar created a plant-care business that grew, stocked, and maintained fresh plants in office buildings throughout Raleigh. Over time, The Green Zone Inc. (TGZ) has grown from a proprietorship into a corporation, now reaching far beyond Raleigh. To finance and support this growth, TGZ issued shares that were sold to TGZ employees, Caesar’s family members, and selected outsiders. Caesar is TGZ’s chairman of the board of directors and CEO, but he is no longer the largest shareholder.
At the latest annual meeting, two mutually exclusive proposals were placed on the ballot for discussion and vote. The first was put forth by Caesar and TGZ’s management team, and the second was proposed by a small group of other shareholders. Both groups are adamantly opposed to the other group’s proposal, even though both proposals would likely have the same effect on TGZ’s value and riskiness.
Does an agency conflict exist between TGZ’s management and the small group of opposing shareholders?
No; although an agency relationship exists between TGZ’s management—including Caesar as TGZ’s chairman and CEO and the firm’s shareholders—there is no agency conflict, because no expropriation or wasting of the shareholders’ wealth has occurred.
No; Caesar was the original owner of TGZ, so he would always be sensitive to the concerns of the firm’s current owners (shareholders) and would not engage in an agency conflict.
Yes; any conflict or disagreement between the firm’s managers and its shareholders constitutes an agency conflict.
Yes; an agency relationship exists, and an agency relationship always gives rise to agency conflicts, regardless of the actual behavior of the participants.
Which of the following actions will help ease agency conflicts and better align managers’ objectives with the firm’s shareholder wealth?
Pay the manager a large base salary with a huge stock option package that matures on a single date.
Pay the manager a combination of salary and stock options (phased in over several years) that reward him or her for consistently increasing shareholder wealth.
Great Fortunes Baking Company’s stockholders are mostly individual investors, and there is relatively little institutional ownership. If several pension and mutual funds were to take large positions in Great Fortunes Baking Company’s stock, direct shareholder intervention would be more or less likely to motivate the firm’s management.
In the late 1980s and early 1990s, Congress passed legislation making it more difficult for outside investors to stage hostile takeovers. This legislation likely reduced or increased conflicts between managers and stockholders.
Answer:
1. Yes; William is misappropriating some of Abigail’s wealth by unilaterally purchasing a nonbusiness asset using ANB’s funds.
William is enriching himself at the expense of Abigail so indeed an Agency conflict exists.
2. No; although an agency relationship exists between TGZ’s management—including Caesar as TGZ’s chairman and CEO and the firm’s shareholders—there is no agency conflict, because no expropriation or wasting of the shareholders’ wealth has occurred.
An agency conflict arises only when the agent begins to act in a way that is not in the best interest of their principal and enriches themselves at the expense of their principal. This has not happened here so there is no agency conflict.
3. Pay the manager a combination of salary and stock options (phased in over several years) that reward him or her for consistently increasing shareholder wealth.
This way the manager will have an incentive to keep working for the benefit of the shareholders overtime because it would make them well off as well.
4. MORE LIKELY
When Institutional ownership is available like Pensions and Mutual funds, they will be able to put more pressure on management as they will typically own a larger share of shares while at the same time having the expertise required to influence management.
5. INCREASED CONFLICT.
One incentive that can be used to keep management in check is the risk of Hostile Takeovers and the new management can decide to fire the management for poor performance or selfish behavior. If Congress reduces the chances of hostile takeovers, management will be more likely to engage in agency conflicts.
Adelberg Corporation makes two products: Product A and Product B. Annual production and sales are 1,500 units of Product A and 1,500 units of Product B. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.4 direct labor-hours per unit and Product B requires 0.2 direct labor-hours per unit. The total estimated overhead for next period is $87,630. The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for external reports. The new activity-based costing system would have three overhead activity cost pools--Activity 1, Activity 2, and General Factory--with estimated overhead costs and expected activity as follows:
Expected Activity
Activity Cost Pool Estimated Overhead Costs Product A Product B Total
Activity 1 $ 41,400 1,000 500 1,500
Activity 2 15,720 800 400 1,200
General Factory 30,510 600 300 900
Total $ 87,630
(Note: The General Factory activity cost pool's costs are allocated on the basis of direct labor-hours.)
The overhead cost per unit of Product B under the activity-based costing system is closest to:_________
a. $42.90
b. $9.10
c. $21.30
d. $63.92
Answer:
Results are below.
Explanation:
First, we need to calculate the predetermined overhead rate for each activity:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Activity 1= 41,400/1,500= $27.6 per unit of activity
Activity 2= 15,720/1,200= $13.1 per unit of activity
General Factory= 30,510/900= $33.9 per direct labor hour
Now, we can allocate overhead to product B:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Activity 1= 27.6*500= $13,800
Activity 2= 13.1*400= $5,240
General Factory= 33.9*300= $10,170
Total allocated overhead= $29,210
Unitary allocated overhead= 29,210/1,500= $19.47
A budget surplus a. occurs when government expenditures exceed tax revenues. b. occurs when tax revenues exceed government expenditures. c. occurs when tax revenues exceed transfer payments. d. occurs when monetary policy works in the opposite direction of fiscal policy
Answer:
b. occurs when tax revenues exceed government expenditures.
