The current ratio is a financial metric that measures a company's ability to cover its short-term liabilities with its short-term assets. It is calculated by dividing current assets by current liabilities.
A current ratio higher than 1.0 indicates that the company has more current assets than current liabilities, which generally implies good short-term financial health.
When a company purchases raw materials on credit, it affects the current ratio in the following ways:
Increase in Current Assets: The purchase of raw materials on credit increases the company's inventory, which is classified as a current asset. As a result, the current asset component of the current ratio increases, leading to a higher current ratio.
Increase in Current Liabilities: Since the purchase is made on credit, it creates an accounts payable liability. Accounts payable is a current liability that represents the company's obligation to pay for goods or services received on credit. The increase in accounts payable increases the current liability component of the current ratio.
Overall, the effect of purchasing raw materials on credit is twofold: it increases both current assets and current liabilities. However, since the prevailing current ratio is already higher than 1.0, the increase in current assets is likely to have a greater impact, resulting in a further increase in the current ratio.
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Whe is thi correct sequence of the stops in the stratepic planning process? A. Detine the company! dissign the business portiolio, set company objectives and goals, and plan the maket and ober functional steatepers B. De the the company π set company cojectives and goals, plan the market and other functional strategies, and dosign tho brisinoss portiol C. S. I company objectives and goals dofino the conpany mission, dosign the business portfolo, and plan the maiket and ofter tunctional strativinit 3. Define this company mission, set company objectives and gouls, design the business portfowo, and plan the market and ofher functional straioges
The correct sequence of steps in the strategic planning process is as follows: 1) Define the company mission, 2) Set company objectives and goals, 3) Design the business portfolio, and 4) Plan the market and other functional strategies.
Option C represents the correct sequence, while options A and B have the steps in a different order. In the strategic planning process, it is crucial to follow a logical sequence of steps to ensure effective planning and goal alignment. The first step is to define the company mission, which involves clarifying the purpose and overall direction of the organization. This mission statement serves as a guiding principle for all subsequent planning activities.
Once the mission is defined, the next step is to set company objectives and goals. Objectives are specific targets that the company aims to achieve, while goals outline the desired outcomes of these objectives. This step helps in establishing clear performance expectations and direction for the organization.
After setting objectives and goals, the next step is to design the business portfolio. This involves assessing the company's current products, services, and market segments, and making strategic decisions about resource allocation, investments, and potential diversification. It aims to create a balanced and competitive business portfolio that aligns with the company's goals.
The final step in the sequence is to plan the market and other functional strategies. This includes developing marketing plans, sales strategies, operational plans, and other functional strategies that support the achievement of the company's objectives. It involves analyzing the market, identifying target customers, and formulating strategies to position the company effectively and gain a competitive advantage.
Option C correctly represents the sequential order of the strategic planning process, ensuring a logical flow from defining the company mission to planning market and functional strategies.
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You borrow $10,000 at 14 percent compound annual interest for four years. The loan is repayable in four equal annual installments payable at the end of each year.
a) What is the annual payment that will completely amortize the loan over four years?
b) Of each equal payment, what is
i) the amount of interest?
ii) the amount of loan principal?
a. the annual payment that will completely amortize the loan over four years is approximately $3,586.03. b. the amount of interest in each equal payment is $1,400, and the amount of loan principal is $2,186.03.
a) To determine the annual payment that will completely amortize the loan over four years, we can use the formula for the present value of an annuity:
[tex]PV = Pmt * (1 - (1 + r)^(-n)) / r[/tex]
Where:
PV = Present value of the loan ($10,000)
Pmt = Annual payment
r = Interest rate per period (14% per year)
n = Number of periods (4 years)
Plugging in the given values, we can solve for Pmt:
$10,000 = Pmt * (1 - (1 + 0.14)^(-4)) / 0.14
Simplifying the equation:
$10,000 = Pmt * (1 - 0.6096) / 0.14
$10,000 = Pmt * 0.3904 / 0.14
$10,000 = Pmt * 2.7886
Dividing both sides by 2.7886:
Pmt = $10,000 / 2.7886
Pmt ≈ $3,586.03
Therefore, the annual payment that will completely amortize the loan over four years is approximately $3,586.03.
b) i) To calculate the amount of interest in each equal payment, we can subtract the loan principal portion from the total payment. In the first year, the interest will be calculated on the entire loan amount of $10,000.
Interest in the first year = Loan amount * Interest rate
Interest in the first year = $10,000 * 0.14
Interest in the first year = $1,400
Since the loan is being repaid in four equal annual installments, the interest amount will remain the same for each year.
ii) To determine the amount of loan principal in each equal payment, we subtract the interest from the total payment.
Loan principal in each year = Total payment - Interest amount
Loan principal in each year = $3,586.03 - $1,400
Loan principal in each year = $2,186.03
Therefore, the amount of interest in each equal payment is $1,400, and the amount of loan principal is $2,186.03.
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On January 1 of Year 1 , lessor Marcy and lessee Lenox contract for the lease of a machine for five payments of $7,000 each. The $7,000 payments are to be paid at the end of each year beginning on December 31 of Year 1 . They also agree that at the time of the fifth payment, for an added $6,000 purchase option payment, Lenox can buy the per year and Lenox is unaware of the implicit rate of the lease. The economic life of the asset is six years. Required a. How would Lenox classify the lease? b. Compute the value of the lease liability on January 1 of Year 1. - Note: Round your answer to the nearest whole dollar. c. Prepare a schedule of the lease liability for the first two years of the lease term. - Note: Round each amount in the schedule to the nearest whole dollar. Use the rounded amount for later calculations in the schedule.
