Answer:
Yes they should buy the new machine.
Explanation:
since the new mill produces after tax cash savings of $8,200 per year, we should calculate the net present value of the 10 cash flows in order to determine if the project is profitable or not.
using a present value annuity factor for 10 years and 12% discount rate = 5.6502
the project's NPV = ($8,200 x 5.6502) - $38,000 = $46,331.64 - $38,000 = $8,331.64
since the NPV is positive, the project is profitable.
Swiss Group reports net income of $40,000 for 2019. At the beginning of 2019, Swiss Group had $200,000 in assets. By the end of 2019, assets had grown to $300,000. What is Swiss Group's 2016 return on assets? How would you assess its performance if competitors average an 11% return on assets?
Answer:
For the tear 2019, net income is 40,000
Beginning of the year 2019, asset of the S are 200,000
Ending of the year 2019, asset of the S are 300,000
Average asset for 2019= Beginning assets + Closing assets / 2
Average asset for 2019= 200,000 + 300,000 / 2
Average asset for 2019= $250,000
Return on assets = Net income / Average assets * 100%
= 40,000 / 250,000 * 100
=16%
Thus, the return on assets is 16%
Conclusion: If the average return of assets of the competitors are 11%, It means S uses the assets efficient manner, so performance of the S is very good ad return of the S is higher than competitors on asset
The problem of ________________ in insurance markets is that insurance companies are unable to ______________ . Group of answer choices
Answer:
adverse selection, differentiated those with high risk and low risk
Explanation:
Adverse selection refers to the selection in which an individual gained the insurance at a cost but it is below the level of risk. In other words we can say that the applicant pay the lower amount of premium in case of higher premium charged by the company as the company is not aware of the fact
In the given case, the problem of adverse selection is there that unable to differentiate between a high level of risk and lower level of risk
The _____ dictates that an importer must pay a specified amount of money by a specific date.
A. bill of exchange
B. drawee
C. lease agreement
D. letter of credit
E. bill of lading
Answer:
A bill of exchange
Explanation:
This is the answer google bill of exchange and it matches this description very close i think at least
In 2017, Costello Company performs work for a customer and bills the customer $10,000; it also pays expenses of $3,000. The customer pays Costello in 2018. If Costello uses the accrual-basis of accounting, then Costello will report:_____
a. revenue of $10,000 in 2018.
b. revenue of $10,000 in 2017.
c. net income of $7,000 in 2018.
d. expenses of $3,000 in 2018.
Answer: revenue of $10,000 in 2017
Explanation:
Accrual basis of accounting is a method that is used in accounting whereby the revenue or expenses have to be recorded when the transaction is made and not when the payment dor the transaction is made or received.
Since we are told that Costello Company performs work for a customer and bills the customer $10,000 in 2017, therefore if Costello uses the accrual-basis of accounting, then Costello will report revenue of $10,000 in 2017.
Attraction Corporation produces specially machined parts. The parts are produced in batches in one continuous manufacturing process. Each part is custom produced and requires special engineering design activity (based on customer specifications). Once the design is completed, the equipment can be set up for batch production. Once the batch is completed, a sample is taken and inspected to see if the parts are within the tolerances allowed. Thus, the manufacturing process has four activities: engineering, setups, machining, and inspecting. In addition, there is a sustaining process with two activities: providing utilities (plantwide) and providing space. Costs have been assigned to each activity using direct tracing and resource drivers:Engineering $1,000,000Setups 900,000Machining 2,000,000Inspection 800,000Providing space 250,000Providing utilities 180,000Activity drivers for each activity have been identified and their practical capacities listed:Machine hours 25,000Setups 200Engineering hours 5,000Inspection hours 2,500The costs of facility-level activities are assigned using machine hours.What is (are) the unit-level activity(ies)?a. setups.b. providing space.c. machining.d. engineering.
Answer:
c. machining.
