The Days Sales Outstanding: Receivable / Average sales per day DSO= 20 days, Average daily sales = $20,000 Receivable 20 days= 20,000 Receivable = 20 x 20,000 = $400,000 Problem 3-2: Vigo Vacations has an equity multiplier of 2.5. The company’s assets are financed with some combination of long-term debt and common equity. What is the company’s debt ratio? Debt Ratio: Total liabilities / Total assets Problem 3-3: Winston Washers’s stock price is $75 per share. Winston has $10 billion in total as- sets.
If she were to move to another state where her marginal state rate would be 10 percent, would her choice be any different? Assume that Dana itemizes deductions. When the state rate is 5 percent, Dana would achieve the following returns from the Treasury bond or the corporate bond: The Treasury bond yields $1,125 or $30,000 x [.05 x (1-.25)] after tax. The corporate bond yields $1,282.50 or $30,000 x [.06 x (1 - .25 - .05(1-.25))] after tax. Note that the actual state rate is reduced by 25% to allow for the deductibility of state income taxes on the federal income tax return.
Question : (TCO 7) Pritchard Company manufactures a product that has a variable cost of $30 per unit. Fixed costs total $1,500,000, allocated on the basis of the number of units produced. Selling price is computed by adding a 20% markup to full cost. How much should the selling price be per unit for 300,000 units? 6.
Why does the degree of operating leverage change as the quantity sold increases? 20,000 bags: DOL= 20,000(5) = 100,000 = 5 (20,000 x 5) – 80,000 20,000 DOL = 5 25,000 bags: DOL= 25,000(5) = 125,000 = 2.8 (25,000 x 5) – 80,000 45,000 DOL= 2.8 The degree of operating leverage changes because the company is increasing or decreasing in profit. As the profit increases, the leverage decreases. d. If Healthy Foods has an annual interest expense of $10,000, calculate the degree of financial leverage at both 20,000 and 25,000 bags. 20,000 bags: 200,000- 80,000 (fixed cost)- 100,000 (variable cost)= $20,000 DFL= 20,000 = 2 20,000 – 10,000 DFL= 2 25,000 bags: DFL= 45,000 = 1.29 45,000 – 10,000 DFL=1.29 e. What is the degree of combined leverage at both sales levels?
1. Given the following information: Total assets $250,000 Debt (12% interest rate) $150,000 Equity $40,000 Variable costs of production $150 per unit Fixed cost of production $50,000 Units Sold 1,000 Sales price $210 per unit What happens to operating income and net income if output is increased by 10 percent? Verify your answer. Solution: The operating income: Revenues: $210 x (1,000) = $210,000 Expenses: $150 x (1,000) + $50,000 = $200,000 Operating income: $210,000 - 200,000 = $10,000 Net income: $10,000 - (.12 x 150,000) = ($8,000) With 10% increase in revenue: Revenues: $210 x (1,100) = 231,000 Expenses: $150 x (1,100) + $50,000 = $215,000 Operating income: $231,000 - $215,000 = $16,000 Net income $16,000 - (.12 x $150,000) = ($2,000) Operating income rose from $10,000 to $16,000 for a 60% increase. Net income rose from ($8,000) to ($2,000) which cut losses by $6,000.
To reposition its water as a premium product, Healthy Spring will require an increase in its advertising and promotion budget of $900 daily. What is
Capital | + | EarnedCapital | Rev-enues | – | Expen-ses | = | NetIncome | Purchase $10,000 of inventory on credit | | | +10,000(Inventory) | = | +10,000(AP) | | | | | | – | | = | | Sell all inventory for $18,000 on account | | | +18,000(AR)-10,000(Inventory) | = | | | | | +8,000(Retained Earnings) | +18,000(Sales) | – | +10,000(COGS) | = | +8,000 | Collect $4,000 cash for accounts receivable | +4,000 | | –4,000(AR) | = | | | | | | | – | | = | | Pay $6,000 cash toward accounts payable | –6,000 | | | = | –6,000(AP) | | | | | | – | | = | | Topic: Using the Financial Statements Effects Template – Balance Sheet Only 2. Record the following transactions in the financial statements effects template below. a) Founder contributes $12,000 in cash in exchange for common stock. b) Obtain $18,000 short-term bank loan. c) Purchase equipment costing $14,000
FI 515 Course Project a) The net cost of the spectrometer would include the original cost of the equipment, the modification costs and the increase in working capital due to having the equipment. Therefore, the net cost would be the $70,000 base costs, plus the $15,000 in modification costs and the $4,000 in capital, which equals $89,000. b) To find the operating cash flows for the three years, we have to find the cost savings after taxes and add the tax of depreciation. To find the cost savings, we have to take the $25,000 that is expected to be saved and reduce it based on a tax of 40%, or $25,000(1-.4), which equals $15,000. The tax on depreciation requires several steps to calculate.
In order to achieve her marketing objective, she has to allocate communication budget in such a way that it would result in 10% increase in profit over 2007 estimates. Marketing Mix Strategies: RBS had high distribution penetration. Maximum distribution was of 1 lb box. There was a 150 person sales team to manage retail and wholesale accounts. Sales-force was incentivized by a quota system with quarterly volume quotas.
Assignment #1 Economics and Ethical Issues Mrs. Acres Homemade Pies In relationship between supply and demand for Mrs. Acres Homemade Pies, according to the growth of production, consumers are willing to buy Shelly pies at $4.50 each with a production of 8000 pies per month with a profit of $12,000. In order to stay at a $12,000 monthly profit, if Shelly decide to raise her price to $9.50 per pie; the impact will decrease the demand for her pies and her production would only have to be 2000 pies per month. The equilibrium price for Shelly pies is $6.00 per pie with a production of 4000 pies a month.