DSO = Receivables / Ave. sales per day Receivables= DSO * Ave. sales per day = 20 * 20,000 Receivables= $400,000 (3-2) Debt Ratio: 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 = 1 – (1 / Equity multiplier) Debt ratio = 1 – (1/2.5) = 1 - .40 = .60 Debt ratio = 60% (3-3) Market/Book Ratio: Winston Washers’s stock price is $75 per share. Winston has $10 billion in total assets.
My customer satisfaction rate was at 100% and my popularity grew from 4% to 8%. My losses were in ice and twelve spoiled lemons; next time, I will not purchase as many lemons. I made approximately $8.00 in profit. On day three, the weather forecast was hazy, with a temperature of 89 degrees, so I kept the price of the lemonade to $0.20 per cup. I bought 50 cups and 250 ice cubes.
Week 10 Problems 1. Given the following information: Total assets $100,000 Debt (12% interest rate) $80,000 Equity $20,000 Variable costs of production $14 per unit Fixed cost of production $27,000 Units Sold 12,300 Sales price $19.75 per unit What happens to operating income and net income if output is increased by 10 percent? Verify your answer. Revenue: $19.75*(12,300) = $242,925 Expenses: $14*(12,300) = $172,200 Operating Income: $242,925-$172,200 = $70,725 Net Income: $72,725- (.12*$80,000) = $63,125 With 10% increase in revenue: Revenue: $19.75*(13,530) = $267,217.50 Expenses: $14*(13,530) = $189,420 Operating Income: $267,217.50- $189,420 =$77,797.50 Net Income: $77,797.50 - (.12*$80,000) =$38,197.50 Operating Income rose from $70,725 to $77,797.50 for a 91% increase. Net income dropped from $63,125 to $38,197.50 which cuts losses by $24,927.50.
Again, 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. If Dana’s state tax rate increases to 10%, corporate bonds are still superior to Treasury bonds. 50. [LO 1] At the beginning of his current tax year David invests $12,000 in original issue U.S. Treasury bonds with a $10,000 face value that mature in exactly 10 years. David receives $700 in interest ($350 every six months) from the Treasury bonds during the current
Sales (3,000 * 70)……………………. $210,000 Variable Expenses (3,000 * 50)………$150,000 Contribution Margin…………………..$60,000 Fixed Cost……………… …………....$25,000 Net Operating Income………………. $35,000 25% Decrease in Sales and 15% Increase in Variable Cost Sales (2,250 * 70)……………………. $157,500 Variable Expenses (32,250 * 57.5)…...$129,375 Contribution Margin…………………..$28,125 Fixed Cost……………… …………....$25,000 Net Operating Income………………. $3,125 $35,000 - $3,125 =
Sales units Sales Selling price: $250 100,000 400 Selling price: $250(0.1)= $275 137500 Variable cost: $160 variable cost: $160 Fixed cost: 22500 Fixed cost: 22,500(0.1)= 24750 1. Compute the company’s current break-even point in units and dollars? Break even Units: Fixed expense/CMUnit 22500/90 = 250 CM: 250-160= 90 Dollars: Fixed expense/ Cm ratio 22500/.36= $62500 CM Ratio: units 90/ $250 selling price = .36 2. What is the company’s current margin of safety in Units, dollars and percentage? Margin of Safety (DOLLARS) Budgeted – break even = 100,000-62500= 37500 (Percentage) 37.500/100.000= 37.5% (Units) 37500/250= 150 3.Compute the company’s margin of safety in units assuming the proposal is accepted.
What is it's breakeven point? Contribution Margin = Sale price – Variable cost = $100 - $25 = $75 Breakeven Point = Fixed Cost ÷ Contribution per unit = $500,000 ÷ $75 = 6,667 procedures c) what volume is required to provide a pretax profit of $100,000? A pretax profit of $200,000? Volume required to provide a pretax profit $100,000 = (Fixed cost + Desired profit) ÷ Contribution margin = (500,000 + 100,000) ÷ 75 = 8,000 Volume required to provide a pretax profit $200,000 = (Fixed cost + Desired profit) ÷ Contribution margin = (500,000 + 200,000) ÷ 75 = 9,334 d) Sketch out a CVP analysis graph depicting the base case situation? ------------------------------------------------- Revise
In year 2 it reports a $40,000 loss. For year 3, it reports taxable income from operations of $100,000 before any loss carryovers. Using the corporate tax rate table, determine how much tax Willow Corp. will pay for year 3. Answer: $4,500. Description (1) Year 3 taxable income $100,000 (2) Year 1 NOL carryforward ($30,000) (3) Year 2 NOL carryforward ($40,000) (4) Taxable income reported 30,000 (1) - (2) -
Cushenberry Corporation had the following transactions. • Sold land (cost $12,000) for $15,000. • Issued common stock at par for $20,000. • Recorded depreciation on buildings for $17,000. • Paid salaries of $9,000.
Given: wages, salaries, and fringe benefits = $5 trillion; profits = $400 billion; interest = $300 billion; rent = $100 billion; and depreciation = $700 billion. How much is National Income? 7. Given: wages, salaries, and fringe benefits = $5.7 trillion; profits = $500 billion; interest = $250 billion; rent = $150 billion; and indirect business taxes = $400 billion. How much is National Income?