Answer:
A. it promises to pay to its holder a fixed stream of income each year.
Explanation:
In Business, stock can be defined as having an equity or ownership by an individual in an organization. Generally, stocks are of two (2) types and these are;
1. Common stock.
2. Preferred stock.
Preferred stock refers to the securities which represents an individual's ownership or share in an organization and having a fixed claim over common stocks in earnings and assets.
Also, the preferred stock pay a fixed amount of interest regularly rather than being paid as a dividend only.
Hence, preferred stock is like long-term debt in that it promises to pay to its holder a fixed stream of income each year. This simply means that, the preferred stockholders are given more priority than the holders of common stocks. Therefore, in the event of liquidation of a firm the preferred stockholder can claim the assets belonging to a the firm.
There are four (4) types of preferred stocks and these are;
1. Perpetual preferred stock.
2. Exchangeable preferred stock.
3. Convertible preferred stock.
4. Cumulative preferred stock.
Use the following information to determine this company's cash flows from financing activities.
A. Net income was $473,000.
B. Issued common stock for $74,000 cash.
C. Paid cash dividend of $13,000.
D. Paid $125,000 cash to settle a note payable at its $125,000 maturity value.
E. Paid $119,000 cash to acquire its treasury stock.
F. Purchased equipment for $86,000 cash.
Use the above information to determine this company's cash flows from financing activities.
Answer:
The answer is ($183,000)
Explanation:
This section deals with cash flows used to fund(e.g borrowing and repayment of loans) the business
Statement of cash flow(Partial)
Issued common stock for cash----------------------------------------------------------$74,000
Paid cash dividend-------------- ($13,000)
Paid cash to settle a note payable -----------------------------------------------($125,000)
Paid cash to acquire its treasury stock----------------------------------------($119,000)
Net cash flow from financing activities-----------------------------------------($183,000)
Femur Co. acquired 70% of the voting common stock of Harbor Corp. on January 1, 2020. During 2020, Harbor had revenues of $2,500,000 and expenses of $2,000,000. The amortization of fair value allocations totaled $60,000 in 2020. Not including its investment in Harbor, Femur Co. had its own revenues of $4,500,000 and expenses of $3,000,000 for the year 2020. The noncontrolling interest's share of the earnings of Harbor Corp. for 2020 is calculated to be
Answer:
The answer is $132,000
Explanation:
Solution
Given that:
Harbor revenues = $2,500,000
Expenses = $2,000,000
The amortization of fair value allocations = $60,000
Femur corporation revenues =$4,500,000
expenses = $3,000,000
Now,w e have to compute for the non controlling interest's share of the earnings of Harbor Corp which is given below:
=[revenue of harbor - expenses of harbor - amortization of fair value allocations] 30%
= [$2,500,000 - $2,000,000- $60,000] * 30%
=[$500000 - $60000]* 30%
=$132,000
Therefore the non controlling interest's share of the earnings of Harbor Corp is $132,000
Reports are the primary means of communication in an organization. Illustrate the comment.
Answer: hi
Explanation: bye
Grand River Corporation reported taxable income of $550,000 in 20X3 and paid federal income taxes of $192,500. Not included in the computation was a disallowed meals and entertainment expense of $3,000, tax-exempt income of $2,000, and deferred gain on a current-year transaction treated as an installment sale of $30,000. The corporation's current earnings and profits for 20X3 would be:_________
Answer:
$336,500
Explanation:
Grand River corporation has a taxable income of $500,000 in 20X3
They paid a federal income tax of $192,500
The amount of expense that was not added to the report is $3,000
The tax exempt income is $2,000
The deferred gain is $30,000
Therefore, the current earinings and profits of the corporation for the year 20X3 can be calculated as follows
= Taxable income-federal income taxes-expenses-tax exempt income+deferred gain
=$500,000-$192,500-$3,000+$2,000+$30,000
= $336,500
Hence the current earnings and profits for the corporation is $336,500
The stock of Wiley United has a beta of 1. The market risk premium is 11.5 percent and the risk-free rate is 2.3 percent. What is the expected return on this stock in percent
Answer:
9.41%
Explanation:
Wiley United has a beta of 1
The market risk premium 11.5%
= 11.5/100
=0.115
Risk free rate is 2.3%
= 2.3/100
= 0.023
Therefore the expected rate of return can be calculated as follows
Expected rate of return= Risk free rate+beta(market return-risk free rate)
= 0.023+1(0.115-0.023)
= 1.023(0.092)
= 0.0941×100
=9.41%
Hence the expected return on the stock is 9.41%
What will be your rate of return if the price of Telecom stock goes up by 10% during the next year? (Ignore the expected dividend.)