Explanation:
A budget deficit occurs when government expenditures exceed tax revenues
How is a proceeding for violation of the regulations in Circular 230 instituted against a tax practitioner
Incomplete question. The options read;
A. An aggrieved taxpayer files a petition with the United States Tax Court stating a claim against the attorney, certified public accountant, registered tax return preparer, enrolled agent, enrolled retirement plan agent, or enrolled actuary
B. The IRS representative signs a complaint naming the tax practitioner and files the complaint with the Administrative Law Judge (ALJ)
C. The Secretary of the Treasury files a complaint against the attorney, certified public accountant, registered tax return preparer, enrolled agent, enrolled retirement plan agent, or enrolled actuary in the United States District Court for the District of Columbia
D. The Commissioner of the IRS files a complaint against the attorney, certified public accountant, registered tax return preparer, enrolled agent, enrolled retirement plan agent, or enrolled actuary with the United States Tax Court
Answer:
D. The Commissioner of the IRS files a complaint against the attorney, certified public accountant, registered tax return preparer, enrolled agent, enrolled retirement plan agent, or enrolled actuary with the United States Tax Court
Explanation:
According to the information on the thetaxadviser website, when there is a violation of the regulations in Circular 230 instituted by a tax practitioner a complaint would be filed, and if found guilty, he or she "may be censured, suspended, or disbarred from practice before the IRS."
Usually, the Office of Professional Responsibility would take up the case against the tax practitioner.
Following is a complete list of accounts and account balances that appear in the general ledger as of August 1, 2020 for Flourish and Botts, Co. bookstore. Assume all accounts have their normal debit or credit balance.
Account: Amount: Account: Amount:
Cash $9,021 Common Stock $84
Accounts Receivable (A/R) $13,992 Additional Paid-In Capital $6,408
Inventory $4,033 Retained Earnings $7,220
Prepaid Rent $200 Sales Revenue $0
Equipment $7,200 Cost of Goods Sold $0
Accumulated Depreciation-Equipment $800 Wages Expense $0
Accounts Payable (A/P) $11,844 Interest Expense $0
Deferred Revenue $3,055 Depreciation Expense $0
Interest Payable $35 Rent Expense $0
Notes Payable $5,000
The following transactions were observed for August 2020:
Date: Transaction:
8/3 Purchased merchandise inventory on account for $11,941
8/6 Sold merchandise inventory, which originally cost $13,088, to customers for $20,972. Customers paid $2,400 in cash, the remaining $18,572 was purchased by customers on account.
8/16 Paid $2,750 in cash to workers for work done in August.
8/20 Received $17,046 in cash payments from customers on their accounts receivable.
8/27 Paid creditors $14,635 in cash for accounts payable.
Required:
Record all of the above transactions that occurred during the period using journal entries. Make sure to use proper formatting for all entries, and to include the date of each entry and a brief description of each entry. Do not make any end of the period adjusting or closing entries.
Answer:
Date Particular Debit Credit
8/3 Purchases 11,941
Account payable 11,941
8/6 Cost of good sold 13,088
Inventory 13,088
8/6 Account Receivable 18,572
Cash 2,400
Revenue 20,972
8/16 Wages expense 2,750
Cash 2,750
8/20 Cash 17,046
Account Receivable 17,046
8/27 Account payable 14,635
Cash 14,635
How can an organization employ social computing technologies and applications to benefit its business processes?
Answer:
I. For effective communication
II. For Effective collaboration
III. For problem solving
IV. To improve the performance of team members.
Explanation:
Social computing is a term used in computer science to describe the process through which social attributes and behaviours interact or are intersected with computational systems and processes.
Social computing helps to ensure improved collaboration as people can have face to face interactions,problems and issues affecting Organisations can be effectively identified and possibly solved which will help to improve team Performance etc
An internal control system consists of the policies and procedures managers use to protect assets, ensure reliable accounting, promote efficient operations, and uphold company policies. It can prevent avoidable losses and help managers both plan operations and monitor company and human performance. Principles of good internal control include establishing responsibilities, maintaining adequate records, insuring assets and bonding employees, separating recordkeeping from custody of assets, dividing responsibilities for related transactions, applying technological controls, and performing regular independent reviews.
Sarbanes-Oxley Act requires each of the following: (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark willl be automatically graded as incorrect.)
An effective internal control
Light penalties for violators
Auditors must evaluate internal controls
Auditor's work overseen by Public Accounting Board
Answer:
An effective internal control Auditors must evaluate internal controlsExplanation:
The Sarbanes Oxley Act (SOX) was passed in the aftermath of several accounting scandals that shook the business world including the Enron and Worldcom sagas. The Government then decided to implement tougher accounting requirements to ensure that such does not happen again.
One way that SOX does this is to require that companies maintain a robust and effective internal control system which are Auditor evaluated that will catch errors and false information more effectively.
Label the statements regarding the Patient Protection and Affordable Care Act (ACA) as true or false.
a. The ACA establishes a national healthcare system for the United States in which the government rather than insurance companies pays for all health related expenses.
b. Under the ACA, the government has the right to fine employers or individuals for not having or providing health insurance.
c. Assume the ACA is in effect. A health insurance company is looking over a prospective individual, Alfred, and finds that Alfred goes cliff diving regularly, which was the cause of his past six concussions. He now suffers from frequent headaches. The insurance company can deny
Alfred coverage because of his preexisting medical condition.
d. To fund the ACA, new taxes will be imposed on items including medical devices and indoor tanning.
e. Under the ACA, until age 26, you can be covered under your parent's health insurance policy.
Answer:
a. FALSE
Both Employers and Employees do most of the paying not the Federal government which only steps in for subsidies to lower income households.
b. TRUE
The Government can indeed fine employers or individuals for not having or providing health insurance.
c. FALSE
They cannot deny him coverage based on his pre-existing medical condition as a result of the ACA and neither can they charge higher premiums.
d. TRUE
Funding the ACA will need the Government to raise more revenue and they plan to do so by imposing new taxes on items including medical devices and indoor tanning.
e. TRUE.
