Answer: $40
Explanation:
Cash-flow to creditors is that amount of cash that the business paid to creditors during a period. It is calculated by removing the net new borrowings from the interest payments for the period to the creditors.
Cash-flow to Creditors = Interest Paid - Net Borrowing
Cash-flow to Creditors = 150 - 110
Cash-flow to Creditors = $40
The total cost of producing 15 tons of butter is $35000. If average variable cost is $530, then what is the firm's average fixed cost? (enter answer as just a number, no commas, dollar signs, or the like)
Answer:
$1803.33
Explanation:
average total cost = average variable cost + average fixed cost
average total cost = total cost / quantity = $35000 / 15 = $2,333.33
average fixed cost = $2,333.33 - $530 = $1803.33
If a company presently has B+ credit rating, which one of the following will NOT contribute to achieving a higher credit rating?
A. A "low" default risk ratio
B. Larger retained earnings
C. A lower debt to assets ratio
D. A higher interest coverage ratio
E. A higher default risk ratio
Answer:
C
Explanation:
The option that would not contribute to achieving a higher credit rating for the company is a higher default risk ratio.
What do the financial ratios mean?
A low default risk ratio mean that the company has a low probability of defualting on its obligations. This would increases its rating.
A lower debt to assets ratio indicates lower financial risk and greater solvency. A higher interest coverage ratio indicates greater solvency.
To learn more about financial ratios, please check: https://brainly.com/question/26092288
#SPJ2
Mary Beth Marrs, the manager of an apartment complex, feels overwhelmed by the number of complaints she is receiving. Below is the check sheet she has kept for the past 12 weeks. Develop a Pareto chart using this information. What recommendations would you make?
The correct answer to this open question is the following.
Unfortunately, the question does not attach the check sheet with the needed information.
However, we can say that the Pareto chart helps us understand where the priority is to focus on it. The Pareto chart is based on the 80%-20% rule. The Pareto chart says that 20% of the solutions help resolve 80% of the issues.
So Mary Beth Marrs, the manager of the apartment complex must focus on issues such as the parking lot, the ground, and the pool, to appease most of the people and diminish the complaints.
To Develop a Pareto chart using this information the recommendations would you make:
The Pareto chart makes a difference in us getting it where the need is to center on it. The Pareto chart is based on the 80%-20% run of the show. The Pareto chart says that 20% of the arrangements offer assistance to resolve 80% of the issues. So Mary Beth Marrs, the chief of the flat complex must center on issues such as the stopping part, the ground, and the pool, to conciliate most of the individuals and reduce the complaints.Know more :
https://brainly.com/question/20647442?referrer=searchResults
An entrepreneur is looking to open a restaurant in a town with only one other restaurant. The incumbent restaurant is very successful with high profits. Which of the following business strategies are most likely to allow the entrepreneur to start a profitable restaurant? Select all that apply. Offer the most popular dish served by the incumbent restaurant. Open the restaurant location near the incumbent restaurant. Use new technology and business practices to cut variable costs lower than the incumbent restaurant. Specialize in a type of cuisine not served by other restaurants in the region.
Answer:
Options C and D would be the correct options.
Explanation:
The technological innovation will decrease costs and raise income, even though the other establishment launches a trade dispute, it seems to be profitable. Specializing in some other quality of diet creates significant consumers and that could stick to something like a restaurant that will boost the product revenue and profit.Fining the least expensive could begin price competition and that it's necessary to play on quality to make costing fewer costly. The upscale steakhouse may have cheaper price capacities than that of the new ones. Specializing in almost the same product will boost rivalry, although with the old store, that the very first leading benefit is.Many alternatives have no relation to the given instance. Therefore the answer to the above seems to be the right one.
During the coming year, Colgate expects an increase in variable manufacturing costs of $8 per unit and in fixed manufacturing costs of $35,000. (a) If sales for 2015 remain at 13,000 units, what price should Colgate charge to obtain the same profit as last year? Round to the nearest cent.
