For federal taxation purposes, the proceeds received by the investor company in a proportionate redemption are taxed as dividends by applying the effective intercorporate dividend tax rate. In 1983, that tax rate was approximately 6.9 percent. Berkshire also chose to treat the proceeds from the redemption of the GEICO stock as dividend income in its 1983 financial statements. Berkshire’s audit firm, Marwick, Mitchell & Company, approved that accounting treatment. In 1984, another company in which Berkshire had a significant equity
How does Net Sales change during these three years? What could be the reason for the change in Net Sales in 2011? According to the Risk factors mentioned in the Financial Statements, factors such as current economic conditions, timing of new merchandise releases and promotional events, changes in merchandise mix, success of marketing programs, and weather conditions are the main factors that affect sales in a company such as The Gap Inc. 4. What was the change of Retained Earnings from the year 2010 to 2011? Retained earnings increase by $597.00 they raised from $11,767.00 to $12,364.00, an increase approximately of 5.07% And what was the Net Income for the year 2011?
If the sales outlook for the coming three years was only 20,000,000 and B.E. continued producing at the rate of 30,000,000 units, a total of 10,000,000 units would be dumped into ending inventory at the end of each year once again reducing costs of goods sold and falsely increasing income. By the end of year 2013, B.E. Company would have 35,000,000 units sitting in ending inventory taking up space and costing money to store. Once again if the president’s bonus is based off of net income, this situation is the most favorable for a high paying bonus and encourages stockpiling inventory to inflate net income.
The theory behind this was that if taxes were increased or left at their same rate, the amount of money brought into the government would be x. But if taxes are cut, GDP rises. The rise in GDP plus the lower taxes would be greater than x, causing an increase in tax revenues. This would push the supply curve to the right also increasing real Gross
Even though the acid-test ratio is less than 1 which rates in the lower third quartile in the industry of 1.6, 0.9 to 0.6, it indicates a concern with repaying current liabilities. This could be due to quick expansion of inventory with the intention of increasing sales. While this is currently considered a weakness and is concerning, a rise in the ratio should be seen by 2013 due to the increase of suggested sales. 3. I calculated an “inventory turnover ratio” which measures the number of times a company sells its inventory during a year.
When the sales are increased for his division, bonuses could be paid to the managers. Frank Campbell reviewed the purchase orders received from November and December. He wanted to determine if any shipments to the customers before December 31 may increase their sales. The alternative way to report sales was to increase sales by sending out two shipments to customers. Although the customers only needed the shipment the following year, this would be a way to exceed the targeted budget.
This suggest that for every $1 that the company earns in Sales, they paid 23.1 cents for their employee. The fact that Country Road has decreased the percentage means that they became more efficient in paying their employee over the years. (c) Judging from the Vertical Analysis, Country Road might have been opening new stores , thus increasing Occupancy Expense. By doing this they have to save more money, cutting cost which led to decrease in Employment Expense, cutting their employee’s wages. ??
Productivity, as measured by the output per hour by the business sector, grew at a lower rate during the Reagan years than the 7 years prior. The growth rate of 1.3% during Reagan’s tenure was .2% higher than the 6 years afterwards, but .3% lower than the years preceding (Niskanen & Moore 1996). Inflation is an increase in the average price level and is not a positive occurrence. When Reagan took office, the REAGAN-SIDE ECONOMICS consumer price index (CPI) was at a high 13.5%, by the end of his terms, the CPI had been decreased to 4.1% (Niskanen & Moore 1996). Those who are critical of Reagan’s policy speak of the explosion of the United States’ budget deficit during the 1980s.
When there is a recessionary gap, expansionary fiscal policy does not makes things better, but worse. Fiscal policy causes interest rates to increase and the Canadian Dollar to appreciate; as a result, there is a decrease of net exports and a decline in the economy. However, expansionary monetary policy causes interest rates to fall, which will provoke international outflows of financial capital. This, in turn, lowers the value of the dollar and makes Canadian goods more desirable. “The net export effect of expansionary monetary policy will be in the same direction as the monetary policy effect”.1 Recommended Course of Action Although both fiscal policy and monetary policy prove to have beneficial effects on an economy during a contractionary period, we believe that the government should use a combination of both policies…… - The money supply may be ineffective, but in the end people want to make sure that they will have money to save up in case of emergencies.
If the government cut taxes or increases transfer payments such as unemployment insurance and food stamps this helps to offset the decrease in household income. Additionally, when government cuts corporate taxes, it helps prevent businesses from cutting expenses as much as they would during a recession. Therefore, an increased federal budget deficit can help stabilize an economy for as households’ disposable income rises they will spend more. Fortunately, mechanisms such as automatic stabilizers are in place to neutralize the ups and downs of the economy without having to