Financial Analysis * The tax rate is approximately 30% 5.618.8=29.79% 5.418.1=29.83% 5.418=30% * Based on the industry average, a sports store of similar size should be making around $21000 or 67% more profitable than Rhodes’ store. * Assuming the lots are of the same size and bear the same tax burden, if the unused lot is sold off property taxes would be reduced by $6000 at the 2008 rate. All else being equal, this would increase net profit by 6000×0.30=$1800, for a total of $14400. Profit as a percentage of sales would increase from 2.1% to 2.4%. * Of the $18400 Rhodes made in mortgage payments last year, $8000 was interest.
General Priciple – Performance are only recorded when the target is proable to be acheived Sooner and Later Inc On January 1, 2006, Sooner or Later Inc. granted 1,000 “at-the-money” employee stock options (i.e., the exercise price was equal to the stock price on the grant date). To align the compensation of the employees with the financial performance of the company, the award will vest only if cumulative revenue over the following three-year reporting period is greater than $10 million and the employees are still employed by Sooner or Later. As of the date of the grant, management believes it is probable that the company will achieve cumulative revenue in excess of $10 million over the following threeyear period. Each award has a grant-date fair value of $9. Sooner or Later’s valuation professionals have indicated that if the revenue target was factored into the fair value assessment, the grant-date fair value would be $6.
C) The answers are different because if the interest is left untouched, it makes the principal amount higher each year, giving more money after 10 years. Compounded interest allows for more money that simple interest would. 2. A) If the individual retires at the age of 65, having started the program at age 40, there would be $219,318 in the account. $3,000 x (8% in 25 years) 3000 x 73.106 = $219,318 B) If
From this we know that a) Firm A has a higher profit margin than firm B b) Firm B has a higher profit margin than firm A c) Firm A and B have the same profit margin d) Firm A has a higher equity multiplier than firm B 16. If you deposit $15,000 per year for 9 years (each deposit is made at the beginning of each year) in an account that pays an annual interest rate of 8%, what will your account be worth at the end of 9 years? 17. You plan to accumulate $450,000 over a period of 12 years by making equal annual deposits in an account that pays an annual interest rate of 9% (assume all payments will occur at the beginning of each year). What amount must you deposit each year to reach your
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.
Although the bonds have the lowest cost of issuance among the choices, its Net Present Value (NPV) of $219 million is lower than the HUD 242. The Business Dictionary defines NPV as “the difference between the present value of the future cash flows from an investment and the amount of investment” (Business Dictionary, p. 1, 2012). The collateral requirement for the bonds is also much higher than the HUD 242. Because the collateral includes escrow on ECH’s gross receivables, ECH possibly may have less control over its future revenue stream. The simulator also took note of the four-year time frame of the expansion project versus the three-year spending limit on the bonds.
Using a flexible budget is more accurate in this instance as it captures the change in anticipated production from 10,000 to 10,800 bikes. Variance Analysis Implications and possible Causes Frame Assembly Department There is a favorable cost variance in the frame assembly department of approximately $82,663 when comparing actual costs to flexible budgeted costs. Steel tubing has a total unfavorable variance of $8,100. The original budget for 2004, estimated the cost of steel tubing at $30.00 / lb. Actual costs were $31.50 / lb., which may indicate unanticipated price increases (for example an increase in commodity prices since steel is a commodity), or higher costs for additional orders of steel required to meet the increased production demand.
Write at least one paragraph. Buying an extra copier would probably be a good choice, since the amount of revenue lost almost doubles (US$17,805.50 vs. US$8,000.00) the cost of buying an extra copier. I feel confident with my answer, although there are some limitations to it. As was mentioned before, the sum of the weeks will not always add up to 1 years’ worth, so that needs to be taken into account. Also, this simulation must be run several times to find the average amount
This action will help the company down the road as fewer liabilities will result in less cash outflow, and place the company in a position to manage through the construction downturn. Another upside in the balance sheet was that The Home Depot has reported a $63 million dollar increase in stock holder´s equity. This information will be used by potential lenders or investors to determine if this company is worth the investment. In this case, it appears that The Home Depot would be a good credit risk, based on the latest
Livoria Sandwich Inc. is operating in a highly competitive and fast growing market. In 2011, the company had only 0.29% profit margin. In order to seek competitive advantage and gain market share, Livoria needs to cover its current cash shortage before going any further. In this memo, three strategic alternatives are evaluated; and recommendations and implementation plans will be given to cover Livoria’s short-term cash shortage, gain market share, and earn $1.1 million net income by 2014. Situational Analysis As shown in Appendix 1; in 2011, Livoria generated 53% contribution margin which is almost 10% higher than the industry average.