No, because the yields for treasury instruments are very low at the time, so the premium the company will add to their rate is very low, and the investors will get less money for the same level of riskiness, so the paper is not really cheap. YTMs for these 4 issues are the following: 2013 notes: 0.93% 2015 notes: 1.72% 2020 notes: 3.06% 2040 notes: 4.56% c. The YTM is differing from the coupon rate because these notes are selling at a discount price. The YTMs should be compared with the coupon rate. d. Microsoft issued 4 papers instead of one is because risk diverse, with only 1 paper there is a great risk for them, what if people do not want to buy the type of paper they issued, with the 4 papers people can get different options, some people want long term paper and some people want short term paper. Microsoft can decrease the risk of losing with 4 papers.
Cash basis also records accounts payable the date that it was paid rather than the billed date. Those are the two main differences on how it reports monetary data, other differences are the type of businesses that would utilize the two different accounting basis. Smaller business would most likely use cash basis simply because it is easier to manage. One major benefit to cash basis is that it identifies more clearly cash on hand, but a major down side is that it paints a bad picture of the company’s services that it performs. It paints a bad picture because the business may collect zero revenues for a month and pay accounts payable during that month showing a loss of revenue while the next month they may pay zero accounts payable but receive two month’s worth of accounts payable, this would indicate that the company had higher than realistic earnings.
CRITICAL ISSUES * lack of smart and strong decision making because of owner and CEO’s different perspectives/priorities * sales have increased, but profitability have decreased * ineffective management of A/P and A/R have made the company insolvent * may lose loans because bank requires current ratio of 1.25 SITUATION ANALYSIS The major decisions for the company are taken by the owner rather than the CEO. The owner lacks business sense and his decisions are based on emotional feelings, not for the benefit of the company. The owner is not willing to outsource operations and wages are above industry average. From 2001 to 2005 sales have increased by 186%; whereas, COGS and selling and admin has increased by 199% and 166% respectively. High operating expenses and ineffective management of A/R have led the company to insolvency by demonstrating a quick ratio of 0.38.
Capital improvement can save the company on unexpected cost and long-term shut down. Moreover, since Alliance’s customers are sensitive to delivery times, improvement on capital can save Alliance from losing loyal customers as well as their reputation. Other necessary solutions: Renegotiate with the bank In order for Alliance Concrete to finance the additional money for capital investment, they need to present these forecast data to the bank: • The forecast of 2006 leverage ratios: o Debt to prior year EBITDA of 2.67 which is less than the prior year of 2.80 shows that Alliance’s additional finance will not exceed three times the prior year’s EBITDA. o Interest coverage
When the government prevents prices from adjusting naturally to supply and demand, efficiency is improved in the economy. ANSWER: F TYPE: T KEY1: D SECTION: 2 OBJECTIVE: 7 RANDOM: Y [cxviii]. A market economy cannot possibly produce a socially desirable outcome because individuals are motivated by their own selfish interests. ANSWER: F TYPE: T KEY1: D SECTION: 2 OBJECTIVE: 7 RANDOM: Y [cxix]. While the invisible hand cannot guarantee efficiency, it is better at guaranteeing equity.
At this time they would need to provide cheaper price to attract their consumers and to increase the demand. They would have to reduce the number of staffs as it may become difficult to pay wages. This leads to rise in unemployment. During recession businesses also tries to get loan from the bank and the bank wants to see their financial statements and if they find out that the business is not capable of paying the money back then they won’t lend any money therefore, the business may have to find new way of catching customers attention. For instance, they may be able to start up with a new idea.
Although you might have made a profit on the sale of the item, there is a cash flow gap as you have not yet received the funds to pay for the item yourself. Simple things like can put smaller businesses in a lot of financial trouble. This cash flow gap could damage credit ratings, miss other opportunities, and force the borrowing of
One of the problems is that it reduces the funds available for businesses to invest. People are attracted to high interest rates and the security of investing in the government which attracts them use their savings and profits to buy bonds. However, money spend on the government is one fewer dollar for investments. Crowding-out effect is caused because of loss of funds for private investment due to government borrowing. It hurts and slows down economic growth.
As stated in extract 1, it tells us that the goods we import are not made in the UK and so makes it impossible to replace the imports, therefore meaning that we still have to import goods, despite the high prices due to the low exchange rate of sterling. This is partnered with the fact that some suppliers (shown in extract 1) have agreed long term supply contract with cheaper overseas suppliers before the depreciation of the sterling and so they are now paying high prices. This may mean that these suppliers may have to increase the prices of these goods, therefore leading to cost push inflation due to trying to maintain a decent profit margin in the hope the demand for the good does not drop dramatically. However, it is stated that there still may be a large price differential with countries such as China and India, even after sterling's depreciation. On the other hand however, as stated in extract 1, line 8, volume of good imported has also increased by 16% and inflation has continued well above target.
However, it will increase Johnson's current tax liability. There is usually no advantage to an S-corporation for a wealthy individual who is already in the top tax bracket. S-Corporation income tends to favor start-up businesses and taxpayers with little income, because the corporation is taxed at the individual's lower personal income tax rate. Should Mr. Jones merge Johnson Services with Smithon? What