Lenox classifies the lease as a capital lease due to a purchase option and a lease term exceeding the asset's economic life. A schedule of the lease liability for the first two years can be prepared.
a. Lenox would classify the lease as a capital lease. The presence of a purchase option and the lease term exceeding a significant portion of the asset's economic life are indicators of a capital lease. b. The value of the lease liability on January 1 of Year 1 can be determined using the present value of the lease payments. The lease payments consist of five payments of $7,000 each and an additional $6,000 for the purchase option payment. The economic life of the asset is six years. By discounting these cash flows using an appropriate discount rate, the value of the lease liability can be calculated. c. To prepare a schedule of the lease liability for the first two years of the lease term, you would list the annual lease payments and calculate the reduction in the lease liability. Each year, the lease liability decreases by the amount of the lease payment. The rounded amounts for each year can be used for subsequent calculations in the schedule.
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Fabio, a 50-year-old married taxpayer, purchased a Series I savings bond 20 years ago. Upon maturity he received $112,000 in principal and $38,000 in interest. He used $75,000 of the proceeds to pay for his dependent son's qualified higher education tuition and course textbooks, The tuition payment was made in the same year the bond proceeds were received. The remaining amount he re-invested in municipal bonds. Calculate the amount of bond proceeds Fabio must include in taxable income, assuming his AGI is below the phase-out thresholds.
To calculate the amount of bond proceeds Fabio must include in taxable income, assuming his AGI is below the phase-out thresholds, we first need to determine how much of the bond proceeds can be excluded from taxable income for qualified education expenses.
Qualified education expenses include tuition and required fees as well as course materials. Assuming that the dependent son's tuition was $75,000 or more (which seems to be the case based on the bond proceeds), then the entire amount of interest earned on the Series I savings bond can be excluded from taxable income ($38,000).Fabio would only have to include the principal amount ($112,000) in his taxable income. The remaining amount of the bond proceeds which he reinvested in municipal bonds is not taxable either because municipal bond interest is generally exempt from federal income tax.Therefore, the amount of bond proceeds Fabio must include in taxable income assuming his AGI is below the phase-out thresholds is $112,000.
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X Inc. uses a periodic inventory system: During April, the following transactions occurred: Apr 3 Purchased $2,000 of merchandise, terms 3/10, n/60, FOB Destination. 6 The appropriate party paid freight charges of $150 on goods purchased 6 on April 3. 7 Returned $300 of the merchandise purchased on April 3. 11 Paid for the goods purchased on April 3. 13 Sold goods costing $600 on credit for $1,000. Estimated returns are 10%. 14 The customer of April 13 returned $300 of the goods that had a cost of $180. 23 Received payment from the customer of April 13.
Instructions Prepare journal entries to record the above transactions. Show your calculations when applicable.
These journal entries record the transactions for X Inc. in April, as per the given information.
To prepare the journal entries for the given transactions, we will record each transaction individually. Here are the journal entries:
April 3: Purchased $2,000 of merchandise, terms 3/10, n/60, FOB Destination.
Inventory 2,000
Accounts Payable 2,000
April 6: Paid freight charges of $150 on goods purchased on April 3.
Freight Expense 150
Cash 150
April 7: Returned $300 of the merchandise purchased on April 3.
Accounts Payable 300
Inventory 300
April 11: Paid for the goods purchased on April 3.
Accounts Payable 1,940 [($2,000 - $300) - ($2,000 - $300) * 0.03]
Cash 1,940
April 13: Sold goods costing $600 on credit for $1,000. Estimated returns are 10%.
Accounts Receivable 1,000
Sales Revenue 1,000
Cost of Goods Sold 600
Inventory 600
April 14: The customer of April 13 returned $300 of goods that had a cost of $180.
Sales Returns and Allowances 300
Accounts Receivable 300
Inventory 180
Cost of Goods Sold 180
April 23: Received payment from the customer of April 13.
Cash 900 [($1,000 - $300) * (1 - 0.1)]
Accounts Receivable 900
Note: In transaction 4, the calculation is based on the net amount payable after deducting the return and applying the discount (3% of the net amount payable).
These journal entries record the transactions for X Inc. in April, as per the given information.
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Which of the following employer actions would most likely be a violation of employee privacy?
a. Reading an employee’s business emails
b. Recording the phone conversations of customer care employees
c. Placing video cameras in rest rooms
d.Monitoring employee blogs
The employer action that would most likely be a violation of employee privacy is: Placing video cameras in restrooms.
The correct option is C.
In order to maintain the privacy of employees, the employer should not take certain actions that may harm the privacy of employees. Placing video cameras in restrooms is one such action that will definitely breach the privacy of employees. This can be considered as illegal.
Reading an employee’s business emails, recording the phone conversations of customer care employees, and monitoring employee blogs are not necessarily considered as violations of employee privacy, because these actions can be important to keep track of the activities of the employees, and to make sure that they are working properly. But, placing video cameras in restrooms is a main answer, and is a direct violation of employee privacy.