Answer: $130.69
Explanation:
Colgate made a Net Income of $167,000 in 2014 and sold 13,000 units.
Variable costs were $663,000 and fixed costs were $730,000.
Variable costs are to increase by $8 per unit and fixed costs by $35,000.
Price to sell at to maintain same profit as last year will be x
167,000 = 13,000x - (Old + New Variable cost) - ( Old + New Fixed Cost)
167,000 = 13,000x - (663,000 + (8* 13,000)) - ( 730,000 + 35,000)
167,000 = 13,000x - 767,000 - 765,000
167,000 = 13,000x - 1,532,000
13,000x = 1,699,000
x = 1,699,000/13,000
x = $130.69
Your crazy uncle left you a trust that will pay you $39,000 per year for the next 30 years with the first payment received one year from today. If the appropriate interest rate is 7.2 percent, what is the value of the payments today
Answer:
$474,386.27
Explanation:
For computing the value of the payment today we need to apply the present value formula i.e to be shown in the attachment below:
Given that,
Future value = $0
Rate of interest = 7.2%
NPER = 30 years
PMT = $39,000
The formula is shown below:
= -PV(Rate;NPER;PMT;FV;type)
So, after applying the above formula, the present value is $474,386.27
Farrow Co. expects to sell 300,000 units of its product in the next period with the following results. Sales (300,000 units) $ 4,500,000 Costs and expenses D The company has an opportunity to sell 30,000 additional units at $13 per unit. The additional sales would not affect its current expected sales. Direct materials and labor costs per unit would be the same for the additional units as they are for the regular units. However, the additional volume would create the following incremental costs: (1) total overhead would increase by 15% and (2) administrative expenses would increase by $129,000. Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $13 per unit. Should the company accept or reject the offer?irect materials 600,000 Direct labor 1,200,000 Overhead 300,000 Selling expenses 450,000 Administrative expenses 771,000 Total costs and expenses 3,321,000 Net income $ 1,179,000
Answer:
Explanation:
workings
Unit selling price = 4,500,000/300,000 = 15
Unit Direct material = 600,000/300,000 = 2
Direct labor rate = 1,200,000/300,000 = 4
selling expenses = 450,000/300,000 = 1.5
Normal Sales Extra Sales Total
Turnover 4,500,000 390,000 (30,000*13) 4,890,000
Direct material 600,000 60,000(30,000*2) 660,000
Direct labor 1,200,000 120,000(30,000*4) 1,320,000
Overhead 300,000 45,000 (300,000*15%) 345,000
Selling Expenses 450,000 45,000 (1.5*30000) 495,000
Admin Expenses 771,000 129,000 900,000
Total cost 3,321,000 399,000 3,720,000
Net income 1,179,000 (9000) 1,170,000
B) The offer for additional sales at a reduced price of $13 should be declined as it ends up in a loss of $9,000 due to the related increase in the operating costs
The Acmeville Metropolitan Bus Service currently charges $0.77 for an all-day ticket, and has an average of 472 riders a day. The bus company is not earning a profit, but according to their contract with the city, they cannot cut the number of buses on the road. They must therefore find a way to increase revenues. The bus company is considering increasing the ticket price to $ 0.99 . The marketing department's studies indicate this price increase would reduce usage to 195 riders per day. Calculate the absolute value of the price elasticity of demand for bus tickets using the simple percentage change method. Round your answer to one decimal place.
Answer:
price elasticity of demand = -2.05, price elastic, or in absolute terms 2.05, price elastic
Explanation:
the formula to calculate price elasticity of demand is:
PED = % change in quantity / % change in price
% change in quantity = [(195 - 472) / 472] x 100 = -58.69%% change in price = [($0.99 - $0.77) / $0.77] x 100 = 28.57%PED = -58.69% / 28.57% = -2.05
Generally when we calculate PED we use absolute values, i.e. this PED = 2.05. When PED > 1, price elastic, which means that any change in price will result in a larger change in quantity demanded. When PED < 1, price inelastic, which means that any change in price will result in a smaller change in quantity demanded. When PED = 1, unit elastic, which means that any change in price will result in a proportional and inverse change in quantity demanded.