Explanation:
Unit level activities take place in order to manufacture the product. This manufacturing process has four activities:
engineering setups machininginspectingUnit level activities depend on the amount of units produced, this means that as more units are produced, more costs will be allocated. In this case, engineering, setups and inspecting are done on a batch basis, which means that they are batch level activities.
Only machining costs are proportional to the number of units produced.
During a strike by the United Steelworkers of America in 2010, Honeywell claimed that the union left nails in the plant parking lot and harassed and intimidated people going in and out of the facility. Honeywell filed a(n) _______ against the union in order to stop these behaviors.
Answer:
injunction
Explanation:
A prohibition is a legal and equitable remed in the form of a special court order that compels the party to commit or reject certain action. "When a court appoints an extraordinary injunction, it sets forth the conduct of one party and does so with the support of its full powers." A party who fails to comply with the ban will face criminal or civil penalties, including criminal sanctions and imprisonment. He can also be charged in a contempt of court case. These are the situations where you can ask the criminal party to stop doing things that hurt and hurt you. However, there are cases where asking does not solve the problem. In such a case, you may want to go to court and ask the judge to intervene in the situation and to treat the offending party as problematic. To do this, you file an injunction.If the total revenue variance is favorable and the revenue price variance is unfavorable, then the revenue volume variance must a.exceed the revenue price variance and be favorable b.be less than the revenue price variance and be favorable c.be less than the revenue price variance and be unfavorable d.be equal to the revenue price variance and be favorable
Answer: a.exceed the revenue price variance and be favorable
Explanation:
Revenue Volume x Revenue Price = Total Revenue
From the above formula, for the Total Revenue to be variated positively and yet the Revenue Price is of Negative Variance, it would follow logically that the other variable in the transaction contributed to the favorable variance of the Total Revenue apart from the Revenue Price.
The only other variable is the Revenue Volume. The Revenue volume must therefore have been large and favorable enough to offset the Negative Variance of the Revenue Price.
Four Corners Delivery Company acquired an adjacent lot to construct a new warehouse, paying $40,000 and giving a short-term note for $240,000. Legal fees paid were $2,310, delinquent taxes assumed were $11,800, and fees paid to remove an old building from the land were $17,000. Materials salvaged from the demolition of the building were sold for $4,200. A contractor was paid $851,200 to construct a new warehouse. Determine the cost of the land to be reported on the balance sheet.
Answer:
$306,910
Explanation:
the cost of the land includes:
cash payment $40,000 short term note $240,000 legal fees $2,310delinquent taxes assumed $11,800demolition fees $17,000- salvaged materials sold ($4,200)total $306,910
The cost of the construction must be recorded under buildings (warehouse) since it is a depreciable asset.
Gaggle, Inc. and Microhard, Inc., both large publicly held corporations, form a joint venture to develop a new smartphone operating system. Large corporations like this usually form a joint venture for
The question is incomplete:
Gaggle, Inc. and Microhard, Inc., both large publicly held corporations, form a joint venture to develop a new smartphone operating system. Large corporations like this usually form a joint venture for:
-A single transaction or project
-A stated duration of not more than one year
-An implied duration of not more than six months
-A perpetual existence
Answer:
-A single transaction or project
Explanation:
A joint venture is an agreement in which two or more companies share their resources to achieve a specific objective but each business stays as an independent entity. According to this, the answer is that large corporations like this usually form a joint venture for a single transaction or project as the companies maintain their independence and agree to work together for a specific goal or task.
The other options are not right because joint ventures don't have a specifc duration, it depends on the terms establish by the parties and the joint venture will exist for the period of time determined on the agreement.
The Alfa Co. has a 6% coupon bond outstanding that pays annual interest. Calculate the annual interest payment on a $1,000 face value bond. Group of answer choices.
Answer: $60
Explanation:
The Annual Interest payment is also known as the Coupon payment.
The Issuers of the bond pay this to the Holders in periods until the bond matures.
Annual Interest Payment = Face value of bond * Coupon rate
= 1,000 * 6%
= $60
Doreenâs Dairy produces and sells Swiss cheese. Last year, it produced 7,000 pounds and sold each pound for $6. In producing the 7,000 pounds, the dairy incurred variable costs of $28,000 and a total cost of $40,000.