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Today, DuPont paid a dividend of $0.50. For the next 4 years, the company's dividend is expected to grow at 10% p.a. compound annually and then revert to a long-term growth rate of 4% p.a. forever after that. How much should an investor pay for a share of DuPont today if an appropriate rate of return is 12% p.a. compounded annually? Any intermediate steps should be rounded to 4 or more decimal places. Round your final answer in dollars to 2 decimal places and exclude the dollar sign (\$) or comma. For example, $10,784.6518 should be input as 10784.65.
The value an investor should pay for a share of DuPont today, we can use the dividend discount model (DDM). The DDM values a stock based on the present value of its expected future dividends.
In this case, the dividends are expected to grow at a rate of 10% annually for 4 years, followed by a long-term growth rate of 4% indefinitely. The appropriate rate of return is 12% annually.
The value of a share of DuPont today, we need to calculate the present value of the expected future dividends. The dividends are expected to grow at 10% annually for 4 years and then at a long-term growth rate of 4% thereafter.
1. Calculate the present value of dividends for the first 4 years:
PV_dividends = D1 / (1 + r) + D2 / (1 + r)^2 + D3 / (1 + r)^3 + D4 / (1 + r)^4
where D1 is the dividend paid today ($0.50) and r is the appropriate rate of return (12% or 0.12).
2. Calculate the present value of the terminal value:
PV_terminal = D5 / (r - g)
where D5 is the dividend expected in year 5 (D4 * (1 + g)) and g is the long-term growth rate (4% or 0.04).
3. Calculate the total present value of dividends:
PV_total = PV_dividends + PV_terminal
4. Determine the value an investor should pay for a share of DuPont today:
Value = PV_total
By performing these calculations, we can find the value an investor should pay for a share of DuPont today, taking into account the expected dividend growth, appropriate rate of return, and long-term growth rate.
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Michelle applied for the position of room attendant at Megahotels. She has experience as a room attendant and has good references. Michelle was not hired for the position. When she asked why she was not hired, Michelle heard this from the housekeeping manager: "You indicated on your application that you had a bad back. We are afraid that you might hurt your back while on the job and then take disability leave. We just can't take the chance." Has Michelle been discriminated against under the ADA? Why or why not?
Yes, Michelle has potentially been discriminated against under the ADA (Americans with Disabilities Act).
The ADA prohibits discrimination against qualified individuals with disabilities in employment. To determine if Michelle has been discriminated against, we need to assess whether her back condition qualifies as a disability under the ADA and whether she is able to perform the essential functions of the job with or without reasonable accommodations. According to the ADA, a disability is defined as a physical or mental impairment that substantially limits one or more major life activities. If Michelle's back condition substantially limits her ability to perform tasks related to her job or other major life activities, then it could be considered a disability.
However, even if Michelle's back condition qualifies as a disability, the employer must still engage in an interactive process to determine if reasonable accommodations can be provided to enable her to perform the essential functions of the job. The employer's concern about potential injury and disability leave is not a valid reason to automatically disqualify Michelle without exploring possible accommodations. If Michelle can perform the essential functions of the room attendant position with or without reasonable accommodations, and her back condition does not pose a direct threat to her or others' safety, then the employer may be in violation of the ADA by refusing to hire her based on her disclosed medical condition.
It is important to note that this analysis is based on the limited information provided. A more thorough assessment would require a detailed understanding of Michelle's specific circumstances and the job requirements. Consulting an employment law expert would be advisable to determine the exact applicability of the ADA in this case.
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.2 Elaborate on the advantages marketers have for observing the
external environment
Marketers have several advantages for observing the external environment, including the following:
Market Opportunities: Marketers can identify new opportunities in the external environment and respond proactively. Marketers can adapt their products and services to changing consumer needs and preferences and tap into new markets.
Competitive Advantage: By analyzing competitors' strengths and weaknesses, marketers can gain a competitive advantage in the marketplace. Marketers can also use this knowledge to differentiate their products or services from competitors' offerings and improve their marketing mix.
Environmental Threats: Marketers can anticipate and respond to environmental threats such as economic changes, changes in consumer behavior, political changes, and technological advancements. By staying ahead of the curve, marketers can avoid being caught off guard by environmental threats and take appropriate action.
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Suppose you won a law suit settlement of $1,633 per month for the next 6 years. Suppose you don't want to wait each month to get your payment and you want the cash now. If the going interest rate is 9% APR then how much is your settlement worth today? (Round the answer two decimal point)
______
The present value of the law suit settlement, considering an interest rate of 9% APR, is approximately $103,906.97 (rounded to two decimal places).
To calculate the present value of the law suit settlement, we can use the present value of an annuity formula.
Here are the steps to calculate it:
1) Determine the monthly interest rate:
- Monthly Interest Rate = (1 + Annual Interest Rate)^(1/12) - 1
- Monthly Interest Rate = (1 + 9%)^(1/12) - 1
2) Calculate the present value of the annuity using the formula:
- Present Value = Payment Amount * [(1 - (1 + Monthly Interest Rate)^(-n)) / Monthly Interest Rate]
- Payment Amount = $1,633
- n = 6 years * 12 months/year
Performing the calculations:
Monthly Interest Rate = (1 + 0.09)^(1/12) - 1
Monthly Interest Rate ≈ 0.0072 or 0.72%
Present Value = $1,633 * [(1 - (1 + 0.0072)^(-6*12)) / 0.0072]
Present Value ≈ $103,906.97 (rounded to two decimal places)
Therefore, the present value of the law suit settlement is approximately $103,906.97.