Penny owned 2,000 shares of Dollar Inc. common stock that were purchased in Year 1 at $10.50 per share. Penny received a 5% non-taxable dividend of Dollar common stock in Year 2. In Year 5, the stock split 2 for 1. In the current year Penny sold 800 shares. What is Penny s basis in the 800 shares sold
Answer:
$4,000
Explanation:
Penny's originally purchased 2,000 stocks
she then received 5% stock dividends, which means that her total stocks were 2,100
then the stock split 2 for 1, so Penny had 4,200 stocks in total
stocks basis = $10.50 x 2,000 = $21,000
basis per stock = $21,000 / 4,200 stocks = $5 per stock
basis for 800 stocks sold = $5 x 800 = $4,000
Elevators, Inc. does considerable business overseas for high-rise luxury hotels. To speed up the building permit process, it authorized a project manager to pay a government official a "fee" in the amount of $500. It is common practice in the foreign country for government officials to accept a "fee" to expedite processes. In doing so, has Elevators, Inc. broken United States law? Select one
Answer:
No, Elevators, Inc. has not broken the law because payment was made in United States currency.
Explanation:
It operates a substantial business abroad for high-end luxury hotels. It authorized a project manager to "charge" a government official a charge of 500 for speeding up the building permit process. so
Under the law, it is illegal to bribe foreign officials to get business. But there is an exception to "facilitation payments", also known as grease payments made to speed up general government functions. Flexible payments can be used to persuade government officials to perform work that is already being done. Although many have argued that such payments are important for their operations in some areas, such as Asia and Africa, the difference between facility payment and bribery remains unclear.Yes, Elevators, Inc. has broken the law because it has paid a bribe to a foreign government official.
Here, to speed up the building permit process, Elevators, Inc .does authorized the project manager to pay the government official in charge of expediting processes a "fee" in the amount of $500
The $500 is this case is known as a bribe payment and it is illegal in United States.
Therefore, the answer is Yes, Elevators, Inc. has broken the law because it has paid a bribe to a foreign government official.
The missing options includes "Yes, Elevators, Inc. has broken the law because it has paid a bribe to a foreign government official. Yes, Elevators, Inc. has broken the law because the amount paid to the government official was $500. No, Elevators, Inc. has not broken the law because payment was made in United States currency. No, Elevators, Inc. has not broken the law because "grease" payments are permitted under United States law."
Learn more about this here
brainly.com/question/15872749
How does the format of the income statement for Organic Bones differ from the income statement of a merchandiser?
Answer: Cost of Goods Sold for Manufacturer is different from that of a Merchandiser
Explanation:
Organic Bones as a manufacturer will have a different cost of goods sold to a Merchandiser because it will have to include the cost of manufacturing in the Cost of Goods sold. In the Income statement of Organic Bones, the relevant Cost of Goods will be entered as Finished Goods which would be derived from the Cost of Goods Manufactured schedule.
Merchandisers on the other hand, buy the goods that they sell. They will have no need for a Schedule of Costs of Goods manufactured and so will have no Finished Goods as their Inventory. Their relevant cost of goods sold will be Purchases which they bought from suppliers.
Imagine that you are a senior executive of a large organization such as Starbucks that has geographically scattered operating units. What would NOT be on your agenda?
Answer:
Orchestrate the action steps and the implementation sequence for each operational unit.
Explanation:
A senior executive at a large organization like Starbucks has great responsibilities for managing a company correctly, such as making important decisions, allocating resources to the right places, and directing other people's activities to achieve goals.