Refer to Scenario 13-19.
In producing the 7,000 pounds of cheese, the firm's average fixed cost was
a. $0.29.
b. $6.00.
c. $1.71.
d. $2,00.
Answer:
The answer is option (c) $1.71
Explanation:
Solution
Given that:
Doreenas Dairy produced =7000 pounds (Q)
Each pounds was sold for =$6
The incurred variable costs (vc) =$28,000
Total cost (Tc)= $40,000
Now we find the he firm's average fixed cost
Thus,
Fixed cost =Total cost (Tc) - Incurred variable cost (vc)
= $40,000 - $28,0000
=12,000
So, the average fixed costs (AFC) =FC/Q
=12,000/7000
=$1.714
Therefore the average fixed cost of the firm is $1.71
Adam Smith believed that incentives to seek personal gain would create wealth, but that the government must then step in to make sure that this wealth is equitably distributed.
a. True
b. False
Answer:
b. False
Explanation:
Adam Smith believed that incentives to seek personal gain would create wealth. He did not believe in active government intervention in order to redistribute wealth in an equitable manner. Adam Smith favored capitalism and the accumulation of wealth by individuals, he did not favor socialism and the redistribution of wealth.
A company has $600 in inventory, $1,885 in net fixed assets, $276 in accounts receivable, $125 in cash, and $322 in accounts payable. What are the company's total current assets
Answer:
The answer is $1001
Explanation:
Solution
Given that:
A company inventory is = $600
Net fixed assets =$1,885
Cash =$125
Accounts payable = $322
Now we have to find the company's total current assets
Thus
Inventory =$ 600
Accounts receivable=$276
Cash=$125
Total current assets =$1001
Hence the total assets of the company is $1001
Gentleman Gym just paid its annual dividend of $4 per share, and it is widely expected that the dividend will increase by 5% per year indefinitely.
Requried:
a. What price should the stock sell at if the discount rate is 15% (Do not round intermediate calculations. Round your answer to 2 decimal places.)
b. What price should the stock sell at if the discount rate is 12%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Answer:
a) Price of stock = $42
b) Price of stock = $60
Explanation:
The price of a share can be calculated using the dividend valuation model
According to this model the value of share is equal to the sum of the present values of its future cash dividends discounted at the required rate of return.
If dividend is expected to grow at a given rate , the value of a share is calculated using the formula below:
Price=Do (1+g)/(k-g)
Where Do- Dividend now, g- growth rate, k- required rate of return(cost of equity)
a) Where discount rate is 15%
Price of stock = 4× (1.05)/(0.15-0.05) = 42
Price of stock = $42
b) Where discount rate is 12%
Price of stock =4× (1.05)/(0.12-0.05)= 60
Price of stock = $60
You’re trying to save to buy a new $245,000 Ferrari. You have $50,000 today that can be invested at your bank. The bank pays 4.3 percent annual interest on its accounts. How long will it be before you have enough to buy the car?
Answer:
38 years
Explanation:
You want to find n such that the multiplier over n years gets you from 50,000 to 245,000.
245,000 = 50,000(1 +4.3%)^n
4.9 = 1.043^n
log(4.9) = n·log(1.043)
n = log(4.9)/log(1.043) ≈ 37.7
It will be about 38 years before you will have enough to afford the car at today's price.
_____
Comment on car prices
The rate of inflation of car prices has been about 1.67% since 1953, so taking that into account, you will need much more than $245000 to buy the car. It will take more than 62 years for your bank account to catch up to the price of the car.
Financing the purchase of an investment in real estate with a mortgage at the time of borrowing at a low rate of interest and investing in assets that earn more than what they cost puts you ahead of the game due to the concept of
Answer:
Leverage.
Explanation:
Financing the purchase of an investment in real estate with a mortgage at the time of borrowing at a low rate of interest and investing in assets that earn more than what they cost puts you ahead of the game due to the concept of leverage.