A person under the age of 26 is to be a dependent under this Act and this includes married people under the age of 26 as well as unmarried.
Sunset Products manufactures skateboards. The following transactions occurred in March. Purchased $24,500 of materials on account. Issued $1,450 of supplies from the materials inventory. Purchased $25,900 of materials on account. Paid for the materials purchased in transaction (1) using cash. Issued $30,900 in direct materials to the production department. Incurred direct labor costs of $29,500, which were credited to Wages Payable. Paid $22,400 cash for utilities, power, equipment maintenance, and other miscellaneous items for the manufacturing shop. Applied overhead on the basis of 120 percent of direct labor costs. Recognized depreciation on manufacturing property, plant, and equipment of $5,900.
The following balances appeared in the accounts of Sunset Products for March:
Beginning Ending
Materials Inventory $ 13,500 ?
Work-in-Process Inventory 24,750 ?
Finished Goods Inventory 97,500 $ 54,750
Cost of Goods Sold 120,000
Required:
a. Prepare journal entries to record the transactions. (If o entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Transactions General Journal Debit Credit
1.
2.
3.
4.
5.
6.
7.
8.
9.
b. Prepare T-accounts to show the flow of costs during the period from Materials Inventory through Cost of Goods Sold.
Materials Inventory
Beg. bal. ___________ ____________
______ ___________ ____________ ______
______ ___________ ____________ ______
______ ___________ ____________ ______
End. bal. ___________ ____________ ______
Work in Progress Inventory
Beg. bal. ___________ ____________
______ ___________ ____________ ______
______ ___________ ____________ ______
______ ___________ ____________ ______
______ ___________ ____________ ______
End. bal. ___________ ____________ ______
Manufacturing Overhead Control
Beg. bal. ___________ ____________
______ ___________ ____________ ______
______ ___________ ____________ ______
______ ___________ ____________ ______
______ ___________ ____________ ______
End. bal. ___________ ____________ ______
Applied Manufacturing Overhead
Beg. bal. ___________ ____________
______ ___________ ____________ ______
______ ___________ ____________ ______
End. bal. ___________ ____________ ______
Accounts Payable
Beg. bal. ___________ ____________
______ ___________ ____________ ______
______ ___________ ____________ ______
______ ___________ ____________ ______
End. bal. ___________ ____________ ______
Cash
Beg. bal. ___________ ____________
______ ___________ ____________ ______
______ ___________ ____________ ______
______ ___________ ____________ ______
End. bal. ___________ ____________ ______
Wages Payable
Beg. bal. ___________ ____________
______ ___________ ____________ ______
______ ___________ ____________ ______
End. bal. ___________ ____________ ______
Accumulated Depreciation-Property, Plant, and Equipment
Beg. bal. ___________ ____________
______ ___________ ____________ ______
______ ___________ ____________ ______
End. bal. ___________ ____________ ______
Finished Goods Inventory
Beg. bal. ___________ ____________
Goods Completed ___________ ____________ Transfer to Cost of Goods Sold
End. bal. ___________ ____________
Cost of Goods Sold
Beg. bal. ___________ ____________
Finished Goods Inventory ___________ ____________
End. bal. ___________ ____________
Answer:
Sunset Products
a) Journal Entries:
Transactions General Journal Debit Credit
Materials Inventory $24,500
Accounts Payable $24,500
To record the purchase of materials on account.
Manufacturing Overhead $1,450
Materials Inventory $1,450
To record the issue of supplies.
Materials Inventory $25,900
Accounts Payable $25,900
To record the purchase of materials on account.
Accounts Payable $24,500
Cash Account $24,500
To record the payment on account.
Work-in-Process Inventory $30,900
Materials Inventory $30,900
To record the issue of direct materials to the production department.
Work-in-Process Inventory $29,500
Factory Wages $29,500
To record direct labor costs to work in process.
Manufacturing Overhead $22,400
Cash Account $22,400
To record the payment for utilities and other expenses.
Work-in-Process Inventory $35,400
Manufacturing Overhead $35,400
To apply overhead to work in process.
Manufacturing Overhead $5,900
Depreciation Expense $5,900
To recognize depreciation on property, plant, and equipment.
Manufacturing overhead applied $29,750
Manufacturing overhead $29,750
To transfer manufacturing overhead to the overhead applied account.
b) T-accounts:
Materials Inventory
Transaction Details Debit Credit
Beginning balance $ 13,500
Accounts Payable 24,500
Manufacturing overhead $1,450
Accounts Payable 25,900
Work-in-Process Inventory 30,900
Ending balance $31,550
Work-in-Process Inventory
Transaction Details Debit Credit
Beginning balance $24,750
Materials Inventory 30,900
Factory Wages 29,500
Manufacturing Overhead 35,400
Finished Goods Inventory $71,600
Ending balance 54,200
Finished Goods Inventory
Transaction Details Debit Credit
Beginning balance $97,500
Work-in-Process 71,600
Cost of goods sold $114,350
Ending balance 54,750
Cost of Goods Sold
Transaction Details Debit Credit
Beginning balance $120,000
Overapplied overhead $5,650
Ending balance 114,350
Manufacturing Overhead Control Account
Transaction Details Debit Credit
Materials Inventory $1,450
Cash Account 22,400
Depreciation expense 5,900
Manufacturing overhead applied $29,750
Manufacturing Overhead Applied
Transaction Details Debit Credit
Work in Process $35,400
Manufacturing overhead $29,750
Overapplied overhead 5,650
Accounts Payable
Transaction Details Debit Credit Materials Inventory $24,500
Materials Inventory 25,900
Cash Account $24,500
Cash Account
Transaction Details Debit Credit
Accounts Payable $24,500
Manufacturing Overhead 22,400
Explanation:
a) Data and Calculations:
Accounts balances of Sunset Products for March:
Beginning Ending
Materials Inventory $ 13,500 ?