Answer:
The answer is 12%
Explanation:
Initial investment:
$5,000 in equity + $5,000 in debt
=$10,000
Number of shares bought with the initial investment is:
Initial investment/Stock price
= $10,000/$50 = 200 shares.
The shares increase in value by 10%: $10,000 x 0.10 = $1,000.
Interest on debt = $5,000 x 0.08 = $400.
The rate of return will be:
($1,000 - $400) ÷ $5,000
0.12
Expressed as a percentage:
12%
There are zero coupon bonds outstanding that have a YTM of 6.27 percent and mature in 14 years. The bonds have a par value of $10,000. If we assume semiannual compounding, what is the price of the bonds?
Answer:
Price of the Bond is $4,268.26
Explanation:
The price of the bonds can be obtained using a Financial calculator by entering the data as follows :
r = 6.27%
Pmt = $0
n = 14
Fv = $10,000
Pv = ? Price of the Bond
Therefore, Pv, Price of the Bond is $4,268.2561.
Thus Price of the Bond is $4,268.26 ( 2 decimal places).
Targaryen Corporation has a target capital structure of 70 percent common stock, 5 percent preferred stock, and 25 percent debt. Its cost of equity is 10 percent, the cost of preferred stock is 5 percent, and the pretax cost of debt is 6 percent. The relevant tax rate is 23 percent.1. What is the company's WACC?2. What is the aftertax cost of debt?
Answer:
1. 8.41 %
2.4.62 %
Explanation:
Weighted Average Cost of Capital (WACC) is the cost of capital for all company projects.It shows the risk of the company.
WACC = Ke×(E/V) + Kp×(P/V) + Kd×(D/V)
= 0.10 × 70% + 0.05 × 5% + 0.06 × 77%× 25%
= 8.405 or 8.41 %
After tax cost of debt = Market Interest × ( 1 - tax rate)
= 0.06 × (1 - 0.23)
= 4.62 %
1. The interest rate that the Federal Reserve Bank (the Fed) charges member banks for loans is known as the____________ .
2. The Fed can_____________ the money supply by lowering this rate.
Answer:
1. Discount rate.
2. Increase.
Explanation:
A Federal Reserve Bank is one of the twelve regional banks of the Federal Reserve System in the United States of America. The Federal Reserve Banks are saddled with the responsibility of implementing the monetary policy designed and provided by the Federal Open Market Committee (FOMC).
Federal Reserve System also known as the Fed, was created under the Federal Reserve Act which was passed by US Congress in 1913. The Fed began its operations in the year 1914. It's a financial institution which was founded by President Woodrow Wilson and was primarily aimed at backing each banks in order to put a definitive end to the bank panics of the 1800s.
Furthermore, just like all central banks, the Fed is a government financial institution which is saddled with these responsibilities;
1. Controlling the issuance of currency in United States of America: the Fed promotes public goals such as economic growth, low inflation, and the smooth operation of financial markets.
2. Providing banking services to all the commercial banks in the country: the Fed is the "lender of last resort.
3. Regulating banking activities: it has the power to supervise and regulate banks.
The Federal Reserve Board is the governing body which essentially manages the Federal Reserve System and performs an oversight function on domestic monetary policies.
Additionally, the interest rate that the Federal Reserve Bank (the Fed) charges member banks for loans is known as the discount rate. Also, the Fed can increase the money supply by lowering this rate (discount rate) and thus, empowering the member banks to lend more money.
Julie paid a day care center to watch her two-year-old son while she worked as a computer programmer for a local start-up company.
What amount of child and dependent care credit can Julie claim in each of the following alternative scenarios?
a. Julie paid $2,000 to the day care center and her AGI is $50,000 (all salary).
b. Julie paid $5,000 to the day care center and her AGI is $50,000 (all salary).
c. Julie paid $4,000 to the day care center and her AGI is $25,000 (all salary).
d. Julie paid $2,000 to the day care center and her AGI is $14,000 (all salary).
e.
Julie paid $4,000 to the day care center and her AGI is $14,000 ($2,000 salary and $12,000 unearned income).