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Sheffield Corp. manufactures and sells solar chargers for $90 each. Variable costs are $40 per unit, and fixed costs total $120000. How many solar chargers must Sheffield sell to earn a net income of $280000? O 10200 O7000. O 8000 10400
To calculate the number of solar chargers Sheffield Corp. must sell to earn a net income of $280,000, we can use the contribution margin ratio.
Contribution margin per unit = Selling price per unit - Variable cost per unit
= $90 - $40
= $50
Contribution margin ratio = Contribution margin per unit / Selling price per unit
= $50 / $90
= 5/9 or approximately 0.5556
Let x be the number of solar chargers that need to be sold.
Net income = (Contribution margin per unit * x) - Fixed costs
$280,000 = ($50 * x) - $120,000
$50x = $280,000 + $120,000
$50x = $400,000
x = $400,000 / $50
x = 8,000
Therefore, Sheffield Corp. must sell 8,000 solar chargers to earn a net income of $280,000. So the correct answer is option O 8000.
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In a study of North American IT professionals, Enterprise Management Associates identified several megatrends that were impacting network design and management. Which of the following was not one of those megatrends. A. Network analytics initiatives were under way in most firms. B. Outsourcing of network management functions was common. C. Companies were using too few tools to monitor and troubleshoot their networks. D. Use of the cloud was commonplace. E. Internet of Things (IoT) was pervasive in companies
The megatrend that was not identified by the Enterprise Management Associates in a study of North American IT professionals. Thus, option B is the correct answer.
Impacting network design and management is "Outsourcing of network management functions was common." Enterprise Management Associates conducted a study of North American IT professionals, identifying megatrends that were affecting network design and management.
The following were the megatrends that were recognized in the study: Network analytics initiatives were under way in most firms. Companies were using too few tools to monitor and troubleshoot their networks. Use of the cloud was commonplace. Internet of Things (IoT) was pervasive in companies. The option that was not identified by Enterprise Management Associates as a megatrend impacting network design and management is: "Outsourcing of network management functions was common." Thus, option B is the correct answer.
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Mission statement for Inspira Health Network: Our Mission- to provide a safe and compassionate experience that improves the health and well-being of our community by placing the safety of our patients and the support of our employees at the center of all we do Is it a strong mission statement? Why or why not? What are the strengths of the mission statement? What are the weaknesses? If you could change the statement, how would you change it?
The mission statement for Inspira Health Network, “Our Mission- to provide a safe and compassionate experience that improves the health and well-being of our community by placing the safety of our patients and the support of our employees at the center of all we do” is a strong mission statement. Let's take a look at its strengths, weaknesses, and how it could be modified.Strengths of the Mission Statement:
Clear communication: The mission statement communicates the healthcare organization's primary objective of providing a safe and compassionate experience. This objective has been communicated effectively and clearly.
Targeted audience: The mission statement is geared towards the entire community, as it mentions the well-being of everyone. This ensures that the organization will cater to the healthcare needs of all members of the community.
Prioritizes employee welfare: The mission statement highlights the organization's dedication to ensuring the safety and support of its employees. This ensures that the staff will feel valued and motivated to work to the best of their ability.
Weaknesses of the Mission Statement:
Lack of differentiation: The mission statement is generic and does not give the organization a unique identity. This makes it difficult for potential patients to differentiate Inspira Health Network from its competitors.
Lack of specifics: The statement does not provide specific details about the healthcare services provided by the organization or how they plan on delivering on their objectives. This could make it challenging to measure their progress or success.
A suggestion for how to change the mission statement: To modify the statement, one can include more specifics and emphasize the healthcare services the organization provides. For example, it could be changed to something like: "Our mission is to provide exceptional and accessible healthcare services to the community by offering state-of-the-art medical facilities, skilled healthcare professionals, and cutting-edge technology. We strive to put the safety and care of our patients and staff at the center of everything we do." This would help to differentiate Inspira Health Network from its competitors, provide clarity on the services offered, and highlight the organization's commitment to quality healthcare.
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Your division is considering two projects with the following net cash flows
0 1 2 3
Project A -$25 $5 $10 $17
Project B -$20 $10 $9 $6
a.What are the projects’ NPVs assuming the WACC is 5%? 10%? 15?
b.What are the projects’ IRR at each of these WACCs?
c.If the WACC was 5% and A and B were mutually exclusive, which project would you choose? What if the WACC was 10% and 15%? (Hint: The crossover rate is 7.81%)
a. Project A NPVs: $30.55, $19.46, $10.12; Project B NPVs: $15.81, $8.07, $1.04.
b. Project A IRRs: 11.87%, 8.94%, 6.90%; Project B IRRs: 21.47%, 13.38%, 8.89%.
a. NPVs assuming WACC is 5%, 10%, and 15%:
- Project A:
- WACC = 5%: NPV = $30.55
- WACC = 10%: NPV = $19.46
- WACC = 15%: NPV = $10.12
- Project B:
- WACC = 5%: NPV = $15.81
- WACC = 10%: NPV = $8.07
- WACC = 15%: NPV = $1.04
b. IRR at each WACC:
- Project A:
- WACC = 5%: IRR = 11.87%
- WACC = 10%: IRR = 8.94%
- WACC = 15%: IRR = 6.90%
- Project B:
- WACC = 5%: IRR = 21.47%
- WACC = 10%: IRR = 13.38%
- WACC = 15%: IRR = 8.89%
c. If the WACC was 5% and A and B were mutually exclusive:
- Project A's NPV: $30.55
- Project B's NPV: $15.81
Therefore, Project A would be chosen.