Generally, one of the several and most effective strategies investors used for investing in the business of real estate is a leverage.
Leverage can be defined as the concept of using borrowed money or capital to buy property that would generally appreciate. When leveraging a property in real estate, investors borrow funds (money) from a mortgage (lender) at a low rate of interest in order to enable them purchase an investment property.
This simply means that, instead of covering the entire purchase price, investors resort to borrowing to finance the purchase of an investment property in real estate. The property eventually appreciates and they're able to earn more than what they invested initially.
For instance, if Noahbrap wishes to buy a property worth $1 million. He could go to a bank and borrow the sum of $650,000 and thus, Noahbrap would have to pay the additional $350,000 from his pocket.
However, if depreciation sets investors would run at a loss when leveraging.
Mello Manufacturing Company is a diversified manufacturer that manufactures three products (Alpha, Beta, and Omega) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows:
Activity Activity Cost Pool
Production $259,200.00
Setup 55,000.00
Material handling 9,750.00
Inspection 60,000.00
Product engineering 123,200.00
Total $507,150.00
The activity bases identified for each activity are as follows:
Activity Activity Base
Production Machine hours
Setup Number of setups
Material handling Number of parts
Inspection Number of inspection hours
Product engineering Number of engineering hours
The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows:
Machine Hours Number of Setup Number of parts Number of inspection hours Number of engineering hours Units
Alpha 1,440 75 65 400 125 1,800
Beta 1,080 165 80 300 175 1,350
Omega 720 310 180 500 140 900
Total 3,240 550 325 1,200 440 4,050
Each product requires 40 minutes per unit of machine time.
Required:
a. Complete the Activity Tables for Alpha, Beta and Omega.
b. Determine the activity rate for each activity.
c. Use the activity rates in (1) to determine the total and per-unit activity costs associated with all three products.
d. Why aren’t the activity unit costs equal across all three products since they require the same machine time per unit?
Answer:
Attached are the detailed solution tables for
A) complete the activity rate for each activity is a general question covering so solution starts from B
B) calculation of the activity rate for each activity: shown in the attached table
C) activity cost per unit : alpha = $99.81, Beta = $125.41, 0mega = $175.78
D ) The activity unit costs are not equal across all three products because of different activity bases such as machine hours, setups, parts and inspection hours that also determines the activity cost
Explanation:
A) complete the activity rate for each activity is a general question covering so solution starts from (B)
B) calculation of the activity rate for each activity: shown in the attached table
C) Calculation of activity cost of all products
activity cost of each product = use of product activity * activity rate
production = ($80 * Machine hours of each product )
setup = ( $100 * number of setups for each product )
Material handling = ( $30 * number of parts of each product )
Inspection = ( $50 * number of inspection hours for each product )
Product engineering = ( $280 * number of engineering hour for each product )
Activity cost per unit = total cost of activity of each product / unit produced for each product
D) The activity unit costs are not equal across all three products because of different activity bases such as machine hours, setups, parts and inspection hours that also determines the activity cost
Fred owns a small manufacturing plant. His friend Paul also owns a manufacturing plant and has talked to Fred about issues he has found so far with his system. What is Paul likely to say
Answer:
Please refer to the below explanation.
Explanation;
With regards to the above, Paul is likely to say that Fred should beware of the high price to buy and maintain the cost accounting system. Although there are faults or issues in the small manufacturing plant owned by Fred, yet he must estimate the cost of buying new plant for profitability purpose.
Paul is also likely to tell Fred that he should inform his accountant to conduct reconciliations inorder to ensure that the rates in the system makes sense when compared to actual rate. Fred's accountant would also ensure that the rate loaded in their system correspond with actual rates dispensed by the system. This is to ensure that the anomaly in the system is constantly monitored.