Answer and Explanation:
The computation of In each of the following alternative situations, Julie will demand the amount of child and dependent care credit is shown below:-
According to the 1st situation
Particulars Amount
a. Expenditure of dependent care $2,000
b. Qualifying expenses for one
dependent on limit $3,000
c. Earned income of Julie $50,000
d. Expenses eligible for credit $2,000 (which is least of a,b, and c)
e. Percentage rate on credit 20% (AGI over $43,000)
f. Child and dependent care credit $400 (2,000 × 20%)
According to the 2nd situation
Particulars Amount
a. Expenditure of dependent care $5,000
b. Qualifying expenses for one
dependent on limit $3,000
c. Earned income of Julie $50,000
d. Expenses eligible for credit $3,000 (which is least of a,b, and c)
e. Percentage rate on credit 20% (AGI over $43,000)
f. Child and dependent care credit $400 (3,000 × 20%)
According to the 3rd situation
Particulars Amount
a. Expenditure of dependent care $4,000
b. Qualifying expenses for one
dependent on limit $3,000
c. Earned income of Julie $25,000
d. Expenses eligible for credit $3,000 (which is least of a,b, and c)
e. Percentage rate on credit 30% (AGI over $25,000)
f. Child and dependent care credit $900 (3,000 × 30%)
According to the 4th situation
Particulars Amount
a. Expenditure of dependent care $2,000
b. Qualifying expenses for one
dependent on limit $3,000
c. Earned income of Julie $14,000
d. Expenses eligible for credit $2,000 (which is least of a,b, and c)
e. Percentage rate on credit 35% (AGI over $15,000)
f. Child and dependent care credit $700 (2,000 × 35%)
According to the 5th situation
Particulars Amount
a. Expenditure of dependent care $4,000
b. Qualifying expenses for one
dependent on limit $3,000
c. Earned income of Julie $2,000
d. Expenses eligible for credit $2,000 (which is least of a,b, and c)
e. Percentage rate on credit 35% (AGI over $15,000)
f. Child and dependent care credit $700 (2,000 × 35%)
Developing a List of Activities for Baggage Handling at an Airport
As part of a continuous improvement program, you have been asked to determine the activities involved in the baggage-handling process of a major airline at one of the airline’s hubs. Prior to conducting observations and interviews, you decide that a list of possible activities would help you to better observe key activities and ask meaningful questions.
Required
For incoming aircraft only, develop a sequential list of baggage-handling activities. Your list should contain between 8 and 10 activities.
Listed below are 8 baggage-handling activities in random order. Put the activities in sequential order by selecting the appropriate number using the drop-down answer options under the "Step" column.
(Step 6 is completed as an example)
Load aircraft
Move baggage to baggage sorting area
Unload aircraft
6 Accumulate baggage for each outgoing flight
Move baggage to outgoing aircraft
Move baggage for which hub is final destination to baggage claim area
Open cargo hatch
Sort baggage by outgoing flight numbers and/or destination
Answer:
1. Open cargo hatch
When the plane arrives, it will need to be unloaded so the first thing to do is open the cargo hatch to have access to cargo area.2. Unload aircraft
After gaining access to the cargo area, unload the aircraft.3. Move baggage to baggage sorting area
The baggage should then be moved to a place where it can be sorted.4. Move baggage for which hub is final destination to baggage claim area
If this is the final destination for the baggage then it should be moved to the baggage claim area5. Sort baggage by outgoing flight numbers and/or destination
When it is time for the outgoing flights, sort them according to which flights they will be going on.6. Accumulate baggage for each outgoing flight
After sorting them, accumulate them and prepare them to be transported to the plane they are to go to.7. Move baggage to outgoing aircraft
After accumulating them, transport them to the plane that they are to go with.8. Load aircraft
After transporting them then load the aircraft.Prior to liquidating their partnership, Pepper and Reynell had capital accounts of $13,000 and $49,000, respectively. The partnership assets were sold for $24,000. The partnership had no liabilities. Pepper and Reynell share income and losses equally. Required: a. Determine the amount of Pepper's deficiency. $ b. Determine the amount distributed to Reynell, assuming Pepper is unable to satisfy the deficiency. $
Answer:
Explanation:
Based on the information that has been given in the question, the following answer can be provided
a. Determine the amount of Pepper's deficiency.
First, we need to calculate the loss that was recognized. This will be:
= ($13,000 + $49,000) - $24,000
= $62,000 - $24,000
= $38,000
Pepper's share of the loss will then be:
= $38,000/2
= $19,000
Pepper's deficiency will now be his contribution minus the loss incurred. This will be:
= $19,000 - $13,000
= $6,000
Deficiency of $6000
b. Determine the amount distributed to Reynell, assuming Pepper is unable to satisfy the deficiency.