Work-in-Process Inventory 24,750 ?
Finished Goods Inventory 97,500 $ 54,750
Cost of Goods Sold 120,000
On December 31, 2021, the end of the fiscal year, California Microtech Corporation completed the sale of its semiconductor business for $15 million. The semiconductor business segment qualifies as a component of the entity according to GAAP. The book value of the assets of the segment was $13 million. The loss from operations of the segment during 2021 was $4.8 million. Pretax income from continuing operations for the year totaled $7.8 million. The income tax rate is 25%.
Prepare the lower portion of the 2021 income statement beginning with income from continuing operations before income taxes. Ignore EPS disclosures. (Amounts to be deducted and negative amounts should be indicated with a minus sign. Enter your answers in whole dollars and not in millions.)
Answer and Explanation:
The preparation of the lower portion is presented below:
Income from the continuing operation
before income tax $7,800,000
Less: Income tax expenses ($7,800,000 × 25%) (1,950,000)
Income from continuing operation(A) 5,850,000
Discontinued operation:
Loss from operation discontinued components
($15 - $13 - $4.8) ($2,800,000)
Income tax benefits ($2,800,000 × 25%) $700,000
Loss on discontinued operation(B) ($21,000,000)
Net loss (A - B) -$15,150,000
William Company owns and operates a nationwide chain of movie theaters. The 500 properties in the William chain vary from low volume, small town, single-screen theaters to high volume, big city, multi-screen theaters. The management is considering installing machines that will make popcorn on the premises. These machines would allow the theaters to sell popcorn that would be freshly popped daily rather than the pre-popped corn that is currently purchased in large bags. This proposed feature would be properly advertised and is intended to increase patronage at the company's theaters.
Annual rental costs and operating costs vary with the size of the machines. The machine capacities and costs are as follows:
Economy Regular Super
Annual capacity (boxes) Cost 50,000 120,000 300,000
Annual machine rental $8,000 $11,000 $20,000
Popcorn cost per box 130 130 130
Other costs per box 220 140 050
Cost of each box 080 080 080
Required:
a. Calculate the volume level in boxes at which the economy popper and regular popper would earn the same profit (loss).
b. Management can estimate the number of boxes to be sold at each of its theaters. Present a decision rule that would enable William's management to select the most profitable machine without having to make a separate cost calculation for each theater.
c. Could management use the average number of boxes sold per seat for the entire chain and the capacity of each theater to develop this decision rule? Explain your answer.
Answer:
William Company
a) Volume level in boxes at which the economy popper and the regular popper would earn the same profit (loss):
Economy Regular Difference in costs
Total Fixed costs $58,000 $131,000 $73,000
Total Variable costs per unit $430 $350 $80
Volume = Difference in fixed costs/Difference in variable = $73,000/$80
= 912.5 boxes
b. Decision rule: We assume a selling price of $1,000 per box, then based on this selling price, we calculate the contribution per box. The decision rule is to purchase the machine that has the least break-even point in sales unit.
Economy Regular Super
Total fixed annual costs $58,000 $131,000 $320,000
Selling price per box $1,000 $1,000 $1,000
Total variable cost per box $430 $350 $260
Contribution per box $570 $650 $740
Break-even point = 101.75 201.54 432.43
The most profitable machine is the Economy Popper since it has the least break-even point. This is the point at which management will start realizing some profits after covering all the fixed costs.
c. Management may not be able to use the average number of boxes sold per seat for the entire chain and the capacity of each theater to develop this decision rule. Using this will be complicated. But, using the break-even point for each machine is a lot easier and simpler to implement.
Explanation:
a) Machine Capacities and Costs Data and Calculations:
Economy Regular Super
Annual capacity (boxes) Cost 50,000 120,000 300,000
Annual machine rental $8,000 $11,000 $20,000
Total fixed annual costs $58,000 $131,000 $320,000
Popcorn cost per box 130 130 130
Other costs per box 220 140 050
Cost of each box 080 080 080
Total variable cost per box $430 $350 $260
Modern Movables Corporation is a Virginia-based manufacturer of furniture. In a recent quarter, it reported the following activities:
Net income $4,435
Purchase of equipment 901
Borrowings under line of credit (bank) 1,447
Proceeds from issuance of common stock 14
Cash received from customers 29,464
Payments to reduce notes payable (long-term) 49
Sale of investments 137
Proceeds from sale of equipment 6,894
Dividends paid 280
Interest paid 93
Required:
Based on this information, present the cash flows from investing and financing activities sections of the cash flow statement. (Amounts to be deducted should be indicated with a minus sign.)
Answer:
Modern Movables Corporation
Statement of cash flows
Cash flows from investing activities:
Proceeds from sale of equipment $6,894
Purchase of equipment ($901)
Sale of investments $137
Net cash from investing activities $6,130
Cash flows from financing activities:
Proceeds from issuance of common stock $14
Borrowings under line of credit (bank) $1,447
Payments to reduce notes payable ($49 )
Dividends paid ($280 )
Net cash from financing activities $1,132
At the beginning of the year, Monroe Company estimates annual overhead costs to be $500,000 and that 250,000 machine hours will be operated. Using machine hours as a base, the amount of overhead applied during the year if actual machine hours for the year was 150,000 hours is A.$500,000. B.$300,000. C.$600,000. D.$150,000.