A company had the following purchases during its first year of operations:
January: 17 units at $127
February: 27 units at $137
May: 22 units at $147
September: 19 units at $157
November: 17 units at $167
On December 31, there were 61 units remaining in ending inventory. These 61 units consisted of 9 from January, 11 from February, 13 from May, 11 from September, and 17 from November. Using the specific identification method, what is the cost of the ending inventory?
a. $8,960.
b. $7,620.
c. $9,294.
d. $9,127.
e. $7,714.
Answer:
Ending inventory value= $9,127
Explanation:
Giving the following information:
January: 17 units at $127
February: 27 units at $137
May: 22 units at $147
September: 19 units at $157
November: 17 units at $167
Using the specific identification method, we need to multiply each unit for its specific cost.
Ending inventory:
January= 9*127= 1,143
February= 11*137= 1,507
May= 13*147= 1,911
September= 11*157= 1,727
November= 17*167= 2,839
Ending inventory value= $9,127
The standard rate of pay is $10 per direct labor hour. If the actual direct labor payroll was $39,200 for 4,000 direct labor hours worked, the direct labor price variance is: a. $800 unfavorable. b. $800 favorable. c. $1,000 unfavorable. d. $1,000 favorable.
Answer:
j,utiy5t54e3w25p0l8tuegtr3129lo,ukthngtrf234567ui6klu,khjmhntgf23
Explanation:
uio.,tukwgtw345678oolukmtee3e234567o97kitwr3e45678o08lkiygre32
A company had the following transactions during September, the first month of its operations: Issued 50,000 shares of common stock in exchange for $600,000. Purchased land for $400,000, using a $150,000 cash down payment and signing a note payable for the balance. Received $5,000 from a customer for services to be performed in December. Made a $60,000 payment on the note payable from the purchase of the land. Total monthly sales: Cash sales $50,000 Credit Sales: $17,000 Purchased equipment on credit for $63,000. Collected $8,000 from customers on account. Paid $2,000 for September employee wages. Received a utility bill for $500 which will be paid next month. What is net income for the month of September
Answer:
Net income for the month of September is $451,000
Explanation:
Particulars Amount
Issue of common stock 600,000
Receipt from customer 5,000
Cash sales 50,000
Collection from customer 8,000 663,000
Less:
Cash down-payment made (150,000)
Payment made on notes payable (60,000)
Employee wage paid (2,000)
Cash balance as at end of Sep. 451,000
On January 1, 2021, an investor paid $296,000 for bonds with a face amount of $316,000. The contract rate of interest is 12% while the current market rate of interest is 15%. Using the effective interest method, how much interest income is recognized by the investor in 2022 (assume annual interest payments and amortization)
Answer:
$45,372
Explanation:
The computation of the interest income using the effective interest method is shown below
Interest Income is
= [Paid amount + (Paid amount × current market rate of interest) - (face value of the bond × contract rate of interest)] × current market rate of finterest
= [$296,000 + ($296,000 × 15%) - ($316,000 × 12%)] × 15%
= [$296,000 + $44,400 - $37,920)} × 15%
= $45,372
We simply applied the above formula
Obama Company sells its product for $25 per unit. During 2012, it produced 20,000 units and sold 15,000 units (there was no beginning inventory). Costs per unit are: direct materials $5, direct labour $4, and variable overhead $3. Fixed costs are: $300,000 manufacturing overhead, and $50,000 selling and administrative expenses. The per unit manufacturing cost under variable costing is
a) $12.
b) $27.
c) $29.50.
d) $32.
Answer:
Unitary cost= $12
Explanation:
Giving the following information:
direct materials $5
direct labor $4
variable overhead $3
The variable costing method incorporates all variable production costs (direct material, direct labor, and variable overhead) to calculate the product unitary cost.
Unitary cost= 5 + 4 + 3= $12
The per-unit manufacturing cost under variable Unitary cost is = $12
How to Calculate Unitary cost?
Giving the following information as per the question below:
The direct materials are $5
Then direct labor is $4
After that variable overhead is $3
Then The variable costing method incorporates all variable production costs (direct material, direct labor, and also variable overhead) to calculate the product unitary cost.