This will be:
= $49,000 - $19000 - $6,000
= $49,000 - $25,000
= $24,000
42) Joe just inherited the family business, and having no desire to run the family business, he has decided to sell it to an entrepreneur. In exchange for the family business, Joe has been offered an immediate payment of $100,000. Joe will also receive payments of $50,000 in one year, $50,000 in two years, and $75,000 in three years. The current market rate of interest for Joe is 6%. In terms of present value (PV), how much will Joe receive for selling the family business? A) $$245,641 B) $254,641 C) $641,254 D) $254,461
Answer:
Total PV= $254,641.08
Option B.
Explanation:
Giving the following information:
Cash flows:
Cf0= $100,000
Cf1= 50,000
Cf2= 50,000
Cf3= 75,000
Interest rate= 6%
To calculate the present value, we need to use the following formula on each cash flow:
PV= FV/(1+i)^n
Cf0= 100,000
Cf1= 50,000/1.06= 47,169.81
Cf2= 50,000/1.06^2= 44,499.82
Cf3= 75,000/1.06^3= 62,971.45
Total PV= $254,641.08
On January 1, 2018,MechanicsCredit Union (MCU)issued 8 %,20-yearbonds payable with face value of $ 200 comma 000.These bonds pay interest on June 30 and December 31. The issue price of the bonds is 106.Journalize the following bond transactions:
A. Issuance of the bonds on January 1, 2018.
B. Payment of interest and amortization on June 30, 2018.
C. Payment of interest and amortization on December 31, 2018.
D. Retirement of the bond at maturity on December 31, 2037, assuming the last interest payment has already been recorded.
Answer:
A. Issuance of the bonds on January 1, 2018.
Dr Cash 212,000
Cr Bonds payable 200,000
Cr Premium on bonds payable 12,000
B. Payment of interest and amortization on June 30, 2018.
premium on bonds payable = $12,000 / 40 coupons = $300 per coupon
Dr Interest expense 7,700
Dr Premium on bonds payable 300
Cr Cash 8,000
C. Payment of interest and amortization on December 31, 2018.
Dr Interest expense 7,700
Dr Premium on bonds payable 300
Cr Cash 8,000
D. Retirement of the bond at maturity on December 31, 2037, assuming the last interest payment has already been recorded.
Dr Bonds payable 200,000
Cr cash 200,000
On August 21, Alix Company receives a $2,000, 60-day, 6% note from a customer as payment on her account. How much interest will be due on October 20 - the due date?
a. $10
b. $20
c. $140
d. $120
Answer:
b. $20
Explanation:
Calculation of how much interest will be due on October 20 - the due date
Using this formula
Interest due = Amount received ×Numbers of days ×Note percentage
Let plug in the formula
Interest due =$2,000 x (60/360) x 0.06
Interest due=$2,000×0.17×0.06
Interest due =$20
Therefore $20 interest is the amount of interest that will be due on October 20the due date.
Storico Co. just paid a dividend of $2.05 per share. The company will increase its dividend by 24 percent next year and then reduce its dividend growth rate by 6 percentage points per year until it reaches the industry average of 6 percent dividend growth, after which the company will keep a constant growth rate forever. If the required return on the company's stock is 10 percent, what will a share of stock sell for today
Answer:
A share of stock sell for $74.21 today.
Explanation:
This can be calculated as follows:
Dividend per share in year 1 = Year 0 dividend * (1 + growth rate of year 1 dividend) = $2.05 * (1 + 24%) = $2.5420
PV of year 1 dividend per share = Year 1 dividend / (1 + rate of return)^1 = $2.5420 * / (1 + 10%)^1 = $2.31090909090909
Dividend per share in year 2 = Year 1 dividend * (1 + growth rate of year 1 dividend) = $2.5420 * (1 + (24% -6%)) = $2.5420 * (1 + 18%) =$3.00
PV of year 2 dividend per share = Year 2 dividend / (1 + rate of return)^2 = $3.00 / (1 + 10%)^2 = $2.47933884297521
Dividend per share in year 3 = Year 2 dividend * (1 + growth rate of year 2 dividend) = $3.00 * (1 + (18% -6%)) = $3.00 * (1 + 12%) =$3.36
PV of year 3 dividend per share = Year 3 dividend / (1 + rate of return)^3 = $3.36 / (1 + 10%)^3 = $2.5244177310293
Dividend per share in year 4 = Year 3 dividend * (1 + growth rate of year 3 dividend) = $3.36 * (1 + (12% -6%)) = $3.36 * (1 + 6%) =$3.5616
PV of year 4 dividend per share = Year 4 dividend / (1 + rate of return)^4 = $3.5616 / (1 + 10%)^4 = $2.43262072262824
Dividend per share in year 5 = Year 4 dividend * (1 + growth rate of year 4 dividend) = $3.5616 * (1 + 6%) = $3.775296
Price at year 4 = Year 5 dividend / (Rate of return – growth rate) = $3.775296 / (10% - 6%) = $94.3824
PV of price at year 4 = Price at year 4 / (1 + rate of return)^4 = $94.3824 / (1 + 10%)^4 = $64.4644491496482
Share price to day = PV of year 1 dividend per share + PV of year 2 dividend per share + PV of year 4 dividend per share + PV of year 4 dividend per share + PV of price at year 4 = $2.31090909090909 + $2.47933884297521 + $2.5244177310293 + $2.43262072262824 + $64.4644491496482 = $74.21
Cost centers are evaluated primarily on the basis of their ability to control costs and:_______.