Answer:
Allocated MOH= $300,000
Explanation:
Giving the following information:
Estimated annual overhead costs= $500,000
Estimated machine-hour= 250,000
Actual machine-hour= 150,000
To calculate the predetermined manufacturing overhead rate we need to use the following formula:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 500,000/250,000
Predetermined manufacturing overhead rate= $2 per machine hour
Now, we can allocate overhead:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 2*150,000= $300,000
Piedmont Company segments its business into two regions—North and South. The company prepared the contribution format segmented income statement as shown:
Total Company North South
Sales $825,000 $550,000 $275,000
Variable expenses 495,000 385,000 110,000
Contribution margin 330,000 165,000 165,000
Traceable fixed expenses 156,000 78,000 78,000
Segment margin 174,000 $87,000 $87,000
Common fixed expenses 69,000
Net operating income $105,000
Required:
a. Compute the companywide break-even point in dollar sales.
b. Compute the break-even point in dollar sales for the North region.
c. Compute the break-even point in dollar sales for the South region.
Answer:
A. 562,500
B. 260,000
C. 130,000
Explanation:
First step is to find the Contribution margin ratio using this formula
Contribution margin ratio=Contribution margin÷Sales
Contribution margin 330,000 165,000 165,000
÷Divide by Sales 825,000 550,000 275,000
=Contribution margin ratio 40.00% 30.00% 60.00%
Second step is to find the Break even
Break even = Fixed expenses/Contribution margin ratio
1. Computation for the break-even point in dollar sales.
Dollar sales for company to break-even=
(156,000+69,000)/40%
Dollar sales for company to break=225,000/40%
Dollar sales for company to break=562,500
2. Computation for the break-even point in dollar sales for the North region
Dollar sales for North segment to break-even= Dollar sales for North segment to break-even=78,000/30%
Dollar sales for North segment to break-even=260,000
3. Computation for the break-even point in dollar sales for the South region
Dollar sales for South segment to break-even Dollar sales for South segment to break-even=78,000/60%
Dollar sales for South segment to break-even=130,000
SY Manufacturers (SYM) is producing T-shirts in three colors: red, blue, and white. The monthly demand for each color is 3,487 units. Each shirt requires 0.75 pound of raw cotton that is imported from the Luft-Geshfet-Textile (LGT) Company in Brazil. The purchasing price per pound is $1.55 (paid only when the cotton arrives at SYM's facilities) and transportation cost by sea is $0.70 per pound. The traveling time from LGT’s facility in Brazil to the SYM facility in the United States is two weeks. The cost of placing a cotton order, by SYM, is $186 and the annual interest rate that SYM is facing is 32 percent of total cost per pound.
a. What is the optimal order quantity of cotton? (Round your answer to the nearest whole number.)
Optimal order quantity pounds
b. How frequently should the company order cotton? (Round your answer to 2 decimal places.)
Company orders once every months
c. Assuming that the first order is needed on 1-Jul, when should SYM place the order?
17-Jun
1-Jul
15-Jul
d. How many orders will SYM place during the next year? (Round your answer to 2 decimal places.)
Number of orders times
e. What is the resulting annual holding cost? (Round your answer to the nearest whole number.)
Annual holding cost $ per year
f. What is the resulting annual ordering cost?
Annual ordering cost $
g. If the annual interest cost is only 5 percent, how will it affect the annual number of orders, the optimal batch size, and the average inventory?
Answer: See explanation
Explanation:
a. The optimal order quantity can be calculated as:
= √2DS/H
where
D = 3 × 12 × 3487 × 0. 75
= 94149
Total cost incurred during purchase
= $1.55 + $0.70
= $2.25
Setup cost (S) = $186
Holding cost
= 32% × $2.25
= 0.32 × $2.25
= $0.72
Optimal order quantity
= √(2 × 94149 × 186)/0.72
= 6974.50
b. This will be calculated as:
Annual demand / EOQ
= 94149/6974.50
= 13.50
The company should order cotton 13.5 times per year.
c. Since the first order is needed on 1-July and lead time is 2 weeks, SYM should place the order before 17th June.
d. This will be:
= Annual demand / EOQ
= 94149/6974.50
= 13.5 orders
e. The resulting annual holding cost will be:
= 0.72 × (6974.50/2)
= 0.72 × 3487.25
= $2510.82
f. The resulting annual ordering will be:
= 94149/6974.50 × $186
= 13.5 × $186
= $2511
Three workers each take home two packs of Post-It notes at a cost of $.67 per pack.
Answer:
$ 4.02
Explanation:
Take two packs ×3 and it = 6 then take 6 × 67 and you get $4.02
Lambert Company acquired machinery costing $110,000 on January 2, 2019. At that time, Lambert estimated that the useful life of the equipment was 6 years and that the residual value would be $15,000 at the end of its useful life. Compute depreciation expense for this asset for 2019, 2020, and 2021 using the:
Compute depreciation expense for this asset for 2016, 2017, and 2018 using the a. Straight-line method b. Double-declining balance method C. Assume that on January 2, 2018, Lambert revised its estimate of the useful life to 7 years and changed its estimate of the residual value to $ 10,000. What effect would this have on depreciation expense in 2018 for each of the above depreciation methods?
Answer:
The answer is below
Explanation:
(a) Under straight-line method,
We have depreciation expense to be (cost - residual value) ÷ No of years =
=> ($110,000 - $15,000) ÷ 6 years = $15,833 yearly depreciation expense.
Hence, the year depreciation expense of $15,833 is applicable to all the Years 2016, 2017 and 2018.
Therefore, sum of depreciation for all the three years is calculated as
=> $15,833 * 3 years = $47,499.