Therefore, The Unitary cost is = 5 + 4 + 3= $12
Find out more information about Unitary cost here:
https://brainly.com/question/26388159
Stylon Co., a women's clothing store, purchased $48,000 of merchandise from a supplier on account, terms FOB destination, 2/10, n/30, using the net method under a perpetual inventory system. Stylon returned merchandise with an invoice amount of $7,500, receiving a credit memo. a. Journalize Stylon's entry to record the purchase. If an amount box does not require an entry, leave it blank. b. Journalize Stylon's entry to record the merchandise return. If an amount box does not require an entry, leave it blank. c. Journalize Stylon's entry to record the payment within the discount period of 10 days. If an amount box does not require an entry, leave it blank. d. Journalize Stylon's entry to record the payment beyond the discount period of 10 days. If an amount box does not require an entry, leave it blank.
Answer:
Stylon Company.
General Journal
Net Method
The following entries have been passed using net method.
Sr. No Particulars Debit Credit
a. Merchandise Inventory 47040
Accounts Payable 47040
Purchased $48,000 of merchandise from a supplier on account, terms FOB destination, 2/10, n/30, using the net method under a perpetual inventory system
b. Accounts Payable 7350
Merchandise Inventory 7350
Stylon returned merchandise with an invoice amount of $7,500,
c. Accounts Payable 39690
Cash 39690
Stylon's entry to record the payment within the discount period of 10 days
d. Discount Lost 810
Accounts Payable 810
Accounts Payable 40500
Cash 40500
Stylon's entry to record the payment beyond the discount period of 10 days.
Mattola Company is giving each of its employees a holiday bonus of $125 on December 16 (a non payday). The company wants each employee's check to be $125. The supplemental tax percent is used. Round your calculations and answers to the nearest cent.
a. What will be the gross amount of each bonus if each employee pays a state income tax of 2.8% (besides the other payroll taxes)?
b. What would the net amount of each bonus check be if the company did not gross-up the bonus?
Answer:
a. $193.65
b. $80.69
Explanation:
The computation is shown below:
a) The gross amount of each bonud is
= Holiday bonus ÷ (1 - supplemental tax rate - OSADI tax rate - HI rate - state tax rate)
= $125 ÷ (1 - 0.25 - 0.062 - 0.0145 - 0.028)
= $125 ÷ 0.6455
= $193.65
b) Now the Net amount of each bonus check is
= Holiday bonus - (Holiday bonus × supplemental tax rate - Holiday bonus × OSADI tax rate - Holiday bonus × HI rate - Holiday bonus × state tax rate)
= $125 - ($125 × 0.25) - ($125 × 0.062) - ($125 × 0.0145) - ($125 × 0.028)
= $125 - $31.25 - $7.75 - $1.8125 - $3.5
= $80.69
Refer to the different tax table rate
The following list includes selected permanent accounts and all of the temporary accounts from the December 31, 2017, unadjusted trial balance of Emiko Co. Use these account balances along with the additional information to journalize: a. Adjusting entriesb. Closing entries. Emiko Co. uses a perpetual inventory system. Debit CreditMerchandise inventory $30,000 Prepaid selling expenses 5,600 K. Emiko, Withdrawals 33,000 Sales $529,000Sales returns and allowances 17,500 Sales discounts 5,000 Cost of goods sold 212,000 Sales salaries expense 48,000 Utilities expense 15,000 Selling expenses 36,000 Administrative expenses 105,000 Additional Information: Accrued and unpaid sales salaries amount to $1,700. Prepaid selling expenses of $3,000 have expired. A physical count of year-end merchandise inventory is taken to determine shrinkage and shows $28,700 of goods still available.
Answer:
Emiko Co.
a) Adjusting Journal Entries:
Debit Sales Salaries Expense $1,700
Credit Sales Salaries Payable $1,700
To record unpaid salaries expense.
Debit Selling Expenses $3,000
Credit Prepaid Selling Expenses $3,000
To record expired expenses.
b) Closing Journal Entries:
Debit Income Summary $30,000
Credit Beginning Inventory $30,000
To close the beginning inventory to the Income Summary.