A) Their return on assets.
B) Residual income.
C) The quantity and quality of the services they provide.
D) Their contribution margin ratio.
Answer:
C.
The quality and quantity of the services they provide
Explanation:
When we talk of cost centers in an organization, we refer to such as departments that does not contribute to the overall profitability of the organization but still cost the organization some amount to operate.
What this means is that although, they give no profit to the organization, they add to the total bill of the organization.
So how do we evaluate them?
Since they are not here for profitability, the measure of how they are relevant to the company is measured on two basis.
They are evaluated on their ability to control costs and also the quality and quantity of the services these centers provide
Promoters of an LLC are Select one: a. are never personally liable on pre-formation debt. b. always liable on pre-formation debt. c. only liable on pre-formation debt until a novation occurs.
Answer:
The answer is C. only liable on pre-formation debt until a novation occurs.
Explanation:
The corporation and the third-party agree to release the promoter from liability and to substitute the corporation in place of the promoter as the party liable on the contract. May be express or implied.
What action can a supervisor take to reinforce the desired change and create a work environment that nourishes successful people?
Answer:
Communicate the reasons for the change.
Explanation:
Remember, reinforcement involves not necessarily employing harsh measures, but communicating with a view to persuade into action.
Since a supervisor is often seen as a head among his colleagues, he thus can exert influence on other employees by explaining the reasons and benefits for such change, doing so would steer employees into accepting the organisational change.
Identify the accounts below that would be classified as current liabilities on a classified balance sheet. (Check all that apply.)
a) Notes payable (due in three months)
b) Unearned rent
c) Accounts payable
d) Taxes payable
Answer:
a) Notes payable = current liabilities
b) Unearned rent = current liabilities
c) Accounts payable = current liabilities
d) Taxes payable = current liabilities
Explanation:
Current Liabilities are Company`s Obligations that are due for settlement within a period of 12 months.
All the above Accounts are would be classified as current liabilities as settlement in cash or service (when in comes to unearned rent) is due within 12 months.
"Smokers are more likely to be murdered than nonsmokers." This statement is an example of: Select one: a. the fallacy of unintended consequences:. b. a positive economic statement. c. a normative economic statement. d. a value judgment.
Answer:
positive economic statement
Explanation:
positive economic statement are statements based on facts. they are objective, descriptive and measurable.
The information that smokers are liable to die young is based on extensive research on the effects of smoking on smokers
Marla Staples is concerned with identity theft. One of the ways that she can protect her information from leaking out to the wrong hands is to: limit her purchases with vendors that she knows do not store her information in a database. limit her travels to only the U.S. because identity theft is an international problem. avoid all e-commerce transactions because this is the only type of buying transaction where websites and others handle sensitive, personal information. install antivirus software, firewalls, and anti-spyware software on her computer.
Answer: Install antivirus software, firewalls, and anti-spyware software on her computer.
Explanation:
Marla's computer is the most likely place where people can gain access to her personal information for use to propagate identity theft. Personal computers have all sorts of personal information such as scanned copies of birth certificates, academic achievements, photographs, bank statements and the like. If the security on a personal computer is breached, it could be quite harmful.
For this reason Marla should install antivirus software, firewalls, and anti-spyware software on her computer to protect it from unwanted access from everyone including people who would use her information for the wrong reasons.
No Doubt Company includes one coupon in each box of soap powder that it packs, and 10 coupons are redeemable for a premium (a kitchen utensil). In 2020, No Doubt Company purchased 8,800 premiums at 80 cents each and sold 110,000 boxes of soap powder at $3.30 per box; 44,000 coupons were presented for redemption in 2014. It is estimated that 60% of the coupons will eventually be presented for redemption.