Therefore, among its functions are, to establish a clear and effective communication about important organizational changes and behaviors, to establish deadlines and measures to reach objectives and to build consensus on certain procedures.
However, each operating unit of the company contains a specific management responsible for orchestrating the implementation and the actions necessary for the success of the unit, so this is not the function of a senior executive.
Transactions for Jayne Company for the month of June are presented below.
June
1 Issues common stock to investors in exchange for $5,000 cash.
2 Buys equipment on account for $1,100.
3 Pays $740 to landlord for June rent.
12 Sends Wil Wheaton a bill for $700 after completing welding work.
Identify the accounts to be debited and credited for each transaction.
Account Debited Account Credited
june 1
june 2
june 3
june 12
Answer:
June 1 , common stocks are issued
Dr Cash 5,000
Cr Common stock 5,000
June 2 , equipment purchased on account
Dr Equipment 1,100
Cr Accounts payable 1,100
June 3 , monthly rent paid
Dr Rent expense 740
Cr Cash 740
June 12, service revenue
Dr Accounts receivable 700
Cr Service revenue 700
Which team access level gives the user view only access to QuickBooks Online Accountant firm information, but no access to team and subscription billing and no access to the firm’s books?
Answer:
Basic Access
Explanation:
QuickBooks Online Accountant has three levels of access that can be granted to Team users. These includes:
1. Full Access: this grants the user to perform editing, modifications, update and access firm's QuickBooks Online Accountant.
2. Basic Access: this grants the user to VIEW-ONLY access to QuickBooks Online Accountant firm.
3. Custom Access: this grants the user to pick different mix of permission for the team user.
Hence, the right answer is BASIC ACCESS
Whitman Printing has contracts to complete weekly supplements required by forty-six customers. For the year 20X5, manufacturing overhead cost estimates total $840,000 for an annual production capacity of 12 million pages.
For 2010, Whitman Printing decided to evaluate the use of additional cost pools. After analyzing manufacturing overhead costs, it was determined that the number of design changes, setups, and inspections are the primary manufacturing overhead cost drivers. The following information was gathered during the analysis:
Cost Pool Manufacturing overhead costs Activity
Design changes $120,000 200 design changes
Setups 640,000 4,000 setups
Inspections 80,000 16,000 inspections
Total manufacturing overhead costs $840,000
During 2010, two customers, Money Managers and Hospital Systems, are expected to use the following printing services:
Activity Money Managers Hospital Systems
Pages 60,000 76,000
Design changes 10 2
Setups 20 10
Inspections 30 38
When costs are assigned using the single cost driver, number of pages printed, then Hospital Systems will ___?
a. contribute too little to profits, and Wallace Printing will not want to accept additional work from the company.
b. Will likely seek to do business with competitors
c. Is grossly under billed for the job, while other jobs will be unfairly over billed.
d. Is fairly billed because resources are allocated uniformly to all jobs.
Answer:
a. contribute too little to profits, and Wallace Printing will not want to accept additional work from the company.