If the WACC was 10% and 15%:
- WACC = 10%:
- Project A's NPV: $19.46
- Project B's NPV: $8.07
- WACC = 15%:
- Project A's NPV: $10.12
- Project B's NPV: $1.04
In both cases, Project A would still be chosen as it has a higher NPV.
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Topics:
Performance Appraisal Systems
Techniques of Performance Appraisal
Feedback
Reward Systems in Organizations
Individual and Group Incentive Plans
You can choose a topic from this semester or something you come up with yourself, but your paper must be about Organizational Behavior and be original (ie not just material verbatim that you have pulled from your text/readings or off the internet). Of course, you can still insert charts, graphs, videos, graphics, and excerpts from outside sources (as long as you cite those sources!) I want to see your commentary and analysis, in your own words.
Requirements:
Cover Page
2-3 pages APA formatted content with at least three acceptable sources.
Reference page
Cover Page
2-3 pages APA formatted content with at least three acceptable sources.
Reference page
Organizational Behavior: The performance appraisal is an essential part of human resource management and is an important management tool. The performance appraisal process involves evaluating and assessing employee performance against pre-established objectives and performance standards.
The performance appraisal process helps identify areas where employees require development and areas where employees excel. The feedback process is an essential part of the performance appraisal process. Feedback is an essential component of the performance appraisal process. It provides employees with information about their strengths and weaknesses and helps them identify areas for improvement. Feedback can be provided formally or informally. Formal feedback is generally provided during the performance appraisal process. Informal feedback can be provided by a supervisor or a colleague. Reward systems in organizations are designed to motivate employees and enhance performance.
The design of a reward system should be based on the organization's goals, objectives, and culture. The reward system should include both financial and non-financial rewards. Financial rewards can include bonuses, incentives, and profit-sharing plans. Non-financial rewards can include recognition, praise, and promotions. Individual and group incentive plans are used to motivate employees to enhance performance. Individual incentive plans are designed to motivate individual employees. Group incentive plans are designed to motivate a group of employees. Individual incentive plans are generally based on individual performance.
Group incentive plans are generally based on the performance of a group of employees. Techniques of performance appraisal: There are various techniques of performance appraisal that can be used by organizations. The most common techniques are the essay method, the critical incident method, the graphic rating scale, and the behaviorally anchored rating scale. The essay method involves writing an essay about the employee's performance.
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Driven from HBL data
What might indicate if one company has a significantly higher debt-to-equity ratio than the other two on the below data?
Please describe the financing ratio of company A.
Financing Ratios
Company A Market Comparison
Year 2014 2015 2016 Debt to Equity = total liabilities / shareholder's equity Company A Company B Company C
Ratio 0.27 0.19 0.28 0.28 1.3 4.51
Debt-to-equity ratios for Company A are almost always lower than those for Company C, proving that Company C has a far greater debt-to-equity ratio. Company B is not considerably more expensive than Company A because of its identical 0.28 debt-to-equity ratio.
A financial ratio called the debt-to-equity ratio (D/E) shows the proportions of shareholders' equity and debt used to fund a company's assets. The ratio, which is closely tied to leveraging, is also known as risk, gearing, or leverage.
The ratio may also be calculated using market values for both, if the company's debt-to-equity ratio are both listed on a public exchange, or using a combination of book value for debt and market value for equity financially. The two components expensive are frequently taken from the firm's balance sheet or statement of financial position (so-called book value).
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A bond matures in one year and has a face value of $1,000 which it will pay with a probability of 95% in one year. With a probability of 5%, the bond will default, and the bondholders will only recieve $200. (There are no interim coupon payments.) The bond is currently selling for $860 (REMINDER - Answer any percentage questions as a decimal.) Part 1 What is the promised return on the bond? (i.e. the return if the bond pays it's $1,000 face value as promised.) 11.63% Save Saved Attempt 1/1 Part 2 What is the expected return on the bond? Attempt 1/1
The promised return on the bond is calculated as the face value ($1,000) divided by the current price ($860) minus 1, resulting in 16.28%. The expected return takes into account the probabilities of different outcomes resulting in an expected return of 9.30%.
Part 1: The promised return on the bond can be calculated as the percentage gain or loss based on the bond's face value and current price. In this case, the promised return is ($1,000 - $860) / $860 = 0.1628 or 16.28%.
Part 2: To calculate the expected return on the bond, we need to consider the probability of each outcome (95% chance of receiving $1,000 and 5% chance of receiving $200) and calculate the weighted average. The expected return is calculated as follows: (0.95 * $1,000 + 0.05 * $200 - $860) / $860 = 0.0930 or 9.30%.
Therefore, the promised return on the bond is 16.28%, while the expected return is 9.30%. The expected return takes into account the probability of default and the associated reduced payout, providing a more accurate measure of the bond's potential return.
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What is the difference between customer-centric demand and consumer-centric demand? Which is more predictable and better represents the true need for an item in the marketplace?
Customer-centric demand and consumer-centric demand have a lot of similarities; however, the two are slightly different from one another. Customer-centric demand is focused on the individual customer, while consumer-centric demand is centered on the market as a whole.
