Assume there are 365 days in a year. $20,000/365= 54.79 54.79 x 20 = $1,095.80 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? Equity ratio = 1/2.5 = .40 Debt ratio + equity ratio = 1 1-equity ratio = debt ratio 1-.40 = .60 or 60% 3-3 Winston Washers’s stock price is $75 per share.
What is it's breakeven point? c) what volume is required to provide a pretax profit of $100,000? A pretax profit of $200,000? d) Sketch out a CVP analysis graph depicting the base case situation? e) Now assume that the practice contracts with one HMO, and the plan proposes a 20% discount from charges.
The difference resulted from $60,000 of nondeductible premiums on Ajax's officers' life insurance and $40,000 of rental income received in advance. Rental income is taxable when received. Ajax's effective tax rate is 30%. In its Year 2 income statement, what amount should Ajax report as income tax expense-current portion? 5.
(SP x Q) – (VC x Q) – FC = P $14Q-$4.20Q-$294,000=0 $9.8Q=$294,000 Q=30,000 units D. What is the breakeven point in dollars? Sales Dollars=FC/CM Ratio $294,000/0.7=$420,000 Question 2: Calihan Company has a product contribution margin of $50. The fixed costs are $300,000. Calihan Company desires a target profit before taxes of $150,000 per year. (2 points) A.
This is a sign of weakness. It should be noted that the percentage reduction is larger the percentage reduction in sales and cost of goods sold. OPERATING EXPENSES Selling Expenses Advertising was up from year 6 to year 7 by $8,940 or 37.5%. From year 7 to year 8 operating expenses were down $5,332 or -16.3%. This is weak and raises questions about why management would decrease advertising so much.
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.
Make or buy decision a. Be able to identify relevant costs and benefits b. Be able to prepare a financial analysis and make a decision c. Compute the impact of outsourcing on the company’s overall profits 7. Special orders a. Be able to identify relevant costs and benefits; understand the decision rule b.
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.