Explanation:
For reaching any conclusion first we have to determine the cost assigned by using the single cost driver which is shown below:
= Rate × Pages printed
= ($840,000 ÷ 12,000,000) × 76,000
= $5,320
And Cost assigned using ABC is
= (120,000 ÷ 200) × 2 + (640,000 ÷ 4000) × 10 + (80,000 ÷ 16000) × 38
= $2,990
By this above calculation, the first option is chosen as the cost are high as compared to the ABC while on the other hand the profit would be NIL
Cash received from customers includes all $139,000 of the accounts receivable that were outstanding at November 30, 2017. Accounts receivable at December 31, 2017 totaled $141,000. Accounts payable (to suppliers of inventory) decreased by $19,000 from November 30, 2017 to December 31, 2017. The balance in the inventory account decreased by $39,000 over the same period. Required: What is gross profit for the month of December under accrual accounting
Answer:
Gross profit from the month of December is $238000
Explanation:
Question is incomplete but the missing part is:
Cash received from customer during december 2017 - 387,000
Cash paid to supplier for inventory during december 2017 - 131,000
Accrual basis revenues
Particulars Amount $
Cash received from customer 387000
during December 2017
Cash received in December for -139000
November accounts receivable
December sales made on account 141000
collected in January
Accrual basis revenues 389000
Accrual basis expenses
Particulars Amount $
Cash paid to suppliers for inventory 131000
during December 2017
Payments for inventory purchased -19000
and used in November
Inventory purchased in November 39000
but not used in December
Accrual basis expenses 151000
Gross profit from the month of December= Accrual basis revenues - Accrual basis expenses
Gross profit = 389000 - 151000
Gross profit = $238000
Aloha Inc. has 8 percent coupon bonds on the market that have 11 years left to maturity. If the YTM on these bonds is 10.22 percent, what is the current bond price
Answer:
The answer is $85.73
Explanation:
N(Number of periods) = 11years
I/Y(Yield to maturity) = 10.22 percent
PV(present value or market price) = ?
PMT( coupon payment) = $8
FV( Future value or par value) = $10
We are using a Financial calculator for this.
N= 11; I/Y = 10.22 ; PMT = 8; FV= $100; CPT PV= -85.73
Therefore, the market price of the bond is $85.73
How would utility costs be properly classified? Select one: A. Curvilinear B. Fixed C. Variable D. Stepped E. Mixed
Answer: Mixed
Explanation:
Here is the complete question:
Max Machining incurs the following utilities costs at different levels of production:
0 units: $120
500 units: $2,620
1,000 units: $5,120
How would utility costs be properly classified?
A) Curvilinear
B) Variable
C) Mixed
D) Fixed
E) Stepped
The utility cost here will be classified as a mixed cost. A mixed cost is a type of cost that has both fixed and variable cost. At 0 units, $120 was already spent. This shows that this cost is a fixed cost as it doesn't have anything to do with output. It'll still be paid regardless of the number of outputs while the other cost incurred are variable cost which is dependent on the number of outputs of goods.
Based on the explanation above, the answer is mixed cost.
A 4.5 percent increase in the price of milk causes a 9 percent reduction in the quantity demanded of chocolate syrup. What is the cross-price elasticity of demand for chocolate syrup with respect to the price of milk
Answer:
Cross-price elasticity = 2
Explanation:
The cross-price elasticity of demand measures the degree of responsive of quantity demand of a product with respect to change in the price of a related product. The related product could be a substitute or a complement.
The elasticity is determined as follows:
= % change in the quantity of syrup/% change in the price of milk
= 9%/4.5%= 2
Cross-price elasticity = 2
Donald invests the $10,000 today. Donald’s interest rate is 10% and interest is compounded and paid at the end of each year. At the end of two years, Donald’s investment is worth $12,100. What is the present value of Donald’s investment?
Answer:
The present value of Donald’s investment is $10,000.
Explanation:
The present value (PV) can be described as the current value of a future amount of money or an expected stream of income given a specified rate of return. The future amount of money or an expected stream of incomes are discounted at the discount rate or the rate of return. This is why the present value is also know as the present discounted value.
The present value can be calculated using the following formula:
PV = FV / (1 + r)^n ............................................ (1)
Where, based on the information in this question, we have:
FV = Future value = $12,100
r = rate of return = 10%, or 0.10
n = Number of years = 2 years
Substituting the values above into equation (1), we have:
PV = $12,100 / (1 + 0.10)^2
PV = $12,100 / 1.21
PV = $10,000
Therefore, the present value of Donald’s investment is $10,000 which is equal to the original amount of $10,000 invested at the present day.
Exercise 9-6 Payroll-related journal entries LO P2 Assuming situation a, prepare the employer's September 30 journal entries to record salary expense and its related payroll liabilities for this employee. The employee's federal income taxes withheld by the employer are $70 for this pay period. (Round your answers to 2 decimal places.)