The following are some of the distinctions between customer-centric demand and consumer-centric demand: Customer-centric demand is concentrated on individual customers and their requirements. It is primarily concerned with addressing a customer's individual needs. Meanwhile, consumer-centric demand is focused on the market and all consumers. It is concerned with addressing the needs of a broader audience and considers a variety of aspects, including demographic and geographic factors.Customer-centric demand can be highly unpredictable since it is so personalized, and people's tastes, preferences, and needs vary greatly. Meanwhile, consumer-centric demand is far more predictable since it considers trends and patterns that apply to a larger group of people.As a result, it is simpler to anticipate consumer-centric demand and use it as a metric for determining an item's true need in the marketplace.In conclusion, consumer-centric demand is more predictable and better represents the true need for an item in the marketplace because it is focused on the market and a broader audience.
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The amount originally paid by investors to the company to
purchase a company’s shares is known as
dividends.
share capital.
shareholders’ equity.
retained earnings.
The right response is "share capital." Share capital is the sum that investors first gave the firm to acquire their shares. It symbolises the original outlay that stockholders made in return for stock in the firm.
The amount originally paid by investors to the company to purchase its shares is referred to as share capital. It represents the initial investment made by shareholders in exchange for ownership in the company.
Share capital is a component of shareholders' equity, which also includes retained earnings and other reserves. Dividends, on the other hand, are the portion of a company's profits distributed to shareholders as a return on their investment, but they are not the amount originally paid to purchase shares.
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The amount originally paid by investors to the company to purchase a company's shares is known as share capital (option b).
Share capital represents the initial investment made by shareholders in exchange for ownership rights and a share of the company's profits. It is a fundamental component of shareholders' equity, which represents the residual interest in the company's assets after deducting liabilities.
Share capital is typically raised through the issuance of shares during the company's initial public offering (IPO) or subsequent offerings. It provides the company with the necessary capital to fund its operations, invest in growth opportunities, and meet financial obligations.
Unlike dividends, which are distributions of profits to shareholders, share capital represents the original investment and does not fluctuate based on the company's profitability. It serves as a long-term source of funding for the company and contributes to its overall financial stability and equity position. The correct option is b.
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Decomposition analysis provides a good mechanism for evaluating strengths and weakness within a bank's performance.' Critically evaluate this statement focusing on the decomposition analysis and on profitability ratios involved in it.
Decomposition analysis is a financial analysis technique that breaks down a bank's performance into its component parts. This can be used to identify the strengths and weaknesses of a bank's performance, and to identify areas where improvement is needed.
There are a number of profitability ratios that can be used in decomposition analysis. These ratios measure the bank's ability to generate income, and to control its costs. Some of the most important profitability ratios include:
Return on assets (ROA): This ratio measures the bank's profitability as a percentage of its assets. A high ROA indicates that the bank is generating a lot of income from its assets.
Return on equity (ROE): This ratio measures the bank's profitability as a percentage of its equity. A high ROE indicates that the bank is generating a lot of income from its shareholders' investment.
Net interest margin (NIM): This ratio measures the difference between the interest income that a bank earns on its loans, and the interest expense that it pays on its deposits. A high NIM indicates that the bank is earning a lot of money from the spread between its lending and deposit rates.
Cost-to-income ratio (CIR): This ratio measures the bank's expenses as a percentage of its income. A low CIR indicates that the bank is managing its costs effectively.
Decomposition analysis can be a useful tool for evaluating the strengths and weaknesses of a bank's performance. By identifying the factors that are driving the bank's profitability, banks can make informed decisions about how to improve their performance
However, it is important to note that decomposition analysis is not without its limitations. For example, it can be difficult to isolate the impact of individual factors on the bank's performance. Additionally, decomposition analysis can be time-consuming and complex.
Overall, decomposition analysis is a valuable tool for evaluating a bank's performance. However, it is important to use it in conjunction with other analysis techniques, such as trend analysis and benchmarking, to get a complete picture of the bank's financial health.
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During 2020, Riverbed Furniture Limited purchased a railway carload of wicker chairs. The manufacturer of the chairs sold them to Riverbed for a lump sum of $58,500, because it was discontinuing manufacturing operations and wanted to dispose of its entire stock. Three types of chairs are included in the carload. The three types and the estimated selling price for each are as follows:
Estimated Selling
Туре
No. of Chairs Price per Chair
Lounge chairs Straight chairs
450 640
350
$94
54
Armchairs
84
Riverbed estimates that the costs to sell this inventory would be $3 per chair. During 2020, Riverbed sells 400 lounge chairs, 250 armchairs, and 140 straight chairs, all at the same prices as estimated. At December 31, 2020, the remaining chairs were put on sale: the lounge chairs at 25% off the regular price, the armchairs at 30% off, and the straight chairs at 40% off. All were expected to be sold at these prices.
What is the total cost of the chairs remaining in inventory at the end of 2020, using the relative sales value method? (Round percentages to 1 decimal place, e.g. 52.7% and all other
amounts to 2 decimal places, e.g. 52.75.)
Total costs $
LINK TO TEXT
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What is the net realizable value of the chairs remaining in inventory? (Round answer to 2 decimal places, e.g. 52.75.)
Net realizable value $
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What is the appropriate inventory value to be reported on the December 31, 2020 statement of financial position, assuming the lower of cost and NRV is applied on an individual item basis?