(b) Under the double-declining method
We have = 2 * SLDP * BV
Where SLDP = Straight - Line Depreciation Percentage
BV = Book value
Hence, SLDP is 100% ÷ 6 years = 16.67%,
Thus, 16.67% * 2 => 33.33%
Therefore, Year 2016, 33.33% * $110,000 = $36,663
For Year 2017, 33.33% * $73,337 ($110,000 - $36,663) = $24,443
For Year 2018, 33.33% * $48,894 ($73,337 - $24,443) = $16,296
Adding all the three Years together => 2016 to 2018, => $77,402
(c) Given that after 2 years, the revised estimated useful life becomes 7 years and the residual value is $10,000, depreciation would be calculated as follows:
Under the straight-line method,
NBV = Net Book Value, at the end of 2017 is: $110,000 - $15,833 * 2 years = $78,334
Depreciation expense is therefore: ($78,334 - $10,000) ÷ 7 years = $9,762 (decrease in 2018 yearly depreciation charge)
Also,
Under the double-declining method,
SLDP is 100% ÷ 7 years = 14.29%, * 2 => 28.57%.
For Year 2018,
28.57% * $48,894 ($73,337 - $24,443) = $13,969 (decrease in 2018 yearly depreciation charge)
Answer:
the question is incomplete, so I looked for a similar question:
the requirements are:
calculate depreciation expense using straight line, double depreciation, sum of the years' digits methods
straight line depreciation:
depreciable value = $110,000 - $15,000 = $95,000
depreciation expense per yer = $95,000 / 6 = $15,833.33
depreciation expense 2019 = $15,833depreciation expense 2020 = $15,833depreciation expense 2021 = $15,834double declining balance:
depreciation expense 2019 = $110,000 x 2/6 = $36,667depreciation expense 2020 = ($110,000 - $36,667) x 2/6 = $24,444depreciation expense 2021 = ($73,333 - $24,444) x 2/6 = $16,296sum of the years' digits method:
depreciable value = $110,000 - $15,000 = $95,000
sum of years = 6 + 5 + 4 + 3 + 2 + 1 = 21 years
depreciation expense 2019 = $110,000 x 6/21 = $31,429depreciation expense 2020 = $110,000 x 5/21 = $26,190depreciation expense 2021 = $110,000 x 4/21 = $20,952The following trial balance of Blues Traveler Corporation does not balance.
Blues Traveler Corporation Trial Balance April 30, 2020
Debit Credit
Cash $5,912
Accounts Receivable 5,240
Supplies 2,967
Equipment 6,100
Accounts Payable $7,044
Common Stock 8,000
Retained Earnings 2,000
Service Revenue 5,200
Office Expense 4,320 00000
$24,539 $22,244
An examination of the ledger shows these errors.
1. Cash received from a customer on account was recorded (both debit and credit) as $1,380 instead of $1,830.
2. The purchase on account of a computer costing $3,200 was recorded as a debit to Office Expense and a credit to Accounts Payable.
3. Services were performed on account for a client, $2,250, for which Accounts Receivable was debited $2,250 and Service Revenue was credited $225.
4. A payment of $95 for telephone charges was entered as a debit to Office Expense and a debit to Cash.
5. The Service Revenue account was totaled at $5,200 instead of $5,280.
Required:
From this information prepare a corrected trial balance.
Answer:
1. Cash received from a customer on account was recorded (both debit and credit) as $1,380 instead of $1,830.
Dr Cash 450
Cr Accounts receivable 450
2. The purchase on account of a computer costing $3,200 was recorded as a debit to Office Expense and a credit to Accounts Payable.
Dr Equipment 3,200
Cr Office expense 3,200
3. Services were performed on account for a client, $2,250, for which Accounts Receivable was debited $2,250 and Service Revenue was credited $225.
Cr Service revenue 2,025
4. A payment of $95 for telephone charges was entered as a debit to Office Expense and a debit to Cash.
Cr Cash 190
5. The Service Revenue account was totaled at $5,200 instead of $5,280.
Cr Service revenue 80
adjusted trial balancedebit credit
Cash $6,172
Accounts Receivable $4,790
Supplies $2,967
Equipment $9,300
Accounts Payable $7,044
Common Stock $8,000
Retained Earnings $2,000
Service Revenue $7,305
Office Expense $1,120
$24,349 $24,349
Norton Associates is an advertising agency in Austin, Texas. The company's controller estimated that it would incur $264,000 in overhead costs for the current year. Because the overhead costs of each project change in direct proportion to the amount of direct professional hours incurred, the controller decided that overhead should be applied on the basis of professional hours. The controller estimated 22,000 professional hours for the year. During October, Norton incurred the following costs to make a 20-second TV commercial for Central Texas Bank:Direct materials $ 32,000Direct professional hours ($65/hour) 1,200The industry customarily bills customers at 150% of total cost.1. Compute the predetermined overhead rate.2. What is the total amount of the bill that Norton will send Central Texas Bank?
Answer:
$186,600
Explanation:
The computation of the predetermined overhead rate is shown below:
= Estimated manufacturing overhead / expected tptal labor hours
= $264,000 / 22,000 hours
= $12
Now for determining the total amount of bill first determine the total cost which is shown below:
Total cost is
= Direct material + direct cost + overhead cost
= $32,000 + 1,200 * $65 + 1,200 * $12
= $32,000 + $78,000 + $14,400
= $124,400
Now the total amount of the bill is
= 150% of $124,400
= $186,600
Hart Attorney at Law experienced the follwoing transactions in 2016, the first year of operations:
1. Accepted $36,000 on 4/1/16, as a retainer for services to be performed evenly over the next 12 months.
2. Performed legal services for cash of $54,000.
3. Purchased $2,800 of office suppies on account.
4. Paid $2,400 of the amount due on accounts payable.
5. Paid a cahs dividend to the stockholders of $5,000.
6. Paid cash for operationg expenses of $31,000.
7. Determined that at the end of the accounting period $200 of office supplies remained on hand.
8. On 12/31/16, recognized the revenue that had been earned for services performed in accordance with Transaction 1
Required:
Show the effects of the events on the fianncial statements using a horizontal statement model.