Answer:
Sep 30
DR Salaries expense $700
CR FICA—Social Security taxes payable $43.40
CR FICA—Medicare taxes payable $10.15
CR Employee federal income taxes payable $70
CR Salaries payable $576.45
Explanation:
FICA—Social Security taxes payable
6.2% of the first $118,500
= 6.2% * 700
= $43.40
FICA—Medicare taxes payable
1.45% of gross pay
= 1.45% * 700
= $10.15
10) Financial intermediaries can substantially reduce transaction costs per dollar of transactions
because their large size allows them to take advantage of
Answer: D) economies of scale.
Explanation:
Economies of scale refers to when an entity is able to reduce its total costs as quantities of the good causing the costs increase.
Financial Intermediaries such as Commercial banks, Mutual funds, Investment banks etcetera have a lot of funds available for trade which they use to execute large trades. As a result, the costs on average are lower or them per transaction as opposed to traders executing with lower volumes. For example, when purchasing shares they will be able to negotiate better fees with stockbrokers because they are buying a lot of shares as opposed a single buyer trading.
ACME Inc. has decided on a 10for1 reverse stock split. If the firm currently has 40,000,000 shares outstanding, how many shares will be outstanding after the stock split?
Answer:
$4,000,000 Shares
Explanation:
Calculation for how many shares will be outstanding after the stock split
Using this formula
Outstanding Shares after stock split =Shares outstanding ÷Reverse stock split
Let plug in the formula
Outstanding Shares after stock split =$40,000,000÷10
Outstanding Shares after stock split =$4,000,000 Shares
Therefore the amount of shares that will be outstanding after the stock split will be $4,000,000
The company in the video relies on a contingent workforce. Why are faculty members at the Maine Media Workshop considered to be contingent workers
Answer:
a. They are temporary employees.
d. They are part-time employees.
Explanation:
Contingent Employees are employees that are hired by a company on a temporary basis. They are usually hired to perform a job at a time and hence do not cost as much as permanent staff.
The text from the video shows that Maine Media Workshops hires professionals in fields related to film-making to come and instruct at various workshops on a temporary basis which is inferebly a week or less. The temporary basis of this employment means that they are Contingent Employees who work part time.
A foundation was endowed with $15,000,000 in July 2010. In July 2014, $5,000,000 was expended for facilities, and it was decided to provide $250,000 at the end of each year forever to cover operating expenses. The first operating expense is in July 2015, and the first replacement expense in July 2014. If all money earns interest at 5% after the time of endowment, what amount would be available for the capital replacements at the end of every fifth year forever
Answer:
$2,274,639.75
Explanation:
Endowment on July 2010 = $15,000,000
Endowment amount on July 2014 = $15,000,000 (1+0.05)^4 - Expenditure on facilities
= $15,000,000 (1.2155) - $5,000,000
= $18,232,500 - $5,000,000
= $13,232,500
Amount to be set aside for operation expenses = $250,000/0.05 = $5,000,000
Amount available for capital replacement = $13,232,500 - $5,000,000 = $8,232,500
5-years effective interest rate = (1+0.05)^5 - 1 = 0.2763
Annual available for capital replacements every fifth year forever = $8,232,500 (0.2763) = $2,274,639.75
The amount that would be available for the capital replacements at the end of every fifth year forever is $2,274,513.93.
Endowment amount:
Endowment amount=[$15,000,000 (1+0.05)^4]- $5,000,000
Endowment amount=[$15,000,000 (1.21550625)] - $5,000,000
Endowment amount= $18,232,594- $5,000,000
Endowment amount= $13,232,594
Capital replacement:
Capital replacement = $13,232,594- ($250,000/0.05)
Capital replacement = $13,232,594 - $5,000,000
Capital replacement = $8,232,594
Effective interest rate :
Effective interest rate = (1+0.05)^5 - 1
Effective interest rate = (1.05)^5 - 1
Effective interest rate = 0.2762815625
Every Fifth year Capital replacements:
Every Fifth year Capital replacements= $8,232,594 ( 0.2762815625)
Every Fifth year Capital replacements=$2,274,513.93
Inconclusion the amount that would be available for the capital replacements at the end of every fifth year forever is $2,274,513.93.