Instructions
Prepare all the entries that would be made relative to sales of soap powder and to the premium plan in 2014.
Answer:
Prepare all the entries that would be made relative to sales of soap powder and to the premium plan in 2014.
Explanation:
ere presented for redemption in 2014. It is estimated that 60% of the coupons will eventually be prese
An analysis in which all the components of an income statement are expressed as a percentage of net sales is called blank___________ .
Answer:
Common Size Income Statement
Explanation:
In a common size income statement, each line item of the Income statement is expressed as a percentage of the sales amount for that period.
This helps in comparing performance of companies in different sectors or industries.
Rodriguez Company pays $310,000 for real estate plus $16,430 in closing costs. The real estate consists of land appraised at $215,000; land improvements appraised at $86,000; and a building appraised at $129,000.Required:1. Allocate the total cost among the three purchased assets.2. Prepare the journal entry to record the purchase.
Answer:
Required 1.
Land = $163,215
Land improvements = $65,286
Buildings = $97,929
Required 2.
Land $163,215 (debit)
Land improvements $65,286 (credit)
Buildings $97,929 (credit)
Cash $310,000 (credit)
Explanation:
Allocation of the purchase cost must be made on the bases appraisal value.
Total Appraisal Value = $215,000 + $86,000 + $129,000
= $430,000
Land = $215,000 / $430,000 × $326,430
= $163,215
Land improvements = $86,000 / $430,000 × $326,430
= $65,286
Buildings = $129,000 / $430,000 × $326,430
= $97,929
If a company made a bank deposit on September 30 that did not appear on the bank statement dated September 30, in preparing the September 30 bank reconciliation, the company should:
Answer:
The answer is 'add the deposit to the end cash balance per bank statement'
Explanation:
The company made a deposit on the last day of September and this was not recorded by the bank i.e it will not be shown on the bank statement at September 30. The company had already recorded this deposit in the cash book at office. This means the bank statement is less this deposit amount.
To correct this anomaly, the deposit that was not recorded by the bank will be added to the end cash balance as per bank statement.
The nominal interest rate in Fiji is 3%, while the nominal interest rate in the U.S. is 5%. Real interest rates in both countries are 2%. According to purchasing power parity (PPP), the Fijian dollar (F$) may be expected to ________ by ________%.
Answer:
1.98%
Explanation:
The computation is shown below:-
As we know that
PPP equation i.e
Nominal Interest rate = Real interest rate + Inflation rate
Now
The Inflation rate for Fiji is
= 5% - 2%
= 3%
And, the Inflation rate for US is
= 3% - 2%
= 1%
As we can see that the inflation rate for Fiji is more than the inflation rate for US so we should be depreciated the currency by considering the inflation differential which is shown below:
= (1 + 3%) ÷ (1 + 1%) -1
= 1.98%
Companies that show profits on the income statement will always show positive cash flows from operating activities.
a. True
b. False
Answer:
B. False.
Explanation:
Firstly, explaining a cash flow statement will be explained or tells us how much cash from the business is entering and leaving your business. This is been explained better with the aid of a balance sheets and also income statements; these are practically three most important financial statements that helps effectively in accounts of business management in a small business accounting and making sure you have enough cash to keep operating.
Using a template or probably an excel spreadsheet, the income statement and cash flow statements are been well understood and at this it is totally false to say that companies that show profits on the income statement will always show positive cash flows from operating activities.
Which of the following costs would be applied to manufactured inventory under variable costing? Select one: A. Cost of raw materials B. Salary of factory manager C. Rental payments on administrative offices D. Commissions to sales persons E. Rental payments on factory
Tropetech Inc. has an expected net operating profit after taxes, EBIT(1 – T), of $2,400 million in the coming year. In addition, the firm is expected to have net capital expenditures of $360 million, and net operating working capital (NOWC) is expected to increase by $45 million. How much free cash flow (FCF) is Tropetech Inc. expected to generate over the next year?
Answer:
FCF = $1,995 million
Explanation:
DATA
EBIT(1-T) = $2,400 million
Net Capital Expenditure = $360 million
Net operating working capital (NOWC) = $45 million
Free cash flow (FCF) expected to generate over next year can be calculated as
FCF = EBIT(1-T) - Capital Expenditure - Net operating working capital (NOWC)
FCF = $2,400 million - $360 million - $45million
FCF = $1,995 million