Answer:
I used an excel spreadsheet since there is not enough room here.
Explanation:
it is a type of text which is usually non-fiction
Answer:
Major types
Common literacy examples of non fiction include expository, argumentative, functional, and opinion pieces;
essays on art or literature biographies memoirs journalism historical scientific technical economic writingConsider the following data on U.S. GDP:
Year Nominal GDP (Billions of dollars) GDP Deflator (Base year 2009)
2015 17,947 109.8
1995 7,664 75.3
The growth rate of nominal GDP between 1995 and 2015 was _____, and the growth rate of the GDP deflator between 1995 and 2015 was _____.
Measured in 2009 prices, real GDP was _____ billion in 1995 and _____ billion in 2015.
The growth rate of real GDP between 1995 and 2015 was _____.
The growth rate of nominal GDP between 1995 and 2015 was _____ than the growth rate of real GDP.
Answer:
The growth rate of nominal GDP between 1995 and 2015 was 4.35%
Growth rate over a period is calculated as;
= 100 * (((Current variable/initial variable)^1/n) - 1)
= 100 * (((17,947 / 7,664) ^1/20) -1)
= 4.35%
Growth rate of the GDP deflator between 1995 and 2015 was 1.90%.
= 100 * (((109.8/75.3)^1/20) -1)
= 1.90%
Measured in 2009 prices, real GDP was $ 10,177.95 billion in 1995 and $ 16,345.17 billion in 2015.
Real GDP = (Nominal GDP / GDP Deflator) * 100
1995 = (7,664/75.3) * 100
= $ 10,177.95
2015 = (17,947/109.8) * 100
= $ 16,345.17
The growth rate of real GDP between 1995 and 2015 was 2.397% .
= 100 x (((16,345.17 / 10,177.95)^1/20) -1)
= 2.397%
The growth rate of nominal GDP between 1995 and 2015 was more than the growth rate of real GDP.
Nominal GDP growth was 4.35% whilst Real GDP was 2.397%.
Which best explains why there are many job opportunities in the Lodging pathway?
O The pathway requires a college education.
O The pathway offers seasonal positions.
O The pathway includes low-paying jobs.
The pathway has a high turnover rate.
Answer:
the pathway includes low-paying jobs.
Explanation:
The pathway has a high turnover rate. Because there are many job opportunities are there, In the lodging pathway.
What is employment?In most cases, employment refers to the status of having a paid job—of being employed. Employing someone is paying them to work. Employees are employed by an employer. Employment can also refer to the act of hiring individuals, as in We're trying to hire more women.
An excessively high turnover rate indicates that more employees than is typical for your industry to have left the company. Depending on the sector you work in, a high turnover rate can mean different things. The anticipated turnover rates fluctuate between industries and nations.
Therefore. The correct option is (D)
Learn more about employment here:
https://brainly.com/question/1361941
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Verne Cova Company has the following balances in selected accounts on December 31, 2015
All the accounts have normal balances. The information below has been gathered at December 31, 2015.
1. Verne Cova Company borrowed $10, 000 by signing a 12%, one-year note on September 1, 2015.
2. A count of supplies on December 31, 2015, indicates that supplies of $900 are on hand.
3. Depreciation on the equipment for 2015 is $1,000.
4. Verne Cova Company paid $2,100 for 12 months of insurance coverage on June 1, 2015.
5. On December 1, 2015, Verne Cova collected $30, 000 for consulting services to be performed from December 1, 2015, through March 31, 2016.
6. Verne Cova performed consulting services for a client in December 2015. The client will be billed $4,200.
7. Verne Cova Company pays its employees total salaries of $9,000 every Monday for the proceding 5-day week (Monday through Friday). On Monday, December 29, employees were paid for the week ending December 26. All employees worked the last 3 days of 2015.
Question Completion:
Prepare the adjusting journal entries for the seven items above. The following account balances exist:
Equipment $7,000
Notes payable $10,000
Prepaid Insurance $2,100
Supplies $2,450
Unearned Service Revenue $30,000
Answer:
Verne Cova Company
Adjusting Journal Entries on December 31, 2015:
1. Debit Interest Expense $400
Credit Interest Payable $400
To accrue interest expense for 4 months.
2. Debit Supplies Expense $1,550
Credit Supplies $1,550
To record supplies expense for the period.
3. Debit Depreciation Expense - Equipment $1,000
Credit Accumulated Depreciation $1,000
To record depreciation expense for the period.
4. Debit Insurance Expense $1,225
Credit Prepaid Insurance $1,225
To record insurance expense for the period.
5. Debit Unearned Service Revenue $7,500
Credit Service Revenue $7,500
To record service revenue earned.
6. Debit Accounts Receivable $4,200
Credit Service Revenue $4,200
To record services revenue earned for services performed.
7. Debit Wages Expense $5,400
Credit Wages Payable $5,400
To accrue wages expense for 3 days.