Learn more about here:https://brainly.com/question/24347956
A company uses a process costing system. It's welding department completed and transferred out 100,000 units during the current period. The ending inventory in the welding department consists of 30,000 units (75% complete with respect to direct materials and 40% complete with respect to conversion costs).
Determine the equivalent units of production for the welding department for direct materials and conversion costs assuming the weighted average method.
A. 130,000; 130,000
B. 130,000; 112,000
C. 107,500; 118,000
D. 122,500; 112,000
E. 112,500; 130,000
Answer:
Option D is correct
Equivalent units
Material cost = 122, 500
Conversion cost = 112,000
Explanation:
Equivalent units = Units × degree of completion(%)
Material cost
Item Unit Equivalent units
transferred out 100,000 100,000× 100% = 100,000
Closing inventory 30,000 30,000 75% = 22,500
Equivalent unit 122,500
Conversion cost
Item Unit Equivalent units
transferred out 100,000 100,000× 100% = 100,000
Closing inventory 30,000 30,000 × 40% = 12,000
Equivalent unit 112,000
Equivalent units
Material cost = 122, 500
Conversion cost = 112,000
Which of the following would most directly affect the purchasing power of benefits paid on a fixed annuity?
A) Guaranteed minimum payout.
B) Economic inflation.
C) Interest rates
D) Company investment performance
The purchasing power of benefits on a fixed annuity is directly affected by economic inflation, which reduces the value of money over time. Therefore, option B is correct.
In the context of fixed annuities, inflation refers to the general increase in prices of goods and services over time, leading to a decrease in the purchasing power of money.
Inflation erodes the value of annuity payments, as the fixed benefit amount remains constant while the cost of living rises.
This means that over time, the annuity payments may not be sufficient to meet the same level of expenses. Managing inflation risk becomes crucial in maintaining the long-term purchasing power of annuity benefits, ensuring that they can adequately cover future expenses despite the impact of rising prices.
Learn more about inflation here:
https://brainly.com/question/33537821
#SPJ4
1. Which of the following measures is an evaluation of a firm's ability to pay current liabilities?
A. Acid-test ratio.
C. Both (a) and (b).
B. Current ratio.
D. None of the above
Answer:
B. Current ratio
Current ratio is a comparison of current assets to current liabilities, calculated by dividing your current assets by your current liabilities.
Current ratio is an evaluation of a firm's ability to pay current liabilities. Thus, the correct answer is option B.
What is an current ratio?The current ratio is a liquidity ratio that measures a company's ability to pay short-term or one-year obligations. It explains to investors and analysts how a company can maximise its current assets on its balance sheet in order to pay off its current debt and other payables.
A current ratio that is comparable to or slightly higher than the industry average is generally regarded as acceptable. A lower current ratio than the industry average may indicate a greater risk of distress or default. Similarly, if a company's current ratio is very high in comparison to its peer group, it indicates that management may not be utilising its assets efficiently.
Therefore, current ratio is the correct answer.
