No, I don’t agree with Cohen’s WACC calculation. The cost of debt was determined incorrectly. To determine the cost of debt I calculated the yield to maturity based on the information available on the Current Yield from Exhibit 4. Cost of debt is the interest rate the firm must pay on new borrowing, which can be seen in the financial markets. Since Nike has bonds outstanding, then the YTM on those bonds (7.13%) is the market-required rate on the Nike’s debt.
3) A company changes from straight-line to an accelerated method of calculating depreciation, which will be similar to the method used for tax purposes. The entry to record this change should include a A. credit to Accumulated Depreciation 4) Presenting consolidated financial statements this year when statements of individual companies were presented last year is an accounting change that should be reported by restating the financial statements of all prior periods presented. 13) If a short-term obligation is excluded from current liabilities because of refinancing, the footnote to the financial statements describing this event should include all of the following information EXCEPT: the number of financing institutions that refused to refinance the debt, if any 14) Stock dividends distributable should be classified on the balance sheet as an item of stockholders' equity. 15) Which of the following items is a current liability? A long-term debt maturing currently, which is to be paid with cash in a sinking fund b.
The set up cost is huge and is variously estimated to be somewhere between four and eleven trillion dollars (Friedman). This cost merely needs to be understood, it is more of a financial transaction more than a cost because the money never leaves the Social Security system. This cost is an estimate of the money that workers keep in their private accounts as new retirees are receiving checks that have come from current workers in the past. With new workers saving all Social Security, money there is no money to pay current beneficiaries. This cost however is a one-time cost, and could be paid off in the first few decades of the system.
Memo To: John & Jane Smith From: Date: 12/2/2014 Re: Summary of various tax issues Your first question is how is the $300,000 treated for purposes of federal tax income? In Code 61(a), income derived from services is one of the listed forms of taxable income. This includes fees, commissions, fringe benefits and similar items. Since the compensation was earned this year, even though you worked on the case for two years, you will include it as ordinary income this year. You can reduce your tax liability by deducting necessary business expenses that were paid in the same
Having a ratio below one likely means they had to take out some sort of financing to cover their obligations for the year without some sort of financing. Seeing a current ratio of below one is a scare for many investors because, a ratio of below 1 raises issues with the company’s financial well-being. Debt Management Ratios Debt management ratios show to what extent a company uses borrowed funds to finance its operations. These ratios are important to a company because creditors use them to determine the riskiness of the company’s financial position. Using the debt ratio we can determine how much of Dr. Pepper Snapple Group’s assets are provided through debt.
In the case of our government, debt is managed primarily by selling bonds. The process is cyclical as the government has to sell new bonds to pay for older bonds that have matured. It is important to realize that debt should be judged in relation to assets. While debt is probably never a good thing, in the case of the U.S. economy it is not as bad as it seems. When we view some of the assets of the United States such as natural resources, skilled workforce, and tax revenue generating businesses, we see that our assets have enough value to sustain our current debt level
Most banks have policies that allow exceptions for customers with good loan histories and reputations. An exception might be appropriate in this case if the loan applicant can explain how and how quickly the new equipment will increase income. The new equipment will increase depreciation expense, so at the same level of revenue the company must reduce costs by at least $184,615 (3.51%) plus the net increase in depreciation. This required expense reduction is shown below with some more-or-less reasonable assumptions. This estimate also is conservative because the cost of new equipment was not included in total assets.
FY96 sales projections of $5.5 show that if the percentage of sales were to remain constant in the balance sheet, they would need an additional $357K of funding (cash) to keep up with bill payment. In addition to the $357K in additional funding Clarkson would be required to roll in their current line of credit of $399K bringing the required amount to $756K. In short, if no changes are made to the management of short term assets Clarkson will be absorbing his funds into new assets at a faster rate than he can earn funds through profit margin by having high levels of inventory and an inefficient receivables turnover. It is clear that Clarkson Lumber will need an infusion of cash to sustain the current growth rate. As a banker I would not approve Clarkson lumber request without conditions.
Ashley Trosin American Government 4/21/12 Social Security Reform By the mid-2020s, in addition to the 12.4% Social Security payroll tax, taxpaying workers would need to finance another $200 billion a year (in 2010) in Trust Fund bond redemptions just to keep full benefits flowing. (FDCH Congressional Testimonial) Many people are worried that by the time they need to retire, the social security system will be depleted. Such a beneficial system cannot be allowed to fail. All wages should be taxed for social security so that the shortfall in social security will be covered, the percentage of wages taken from wealthy and poor workers would be fair, and people will be able to continue using social security. The amount of beneficiaries needing support from social security is only rising.
A little plastic card, that can be personalized and lets us effortless buy anything our hearts desire with invisible money, that contributes greatly to the survival and success of materialism. Credit cards are nothing but illusions and a quick fix to achieving the dream, that later bring on bigger problems. Like not being able to purchase a house because you owe a lot in credit card debt. Banks today are stricter than they’ve ever been on lending their money and for good reason. Unemployment rate has gone up, so has the cost of living, while pay rates have not, and the average american is $7,168 in credit card debt.