(Round answer to 2 decimal places, e.g. 52.75.)
Inventory value $
The total cost of chairs remaining in inventory at end of 2020 is $58,500.00. The net realizable value is the sum of the individual net realizable values are $1,366.75. The appropriate inventory value to be reported on the December 31, 2020 statement of financial position is $60,866.75.
To calculate the total cost of the chairs remaining in inventory at the end of 2020 using relative sales value method, we will determine the cost allocated to each type of chair based on their relative sales values.
First, let's calculate the relative sales values for each type of chair:
Lounge chairs: (400 / 400 + 250 + 140) = 0.4878
Armchairs: (250 / 400 + 250 + 140) = 0.3049
Straight chairs: (140 / 400 + 250 + 140) = 0.2073
Next, we allocate the total cost of $58,500 to each type of chair based on their relative sales values;
Cost allocated to lounge chairs: $58,500 × 0.4878 = $28,524.30
Cost allocated to armchairs: $58,500 × 0.3049 = $17,835.15
Cost allocated to straight chairs: $58,500 × 0.2073 = $12,140.55
The total cost of the chairs remaining in inventory at the end of 2020 using the relative sales value method is the sum of the allocated costs:
Total costs = $28,524.30 + $17,835.15 + $12,140.55
= $58,500.00
Next, to calculate the net realizable value (NRV) of the chairs remaining in inventory, we apply the discount percentages provided:
Net realizable value of lounge chairs = $945 × (1 - 0.25)
= $708.75
Net realizable value of armchairs = $640 × (1 - 0.30)
= $448.00
Net realizable value of straight chairs = $350 × (1 - 0.40)
= $210.00
The total net realizable value is the sum of the individual net realizable values;
Net realizable value = $708.75 + $448.00 + $210.00
= $1,366.75
Finally, to determine the appropriate inventory value to be reported on the December 31, 2020 statement of financial position, we compare the cost and net realizable value for each type of chair and choose the lower amount:
Inventory value = $28,524.30 + $17,835.15 + $12,140.55 + $1,366.75
= $60,866.75
Therefore, the appropriate inventory value to be reported on the December 31, 2020 statement of financial position is $60,866.75.
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List and describe briefly three internal elements that are integral to strategic management within the organization.
Three integral internal elements in strategic management are:
1) Organizational Culture: The shared values, beliefs, and behaviors that shape the work environment and guide decision-making. It influences how strategies are implemented and foster innovation and collaboration.
2) Leadership: Effective leaders provide a clear vision, set strategic goals, and guide the organization toward achieving them. They align resources, motivate employees, and make critical decisions to ensure successful strategy execution.
3) Human Resources: Managing the workforce to ensure the right talent, skills, and capabilities are in place to support strategic objectives. This includes recruitment, training, performance management, and employee engagement to create a high-performance culture aligned with the strategy
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In the Career path for Engineers, the goal is to "add value" in all levels. True False
True.In the career path for engineers, the overarching goal is to "add value" at all levels. This means that engineers aim to contribute and make a positive impact in their work.
At a fundamental level, engineers are problem solvers who use their technical expertise and skills to find solutions to complex challenges. They apply scientific principles, analytical thinking, and creativity to design, develop, and optimize various technologies and systems.
Adding value can take different forms, such as improving functionality, increasing efficiency, reducing costs, enhancing reliability, ensuring safety, and addressing environmental sustainability. Engineers strive to deliver high-quality outcomes that meet or exceed the needs and expectations of stakeholders, whether they are clients, customers, users, or the general public.
By continuously seeking opportunities to add value, engineers contribute to the growth, progress, and success of their organizations, industries, and society as a whole. It is a core principle that drives the work and career path of engineers.
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a. A bond with a coupon rate of 8% makes semi-annual coupon payments on January 15 and July 15 of each year. The Wall Street Journal reports the ask price for the bond on February 16 at 101% of the par value. The par value of the bond is 1000. What is the invoice price of the bond? The coupon period has 182 days. (3 marks) b. Pension funds pay lifetime annuities to recipients. If a firm will remain in business indefinitely, the pension obligation will resemble perpetuity. Suppose, therefore, that you are managing a pension fund with obligations to make perpetual payments of $2 million per year to beneficiaries. The yield to maturity on all bonds is 16%. If the duration of 5-year maturity bonds with coupon rates of 12% (paid annually) is 4 years and the duration of 20-year maturity bonds with coupon rates of 6% (paid annually) is 11 years, how much of each of these coupon bonds (in market value) will you want to hold to both fully fund and immunize your obligation? (5 marks)
The invoice price of the bond is approximately $1203.63. You would want to hold approximately $11,071,428.57 worth of 5-year maturity bonds with a coupon rate of 12% and approximately $1,428,571.43 worth of 20-year maturity bonds with a coupon rate of 6% to fully fund and immunize the pension obligation.
To calculate the invoice price of the bond, we need to determine the present value of the bond's future cash flows, including the coupon payments and the final payment of the par value.
Given information:
Coupon rate = 8%
Par value = $1000
Coupon payment frequency = Semi-annual (every 6 months)
Coupon period = 182 days
Ask price = 101% of par value = 1.01 * $1000 = $1010
Step 1: Calculate the semi-annual coupon payment.
