New contribution margin = $70 Break-even point in passengers = fixed costs/contribution margin Passengers = 45,000 Train cars = 715 e) Springfield Express has experienced an increase in variable cost per passenger to $ 85 and an increase in total fixed cost to $ 3,600,000. The company has decided to raise the average fare to $ 205. If the tax rate is 30 percent, how many passengers per month are needed to generate an after-tax profit of $ 750,000? Before Tax Needed Profit = $1,071,428.57 Before Tax Needed Contribution Margin = $4,671,428.57 Contribution Margin per Customer = $120 Number of Customers Needed = 38,928.57 Whole Number of Customers Needed = 38,929
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.
J. Premium offers outstanding- Current Liability K. Discount notes payable- Current Liability L. Employee payroll deductions unremitted- Current Liability M. Current maturities of long-term debts to be paid from current assets- Current Liability N. Cash dividends declared but unpaid- Current Liability O. Dividends in arrears on preferred stock- Footnote disclosure P. Loans from officers- Current Liability 13-2. Accounts and Notes Payable * The following are selected 2012 transactions of Darby Corporation. Sept. 1 | Purchased inventory from Orion Company on account for $50,000.
CASE STUDY 3 - Cash Budget Template SCHEDULE OF EXPECTED CASH COLLECTIONS FROM CUSTOMERS: Credit Sales August September July 30,000 x 40% 12,000 August (24,000x60%) (24,000x40%) 14,400 9,600 September (24000x60%) 14,400 Total Cash Collections 26,400 24,000 SCHEDULE FOR EXPECTED PAYMENTS FOR PURCHASE OF INVENTORY Inventory purchases August September July (65,000 x 50%) 32,500 August (45,000 x 50%),collected Sept(45,000 x 50%) 22,500 22,500 September (21,000 x 50%), 10,500 Total Payments for Inventory Purchases 55,000 33,000 Oxford Company Cash Budget For the Two Months of August and September August September Cash balance $10,000 $10,000 Add: Receipts Collections from customers 26,400 24,000 Sale of plant assets 12,350 Sale of new common stock 16,850 Cash sales 51,000 39,000 Total receipts 89,750 79,850 Total Available Cash 99,750 89,850 Less: Disbursements Purchases of inventory 55,000 33,000 Operating expenses 6,750 6,750 Selling and administrative expenses12,500 12,500 Dividends 19,000 Equipment purchase 6,000 Total disbursements 93,250 58,250 Excess (deficiency of available cash over disbursements) 6,500 31,600 Financing Borrowings 3,500 Repayments (3,780) Ending cash balance $10,000 27,820 (3500 x12%x 8/12=280.00 +3500=3780) . Answer to the questions What are the three sections of a Cash Budget, and what is included in each section? The Cash receipts section includes expected receipts from the company’s principal source(s) of cash, such as cash sales and collections from customers on credit sales. This section also shows anticipated
Capital | + | EarnedCapital | Rev-enues | – | Expen-ses | = | NetIncome | Purchase $10,000 of inventory on credit | | | +10,000(Inventory) | = | +10,000(AP) | | | | | | – | | = | | Sell all inventory for $18,000 on account | | | +18,000(AR)-10,000(Inventory) | = | | | | | +8,000(Retained Earnings) | +18,000(Sales) | – | +10,000(COGS) | = | +8,000 | Collect $4,000 cash for accounts receivable | +4,000 | | –4,000(AR) | = | | | | | | | – | | = | | Pay $6,000 cash toward accounts payable | –6,000 | | | = | –6,000(AP) | | | | | | – | | = | | Topic: Using the Financial Statements Effects Template – Balance Sheet Only 2. Record the following transactions in the financial statements effects template below. a) Founder contributes $12,000 in cash in exchange for common stock. b) Obtain $18,000 short-term bank loan. c) Purchase equipment costing $14,000
6/ Pays rent of £4000 7/ Pays £3000 wages for the period a) Record each of the above transactions for the first week in the ledger accounts. Question 2 The transactions of a business during the first week of trading are as follows: 1/ Mr Johnson opens a business bank account with £40000 of his own money. 2/ Buys equipment for £6000 on credit from Mr Sort 3/ Purchases goods at a cost of £17000, paying by cheque 4/ Sells goods for £19000. The customer pays by cheque immediately. 5/ Pays a cheque for £5000 to Mr Sort.
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
BRIEF EXERCISE 19-8 Income before income taxes $195,000 Income tax expense Current $48,000 Deferred 30,000 78,000 Net income $117,000 BRIEF EXERCISE 19-10 Year | Future taxable amount | X | Tax Rate | = | Deferred tax liability | 2013 | $ 42,000 | 34% | $ 14,280 | 2014 | 244,000 | 34% | 82,960 | 2015 | 294,000 | 40% | 117,600 | | | | $214,840 | BRIEF EXERCISE 19-14 Income Tax Refund Receivable ($350,000 X. 40) 140,000 Benefit Due to Loss Carryback 140,000 Deferred Tax Asset ($500,000 – $350,000) X .40 60,000 Benefit Due to Loss Carryforward 60,000 Benefit Due to Loss Carryforward 60,000 Allowance to Reduce Deferred
Problem 13-23A Financial statements for Pocca Company follow. (See Excel) Use the financial statements for Pocca Company from Problem 13-22A to calculate the following ratios for 2006 and 2005. Working capital Current ratio Quick ratio Accounts receivable turnover (beginning receivables at January 1, 2005, were $47,000.) Average number of days to collect accounts receivable Inventory turnover (beginning inventory at January 1, 2005, was $140,000.) Average number of days to sell inventory Debt to assets ratio Debt to equity ratio Times interest earned Plant assets to long-term debt Net margin Asset turnover Return on investment Return on equity Earnings per share Book value per share of common stock Price-earnings ratio
E 21–4: Summary entries for cash received from customers LO21–3 For each of the three independent situations below, prepare journal entries that summarize the selling and collection activities for the reporting period in order to determine the amount of cash received from customers and to explain the change in each account shown. All dollars are in millions. Situation 1 Sales | $200 | Received on account | $0 | Cash received | $200 | Summary Entry 1 Description | Debit | Credit | Cash | $200 | | Sales Revenue | | $200 | Situation 2 Sales | $200 | Received on account | $10 | Cash received | $190 | Summary Entry 2 Description | Debit | Credit | Cash (received from customers) | $190 | |