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.
A company has provided the following data: Sales 3,000 units Sales price $70 per unit Variable cost $50 per unit Fixed cost $25,000 If the sales volume decreases by 25%, the variable cost per unit increases by 15%, and all other factors remain the same, net income will: A) decrease by $31,875. B) decrease by $15,000. C) increase by $20,625. D) decrease by $3,125. Sales (3,000 * 70)…………………….
Net income dropped from $63,125 to $38,197.50 which cuts losses by $24,927.50. Losses were cut by 61%. 2. A firm needs $100 to start and has the following expectations: Sales $200 Expenses $185 Tax rate 33% of earnings o What are earnings if the owners invest the $100? $10.05 o If the firm borrows $40 of the $100 at an interest rate of 10%, what are the firm's net earnings?
b. consumer irrationality. c. the second law of demand: Price elasticity increases with time. d. the law of diminishing marginal utility. 5. If Sarah’s income rises by 20 percent, and, as a result, she purchases 40 percent more designer clothing, her income elasticity for designer clothing is a.
Thus, what is the “income before extraordinary items”? (TCO C) Ivy Co. had the following account balances. Sales $ 120,000 Cost of goods sold 70,000 Salary expense 15,000 Depreciation expense 20,000 Dividend revenue 5,000 Utilities expense 6,000 Rental revenue 30,000 Interest expense
Question 1. a) How many parts should you purchase each time you place an order? R=800- ORDERING COST Annual carrying cost of capital= 20% .20 lost per dollar R= 50000 H= .80 r= .20 cost per dollar C= unit cost H=rC Qo= √2RS/H= √(2(50,000)(800)/.8) = 10,000 10,000 parts should be purchased each time an order is placed. (b) To satisfy annual demand, how many times per year will you place orders for this part? R/Qo= 50,000/10,000= 5 times per year Question 2: (a) Determine BIM’s total annual cost of production and inventory control. Q= 4 weeks supply = 1600 units R= 400 units a week= 20000 units/ year C= purchase cost per unit= $1250 X (1-.20)= 1,000 H= holding cost= rC= $200 per unit / year S= setup cost= 2000 + 93.75 = $2,093.75 Setups per year= R/Q= 20000/1600= 12.5 Annual setup cost= (R/Q)(S)=12.5X $2,093.75= $26,172 Annual Holding cost= (q/2)(H)= (1600 /2)X $200= $160,000 Total Annual Cost= Annual Setup Cost+ Annual Holding Cost Total Annual Cost= 26,172+160,000 BIM’S Total Annual Cost= $186,172 (b) Compute the economic batch size and the resulting cost savings.
At an annual interest rate of five percent, how long would it take for your savings to double? Answer: Future Value Factor = (1 + i)^n or, FVF = (1 + .05)^14.21 or, FVF = 2.000322: Where $1,000 * 2.000322 = $2,000.3221 or, rounded to the nearest whole dollar it would take 14.21 years with a 5% APR to double one’s savings. 3. In the mid-1990s, selected automobiles had an average cost of $12,000. The average cost of those same motor vehicles is now $20,000.
• Prepaid expenses increased $150,000 during the year. • Accounts payable to suppliers of merchandise decreased $340,000 during the year. • Accrued expenses payable decreased $100,000 during the year. • Operating expenses include depreciation expense of $70,000. Instructions Prepare the operating activities section of the statement of cash flows for the year ended November 30, 2015, for Whitlock Company, using the indirect method.
Cash flow per share= $3.00 Price /cash flow ratio= 8.0 8.0 x 3.00 = $24.00 $24.00 / $1.50 = 16 (P/E) 3-5 ROE $100millions (sales) x 3% (profit margin) = $30 million (Net income) Net Income/assets= ROE $30 millions/$50 millions (total assets) = 6% 6% x 2.0 (equity multiplier) = 12% (ROE) 3-6 Du Pont Analysis ROA=10% Profit margin= 2% ROE= 15% ROA x Equity Multiplier= ROE (Profit Margin) (Total asset turnover)= ROA 10/2=5 (this is the firm’s total asset turnover) 15/10=1.5 (this is the firm’s equity multiplier) 3-7 Current and Quick Ratios Current assets= $3 million Current ratio= 1.5 Quick ratio= 1.0 Current assets/ Current liability= current ratio $3million/1.5= $2 million (level of current liability) Current Assets - Current Liability= Inventory $3millions – $2 millions = $1 million (level of
Week 2 Practice Question Solutions EXERCISE 4-8 (15–20 minutes) (a) Net sales $ 540,000 Cost of goods sold (210,000) Administrative expenses (100,000) Selling expenses (80,000) Discontinued operations-loss (40,000) Income before income tax 110,000 Income tax ($110,000 X .30) 33,000 Net income $ 77,000 (b) Income from continuing operations before income tax $150,000* Income tax ($150,000 X .30) 45,000 Income from continuing operations 105,000 Discontinued operations, less applicable income tax of $12,000 (28,000) Net income $ 77,000 *$110,000 + $40,000 Earnings per share: Income from continuing operations