| | | | If a regular partnership goes bankrupt, each partner is exposed to liabilities only up to the amount of his or her investment in the business. | | Instructor Explanation: | Chapter 1 Explanation: Ch 1: d is correct, all others are incorrecta. False- Corporate formation is more complex and expensive, in general, than are partnershipsb. False- Corporations are regulated at state level and thus are more regulated than sole proprietorshipsc: False- sole proprietors are taxed once at owner leveld: true- the corporate form provides owners limited liabilitye: False- Under partnership law, each partner is liable for the business debts. | | | | Points Received: | 10 of 10 | | Comments: | | | | 2.
There are certain steps that need to be taken to insure that CanGo can make profit from year to year. CanGo also operates at a high debt ratio. This means that it is imperative for CanGo to produce efficiently and not lag and any quarter of any year. This will prevent possible bind for cash or losing shareholders trust. CanGo has very low profitability ratios, low turnover ratios and a high debt equity ratio.
The total value of the levered firm exceeds the value of the firm without leverage due to the present value of the tax savings from debt: V^L = V^U + PV(interest tax shield) 4. when a firm’s marginal tax rate is constant, and there are no personal taxes, the present value of the interest tax shield from permanent debt equals the tax rate times the value of the debt, τcD. 5. The firm’s pretax WACC measures the required return to the firm’s investors. Its effective after-tax WACC, or simply the WACC, measure the cost to the firm after including the benefit of the interest tax shield. Page 484 has formulas!!
Investors find this information lucrative because the more expendable cash a company has the more likely they are to pay out in dividends for the stock holders.. Liquidity Ratios: Current assets are a business's total current assets divided by its total current liabilities. Total Current Asset / Total Current liabilities 1,971,000 / 116,290 16.949 = 16.9 Current Ratio- 16.9:1 or 17:1 (16.9 to 1 or 17 to
Corporation Tax is a tax on the taxable profits of limited companies and other organisations. Tesco is a large company in the UK, so they will have to pay corporation tax regardless were their profit is coming from. Tax has an impact on Tesco as a whole; tax will be taken of Tesco’s profit which will result in less dividence for shareholders. Invest can be put off as their main and objective is to receive the largest amount of dividence possible. Direct support With business like Tesco, the government provides direct support concerning specific business activities.
Financial Analysis A company’s strengths and weaknesses are better understood by their financial statements such as Income Statement, Cash Flow statement, and Balance sheet. As Financial consultants, our goal is to help CanGo understand their financial statements and where CanGo needs to improve to gain the competitive edge in the market. Every company needs to understand their own financials before analyzing the market or industry. After analyzing CanGo’s efficiency ratios, we found them to be very un-attractive for investors. For example, CanGo has a very high receivables turnover rate.
A flat tax employs territorial taxation, which is when the government only taxes income that is generated within national borders (Meehan). In the global economy, taxes remain a critical component of business; countries with low-taxes benefit from jobs and capital (Meehan). A good tax policy is important to generate revenue for business and also because the penalty for a poorly received tax system on a global scale may be substantial and long-term (Meehan). The flat tax eliminates
Leslie Fay Companies 1.) Clearly Inventories was a big item to address along with Accounts Receivable. Sales and gross profit were stellar in a time of industry unease. Furthermore Accounts Payable decreases as a percentage of current liabilities while Inventories increase as a percentage of current assets. This is an implausible trend on the Balance sheet that BDO should have investigated further, especially with Leslie Fay’s outstanding Income Statement.
The SOX also calls for additional audits which increase business costs. If a business has increased costs and expenses due to the abidance of the SOX, it will most likely take money from other aspects of the business which can negatively impact the investors. The effectiveness of the SOX is debated by the advantages versus the disadvantages that companies and investors face. De Vay (2006) stated that, “The majority of the survey respondents feel that the benefits of
Accessibility refers to the ability of an individual to use consumer law in order to achieve redress. Multi-million dollar corporations have access to the best legal advice and representation while most consumers cannot afford the cost of legal proceedings against large corporations. The law has attempted to rectify these issues of accessibility for the ordinary consumer through the introduction of alternative dispute resolution methods which provide consumers quick and inexpensive avenues for redress. One such method is mediation and conciliation. This provides consumers with effective opportunities to express concerns without going to court (and facing massive amounts of legal fees), although, agreements reached through mediation and conciliation are non-binding and consumers may still have to use the court system to achieve justice.