Debit Sales $529,000
Credit Sales Returns and Allowances $17,500
Credit Sales Discount $5,000
Credit Income Summary $506,500
To close sales, sales returns & allowances & discount.
Debit Income Summary $212,000
Credit Cost of goods sold $212,000
To close cost of goods sold to the income summary.
Debit Income Summary $208,700
Credit Sales Salaries $49,700
Credit Utilities $15,000
Credit Selling expenses $39,000
Credit Administrative expenses $105,000
To close expenses to the income summary.
Explanation:
Adjusting journal entries are often used to make some changes in the accounts at the end of the reporting period in order to ensure that transactions are reported on the accrual basis. Entries made under this journal are usually accrued expenses and income, prepaid expenses and deferred revenue, depreciation charges.
On the other hand, closing journal entries are used to differentiate the temporary accounts from the permanent accounts. Temporary accounts are closed at the end of the accounting period to the Income Summary. Permanents accounts are carried over to the next accounting period. Their accounts make up the balance sheet and their opening balances of the next reporting period.
As a person engaged in the image business, the impression you project consists of your outward apperance the conduct you exhibt in the workplace is known as
Answer:As a person engaged in the image business, the impression you project consists of your outward apperance the conduct you exhibt in the workplace is known as
Explanation:j
In each succeeding payment on an installment note:_______A. The amount of interest expense increases. B. The amount of interest expense decreases. C. The amount of interest expense is unchanged. D. The amounts paid for both interest and principal increase proportionately.
Answer:
Explanation:
Yess
The green giant has 4 percent profit margin and a 30 percent dividend payout ratio. The total assets turnover is 1.2 times and the equity multiplier is 1.6. What is the sustainable rate of growth?
Answer:
5.68%
Explanation:
The green giant has a 4% profit ratio
= 4/100
= 0.04
The dividend payout ratio is 30%
= 30/100
= 0.3
The total assets turnover is 1.2 times
The equity multiplier is 1.6
The first step is to calculate the return on equity
ROE= Profit margin×Total assets turnover×Equity multiplier
= 0.04×1.2×1.6
= 0.0768 or 7.68%
The next step is to calculate the Plowback ratio
b = 1-dividend payout ratio
b = 1-0.3
b = 0.7
Therefore, the sustainable growth rate can be calculated as follows
= ROE×b/(1-(ROE×b)
= 0.0768×0.7/(1-(0.0768×0.7)
= 0.05376/(1-0.05376)
= 0.05376/0.94624
= 0.05681
= 5.68%
Hence the sustainable rate of growth is 5.68%
Broussard Skateboard's sales are expected to increase by 20% from $7.6 million in 2016 to $9.12 million in 2017. Its assets totaled $4 million at the end of 2016. Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2016, current liabilities were $1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals. The after-tax profit margin is forecasted to be 4%, and the forecasted payout ratio is 70%. What would be the additional funds needed? Do not round intermediate calculations. Round your answer to the nearest dollar. $ Assume that an otherwise identical firm had $5 million in total assets at the end of 2016. The identical firm's capital intensity ratio (A0*/S0) is higher than than Broussard's; therefore, the identical firm is -Select- capital intensive - it would require -Select- increase in total assets to support the increase in sales.
Answer:
$510,560
Explanation:
AFN = (A/S) x (Δ Sales) - (L/S) x (Δ Sales) - (PM x FS x (1-d))
A = assets = $4,000,000S = sales = $7,600,000L = liabilities that vary according to sales level = $450,000 + $450,000 = $900,000Δ Sales = change in sales = $9,120,000 - $7,600,000 = $1,520,000PM = profit margin = 4%FS = forecasted sales = $9,120,000d = payout ratio = 70%AFN = ($4,000,000/$7,600,000) x ($1,520,000) - ($900,000/$7,600,000) x ($1,520,000) - (4% x $9,120,000 x (1 - 70%)) = $800,000 - $180,000 - $109,440 = $510,560