To learn more about current ratio, click here:
https://brainly.com/question/28214599
#SPJ2
Oscar Clemente is the manager of Forbes Division of Pitt, Inc., a manufacturer of biotech products. Forbes Division, which has $4.06 million in assets, manufactures a special testing device. At the beginning of the current year, Forbes invested $5.08 million in automated equipment for test machine assembly. The divisionâs expected income statement at the beginning of the year was as follows:
Sales revenue $ 16,140,000
Operating costs
Variable 2,010,000
Fixed (all cash) 7,600,000
Depreciation
New equipment 1,600,000
Other 1,380,000
Division operating profit $ 3,550,000
A sales representative from LSI Machine Company approached Oscar in October. LSI has for $6.51 million a new assembly machine that offers significant improvements over the equipment Oscar bought at the beginning of the year. The new equipment would expand division output by 10 percent while reducing cash fixed costs by 5 percent. It would be depreciated for accounting purposes over a three-year life. Depreciation would be net of the $579,000 salvage value of the new machine. The new equipment meets Pitt's 12 percent cost of capital criterion. If Oscar purchases the new machine, it must be installed prior to the end of the year. For practical purposes, though, Oscar can ignore depreciation on the new machine because it will not go into operation until the start of the next year.
The old machine, which has no salvage value, must be disposed of to make room for the new machine.
Pitt has a performance evaluation and bonus plan based on residual income. Pitt uses a cost of capital of 12 percent in computing residual income. Income includes any losses on disposal of equipment. Investment is computed based on the end-of-year balance of assets, net book value. Ignore taxes.
Required:
a. What is Forbes Divisionâs residual income if Oscar does not acquire the new machine? (Negative amount should be indicated by a minus sign. Enter your answer in thousands of dollars. Round your final answers to nearest whole dollar.)
Residual income ___________
b. What is Forbes Divisionâs residual income this year if Oscar acquires the new machine? (Negative amount should be indicated by a minus sign. Enter your answer in thousands of dollars. Round your final answers to nearest whole dollar.)
Residual income _____________
c. If Oscar acquires the new machine and operates it according to specifications, what residual income is expected for next year? (Negative amount should be indicated by a minus sign. Enter your answer in thousands of dollars. Round your final answers to nearest whole dollar.)
Residual income _______________
Answer:
a. What is Forbes Division's residual income if Oscar does not acquire the new machine?
residual income = $3,550,000 - ($6,160,000 x 12%) = $2,810,800
b. What is Forbes Division's residual income this year if Oscar acquires the new machine?
residual income = $70,000 - ($9,190,000 x 12%) = -$1,032,800
c. If Oscar acquires the new machine and operates it according to specifications, what residual income is expected for next year?
residual income = $5,167,000 - ($5,833,000 x 12%) = $4,467,040
In order to calculate net income, I assumed other depreciation remained the same for both years.
Explanation:
residual income = net income - (capital x cost of capital)
if new machine is not purchased:
net income = $3,550,000
cost of capital = 12%
capital = ($4,060,000 + $5,080,000) - depreciation $2,980,000 = $6,160,000
if new machine is purchased, current year's residual income
net income = $3,550,000 - $3,480,000 loss on disposal = $70,000
capital = ($4,060,000 + $5,080,000 + $6,510,000) - $5,080,000 - $1,380,000 = $9,190,000
if new machine is purchased, calculations for next year
net income:
sales revenue $17,754,000
variable costs ($2,010,000)
Fixed (all cash) ($7,220,000)
depreciation new machine ($1,977,000)
depreciation other ($1,380,000)
loss on disposal new machine ($3,480,000)
net income = $5,167,000
cost of capital = 12%
capital = ($2,680,000 + $6,510,000) - depreciation ($1,380,000 + $1,977,000) = $5,833,000
residual income = $5,167,000 - ($5,833,000 x 12%) = $4,467,040
True or False: Used items like used clothing, electronics, and furniture are included in the computation for GDP because buyers and sellers exchanged money. Explain.
Answer:
False
Used item clothings aren't included in GDP.
The GDP includes only items produced in a given year. The items would have been included in the year they were produced and adding them to GDP again would be double counting
Explanation:
Gross domestic product is the sum of final goods and services produced in an economy within a given period which is usually a year.
GDP calculated using the expenditure approach = Consumption spending + Investment spending by businesses + Government Spending + Net Export
I hope my answer helps you