Explanation:
a) Interest Expense on Note = $10,000 * 12% * 4/12 = $400
b) Supplies Expense (usage for the period) = $1,550 ($2,450 - $900)
c) Insurance expense (expired) = $1,225 ($2,100/12 * 7 months)
d) Earned service revenue = $7,500 ($30,000/4 months)
e) Wages expense unpaid = $5,400 ($9,000 * 3/5 days)
Molly Grey (single) acquired a 30 percent limited partnership interest in Beau Geste LLP several years ago for $56,000. At the beginning of year 1, Molly has tax basis and an at-risk amount of $20,000. In year 1, Beau Geste incurs a loss of $187,500 and does not make any distributions to the partners.
-In year 1, Molly's AGI (excluding any income or loss from Beau Geste) is $67,800. This includes $13,800 of passive income from other passive activities.
-In year 2, Beau Geste earns income of $38,400. In addition, Molly contributes an additional $31,380 to Beau Geste during year 2. Molly's AGI in year 2 is $71,700 (excluding any income or loss from Beau Geste). This amount includes $10,160 in income from her other passive investments.
Based on the above information, complete the following tables: (Leave no answers blank. Enter zero if applicable.) What are the cumulative total passive suspended losses at the end of year 2?
Answer:
$20,770
Explanation:
Share of passive loss in year 1
[187,500 × 30%]
$56,250
Less: Passive income from other activities
($13,800)
Suspended loss in year 1
$42,450
Less: Share of passive income from Beau Geste in year 2 (38,400 × 30%).
($11,520)
Less passive income from other activities
($10,160)
Cumulative total passive suspended losses at the end of year 2.
$20,770
Budgeted income amount $25.00
Actual amount $17.50
Dollar variance
Percent variance
F or U
Answer:
$7.50 and 30% U
Explanation:
Dollar variance is budgeted amount minus actual amount
=$25- $17.50
=$7.50
Percent variance
=$7.50/$25 x 100
=0.3 x 100
=30% unfavorable
Some recent financial statements for Smolira Golf Corp. follow.
SMOLIRA GOLF CORP.
2017 and 2018 Balance Sheets
Assets Liabilities and Owners’ Equity
2017 2018 2017 2018
Current assets Current liabilities
Cash $23,046 $25,100 Accounts payable $24,184 $28,100
Accounts
receivable 13,448 16,200 Notes payable 20,000 11,800
Inventory 26,822 28,100 Other 12,571 19,100
Total $63,316 $69,400 Total $56,755 $59,000
Long-term debt $79,000 $83,424
Owners’ equity
Common stock and
paid-in surplus $48,000 $48,000
Accumulated retained
earnings 214,256 243,576
Fixed assets
Net plant and
equipment $334,695 $364,600 Total $262,256 $291,576
Total assets $398,011 $434,000 Total liabilities and
owners’ equity $398,011 $434,000
SMOLIRA GOLF CORP.
2018 Income Statement
Sales $349,760
Cost of goods sold 241,500
Depreciation 27,200
Earnings before
interest and taxes $81,060
Interest paid 15,300
Taxable income $65,760
Taxes (25%) 16,440
Net income $49,320
Dividends $20,000
Retained earnings 29,320
Find the following financial ratios for Smolira Golf Corp. (use year-end figures rather than average values where appropriate):
Short-term solvency ratios: 2014 2015
A. Current ratio times times
B. Quick ratio times times
C. Cash ratio times times
Asset utilization ratios:
D. Total asset turnover times
E. Inventory turnover times
F. Receivables turnover times
Long-term solvency ratios: 2014 2015
G. Total debt ratio times times
H. Debt–equity ratio times times
I. Equity multiplier times times
J. Times interest earned times
K. Cash coverage ratio times
Profitability ratios:
L. Profit margin
M. Return on assets
N. Return on equity
Answer:
Short-term solvency ratios: 2014 2015
A. Current ratio = current assets / current liabilities
2014 = $63,316 / $56,755 = 1.12
2015 = $69,400 / $59,000 = 1.18
B. Quick ratio = (current assets - inventory) / current liabilities
2014 = ($63,316 - $26,822) / $56,755 = 0.64
2015 = ($69,400 - $28,100) / $59,000 = 0.7
C. Cash ratio times times = (cash + cash equivalents) / current liabilities
2014 = $23,046 / $56,755 = 0.41
2015 = $25,100 / $59,000 = 0.43
Asset utilization ratios:
D. Total asset turnover = net sales / average total assets
= $349,760 / [($398,011 + $434,000)/2] = 0.84
E. Inventory turnover times = COGS / average inventory
= $241,500 / [($26,822 + $28,100)/2] = 8.79
F. Receivables turnover = net sales / average accounts receivables
= $349,760 / [($13,448 + $16,200)/2] = 23.59
Long-term solvency ratios: 2014 2015
G. Total debt ratio = total liabilities / total assets
2014 = $135,755 / $398,011 = 0.34
2015 = $142,424 / $434,000 = 0.33
H. Debt–equity = total liabilities / total equity
2014 = $135,755 / $262,256 = 0.52
2015 = $142,424 / $291,576 = 0.49
I. Equity multiplier = assets / equity
2014 = $398,011 / $262,256 = 1.52
2015 = $434,000 / $291,576 = 1.49
J. Times interest earned = EBIT / interest expense
= $81,060 / $15,300 = 5.3
K. Cash coverage ratio = (EBIT + non cash expenses) / interest expense
= ($81,060 + $27,200) / $15,300 = 7.08
Profitability ratios:
L. Profit margin = net income / sales
= $49,320 / $349,760 = 0.14
M. Return on assets = net income / average total assets
= $49,320 / [($398,011 + $434,000)/2] = 0.12
N. Return on equity = net income / average total equity
= $49,320 / [($262,256 + $291,576)/2] = 0.18