Basic flexible budgeting Centron, Inc., has the following budgeted production costs: |Direct materials |$0.40 per unit | |Direct labor |1.80 per unit | |Variable factory overhead |2.20 per unit | |Fixed factory overhead | |Supervision |$24,000 | |Maintenance |18,000 | |Other |12,000 | The company normally manufactures between 20,000 and 25,000 units each quarter. Should output exceed 25,000 units, maintenance and other fixed costs are expected to increase by $6,000 and $4,500,
• 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.
Normal Cost of Trade Credit = [Discount percentage/(100-Discount percentage)]*[365days/(credit outstanding-Discount Period)] Normal Cost of trade credit = (3/97)*(365/30) = 37.63% Question 6. Your supplier offers terms of 1/10, Net 45. What is the effective annual cost of trade credit if you choose to forgo the discount and pay on day 45? Normal Cost of Trade Credit = [Discount percentage/(100-Discount percentage)]*[365days/(credit outstanding-Discount Period)] Normal Cost of trade credit = (1/99)*(365/45) = 8.19% Question 10. The Manana Corporation had sales of $60 million this year.
Margin of Safety (DOLLARS) Budgeted – break even = 100,000-62500= 37500 (Percentage) 37.500/100.000= 37.5% (Units) 37500/250= 150 3.Compute the company’s margin of safety in units assuming the proposal is accepted. Margin of Safety (Dollars) 137500-58929= 78571 (Units) 78571/275= 286 4. Compute the increase or decrease in profit assuming the proposal is accepted, show the contribution Income Statement for current and proposed. Present Proposed Sales 100,000 137500 Variable expense 64000 80000 CM 36000 57500 Fixed cost 22500 244750 Net income 13500 32750 difference: 19250 4a. What is the operating leverage for the current and proposed?
depreciation over 3 years Depreciation costs per year: 24/3= 8 mln per year. Q3. Tax rate in 2012 = Income Tax Expense / Income Before Tax = 1127mln/4914 mln = 22,93% Q4. | Year 0 | Year 1 | Year 2 | Year 3 | | | | | | | | R&D expenses | -77 | | | | | | | | | | | Total Revenues | | 110 | 83 | 55 | All in millions | Cost of Goods Sold | | -8 | -8 | -5 | | Gross Profit | | 102 | 75 | 50 | | depreciation | | -8 | -8 | -8 | | Adm/sales/etc | | -3 | -3 | -2 | | EBIT | -77 | 91 | 64 | 40 | | Unl Net income | -59,34 | 70,13 | 49,32 | 30,83 | | Q5.
The calculations illustrated on the next pages will refer to the Balance Sheet and Income Statement which follow. Balance Sheet 2004 2005 2004 2005 Assets USD USD Liabilities and Equity USD USD Current Assets Current Liabilities Notes payable 9 800 10 700 Cash 12 165 18 380 Accounts payable 21 500 24 350 Accounts Recievable 8 620 11 182 Total Current Liabilities 31 300 35 050 Inventory 18 140 24 894 Total Current Assets 38 925 54 456 Long-Term Liabilities LT debt 53 000 61 000 Total liabilities 84 300 96 050 Net Fixed Assets 105 000 134 000 Owner's equity New equity 0 10 000 Retained Earnings 59 625 82 406 Total equity 59 625 92 406 Total Assets 143 925 188 456 Total Liab. and Equity 143 925 188 456 Income Statement 2004 2005 USD USD Sales 165 390,0 201 600,0 COGS 84 310,0 106 450,0 Depreciation 23 800,0 26 900,0 Selling and adm. Exp 16 580,0 21 640,0 EBIT 40 700,0 46 610,0 Interest paid 5 180,0 5 930,0 EBT 35 520,0 40 680,0 Taxes 7 104,0 8 136,0 Net income 28 416,0 32 544,0 Dividends paid 8 524,8 9 763,2 Addition to RE 19 891,2 22 780,8 Operating Cash Flow measures the cash flows generated by the firm's main operations. Operating Cash Flow can be determined as follows: Operating Cash Flow= EBIT + Depreciation-Taxes (Ross, Westerfield, Jaffe, 2006). Then, using the figures from the company’s Balance sheet and Income statement we’ll find the Sunset Board’s Operating Cash
FI 515 Homework week 2. 3-1 Days Sales Outstanding Days sales outstanding= receivables/ave sales per day= receivables/annual sales/365) 20 days x $20,000= $400,000 3-2 Debt Ratio Debt ratio formula=Debt ratio +equity ratio=1 Equity ratio = 1/EM….the equity multiplier is 2.5 1 / 2.5 = .40 equity ratio Debt ratio= debt ratio +equity ratio=1 1-equity ratio=debt ratio 1-.40=.60%=debt ratio 3-3 Market/Book Ratio Market value per share =$75 Common equity =6 billion Number of shares outstanding =800M Market value per share/ (common equity/# of shares outstanding)= market/book ratio $75/(6,000,000/800,000,000) = $75/7.5 10 billion= market to book ratio 3-4 PE Ratio Price per share/earnings per share= P/E Price per share/cash flow per share= Price/cash flow
How much is National Income? 8. Given: wages, salaries, and fringe benefits = $6.1 trillion; interest = $400 billion; profits = $500; depreciation = $550 billion; rent = $150 billion; and indirect business taxes = $250 billion. Find National Income, NNP, and GDP. 9.
Use a format similar to the illustrations in Exhibits 9–4, 9–5, and 9–6. In each case, assume that a full year of depreciation was taken in 2005. 1. Straight-line. Cost – Residual Value $40,000 - $5,000 Years of Life 5 Depreciation $7,000 Annually Depreciation Schedule: Straight - Line Method Year Computation Depreciation Expense Accumulated Depreciation Book Value $ 40,000 First 35,000 x 1/5 $7,000 $ 7,000 $ 33,000 Second 35,000 x 1/5 $7,000 $ 14,000 $ 26,000 Third 35,000 x 1/5 $7,000 $ 21,000 $ 19,000 Fourth 35,000 x 1/5 $7,000 $ 28,000 $ 12,000 Fifth 35,000 x 1/5 $7,000 $ 35,000 $ 5,000 Total $35,000 2.
Valuation Questions Question 1 Union Pacific Railroad reported net income of $770 million in 1993, after interest expenses of $320 million. (The corporate tax rate was 36%.) It reported depreciation of $960 million in that year, and capital spending was $1.2 billion. The firm also had $4 billion in debt outstanding on the books, rated AA (carrying a yield to maturity of 8%), trading at par (up from $3.8 billion at the end of 1992). The beta of the stock is 1.05, and there were 200 million shares outstanding (trading at $60 per share), with a book value of $5 billion.