Firms in a competitive industry produce the socially optimal output level at the minimum possible cost per unit. 2) Monopoly : * A monopoly is
The audit objectives auditors use to perform year-end sales cutoff tests are to determine if the information they obtained by the confirmation reduces the audit risk level. This has a heavy emphasis on the materiality of the account being assessed, and the lower the audit risk the better. The sales cutoff tests are usually performed based on the existence and completeness assertions regarding the accounts receivable balance (SAS No. 67, AU Section 330.09). 2.
Also, Inditex has less operation expenses than H&M’s. All of these imply that Inditex is able to operate with high net profit margins. When the capital efficiency is considered, Inditex is less efficient in terms of capital than H&M due to some indicators. First is that working capital of H&M is higher than Inditex’s which can calculated by extracting other non-current assets from total assets and found as 2129 for H&M and 2082 for Inditex. Other indicator is ROA which can be calculated by dividing net income to total assets.
The loss ratio (or claims ratio) should always be less than 100 in order for an insurance company to make a profit; this means that premiums earned are sufficient to cover losses incurred on a particular line. The second way that these funds are used is to pay expenses incurred in the selling and providing of insurance protection. Some examples would be loss adjustment expenses, commissions, and other expenses. The underwriting gain or loss can be calculated by subtracting claims and expenses incurred from net premiums written. The combined ratio is a common measure of the overall underwriting profitability.
Answer: C For an imperfectly competitive firm: A) total revenue is a straight, upsloping line because a firm's sales are independent of product price. B) the marginal revenue curve lies above the demand curve because any reduction in price applies to all units sold. C) the marginal revenue curve lies below the demand curve because any reduction in price applies to all units sold. D) the marginal revenue curve lies below the demand curve because any reduction in price applies only to the extra unit sold. Answer: C For a nondiscriminating imperfectly competitive firm: A) the marginal revenue curve lies above the demand curve.
Last-in first out is usually known as inventory profit, and when prices are decreasing in the market the situation is reversed. Using either last-in first out (LIFO) or first-in first out has its benefits for both forms, last-in first out (LIFO) is able to match the current value because it is using the most recent cost of purchase, and it also provides the user with a lower income tax when prices within the market are rising. When looking at first-in first out (FIFO) you are reporting the most current costs on the balance sheet, and thus you are paying the lower tax payment when prices are decreasing. When the expense of overhead is discussed, it can become extremely difficult for a manager to classify; this is because all of the costs that go into running a business are placed under this topic. Many managers have found it easier to breakdown these overhead costs into production cost, selling cost or administrative cost.
The schedule of cost of goods sold shows the cost of goods manufactured will positively affect the number cost of goods sold, reducing $40,000 labor cost eventually save $40,000 of cost of goods sold. In the income statement, we found net income is significantly affected by product sales and cost. When sales and other expenses stay the same as and cost of goods sold are reduced $40,000, net income increases from $30,750 to $55,490. In addition, we can also estimate the future expected net income for a company by calculating current actual income and probability of sales revenue increase or decrease percentage. Higher probability with a positive percentage of sales revenue will result a higher expected
The two are used in a way that balances these costs and revenues. To obtain the contribution margin, L.L. Bean computes: item retail price if demanded – item cost To obtain the
Margin of safety (MOS) is the excess of budgeted or actual sales over the break even volume of sales. It states the amount by which sales can drop before losses begin to be incurred. The higher the margin of safety, the lower the risk of not breaking even. The formula or equation for the calculation of margin of safety is as follows: [Margin of Safety = Total budgeted or actual sales − Break even sales] The margin of safety can also be expressed in percentage form. This percentage is obtained by dividing the margin of safety in dollar terms by total sales.
Bonuses were based 100% on corporate EVA while the information reports were rewarded on a mixture of corporate EVA, business unit EVA and team EVA goals. Why the introduction of EVA system at Vyaderm? To maximize firm value, a firm must earn more than its cost of capital. The third performance metric is in %, but captures the spirit of two important (and essentially similar) metrics: Residual income, and Economic Value Added (EVA). These differ only in certain details.