Coupon rate = 8%
Par value = $1000
Coupon payment = Coupon rate * Par value / 2
Coupon payment = 8% * $1000 / 2 = $40
Step 2: Calculate the number of coupon payments remaining until maturity.
Since the bond makes semi-annual coupon payments, and the coupon period is 182 days, the bond will have a total of 2 * (365 / 182) = 4 coupon payments remaining until maturity.
Step 3: Calculate the present value of the future cash flows.
Discount rate = Yield / 2 = 16% / 2 = 8%
Present value of each coupon payment = [tex]Coupon payment / (1 + Discount rate)^n[/tex]
where n is the number of coupon payments remaining until maturity.
Present value of each coupon payment [tex]= $40 / (1 + 0.08)^1 + $40 / (1 + 0.08)^2 + $40 / (1 + 0.08)^3 + $40 / (1 + 0.08)^4[/tex]
Step 4: Calculate the present value of the par value payment at maturity.
Present value of par value payment = [tex]Par value / (1 + Discount rate)^n[/tex]
where n is the number of coupon payments remaining until maturity.
Present value of par value payment [tex]= $1000 / (1 + 0.08)^4[/tex]
Step 5: Calculate the invoice price of the bond.
Invoice price = Present value of future cash flows + Present value of par value payment
Invoice price = (Present value of each coupon payment * 4) + Present value of par value payment
Now, let's calculate the invoice price:
Present value of each coupon payment
[tex]= $40 / (1 + 0.08)^1 + $40 / (1 + 0.08)^2 + $40 / (1 + 0.08)^3 + $40 / (1 + 0.08)^4[/tex]
Present value of each coupon payment = $36.89 + $34.15 + $31.69 + $29.42
Present value of each coupon payment ≈ $132.15
Present value of par value payment = [tex]$1000 / (1 + 0.08)^4[/tex]
Present value of par value payment ≈ $735.03
Invoice price = (Present value of each coupon payment * 4) + Present value of par value payment
Invoice price = ($132.15 * 4) + $735.03
Invoice price ≈ $1203.63
To fully fund and immunize the pension obligation, we need to determine the amounts of 5-year and 20-year maturity bonds required to match the cash flows of the $2 million annual payment.
Given information:
Pension obligation = $2 million per year
Yield to maturity on all bonds = 16%
Duration of 5-year maturity bonds with a coupon rate of 12% = 4 years
Duration of 20-year maturity bonds with a coupon rate of 6% = 11 years
Step 1: Calculate the present value of the perpetual payment.
Discount rate = Yield to maturity = 16%
Present value of the perpetual payment = Annual payment / Discount rate
Present value of the perpetual payment = $2,000,000 / 0.16
Present value of the perpetual payment = $12,500,000
Step 2: Determine the allocation between 5-year and 20-year maturity bonds.
Let's assume the market values of the 5-year and 20-year bonds are X and Y, respectively.
The durations of the 5-year and 20-year bonds are given as 4 years and 11 years, respectively. To immunize the pension obligation, we need to match the durations of the bonds with the duration of the obligation.
Weighted duration of the bond portfolio = (Duration of 5-year bond * Market value of 5-year bond + Duration of 20-year bond * Market value of 20-year bond) / (Market value of 5-year bond + Market value of 20-year bond)
To immunize the pension obligation, the weighted duration of the bond portfolio should be equal to the duration of the obligation.
4X + 11Y = 12,500,000
Step 3: Solve the equation to find the values of X and Y.
We also know that the market value of the bond portfolio should be equal to the present value of the perpetual payment.
X + Y = $12,500,000
Now, we have a system of two equations:
4X + 11Y = 12,500,000 (Equation 1)
X + Y = 12,500,000 (Equation 2)
Solving these equations simultaneously will give us the values of X and Y.
Multiplying Equation 2 by 4 and subtracting it from Equation 1:
4X + 11Y - (4X + 4Y) = 12,500,000 - (50,000,000)
7Y = 10,000,000
Y = 10,000,000 / 7 ≈ $1,428,571.43
Substituting the value of Y back into Equation 2:
X + $1,428,571.43 = $12,500,000
X = $12,500,000 - $1,428,571.43 ≈ $11,071,428.57
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CASE 9-27 Master Budget with Supporting Schedules [LO2] Knockoffs Unlimited, a nationwide distributor of low-cost imitation designer necklaces, has an exclusive franchise on the distribution of the necklaces, and sales have grown so rapidly over the past few years that it has become necessary to add new members to the management team. To date, the company's budgeting practices have been inferior, and at times the company has experienced a cash shortage. You have been given responsibility for all planning and budgeting. Your first assignment is to prepare a mas- ter budget for the next three months, starting April 1. You are eager to make a favourable impression on the president and have assembled the information below. The necklaces are sold to retailers for $10 each. Recent and forecast sales in units are as follows: January (actual) February (actual) March (actual) April.. May Variable: The large buildup in sales before and during May is due to Mother's Day. Ending inventories should be equal to 40% of the next month's sales in units. Sales commissions.. 20,000 26,000 40,000 65,000 100,000 The necklaces cost the company $4 each. Purchases are paid for as follows: 50% in the month of purchase and the remaining 50% in the following month. All sales are on credit, with no discount, and payable within 15 days. The company has found, however, that only 20% of a month's sales are collected by month-end. An additional 70% is collected in the following month, and the remaining 10% is col- lected in the second month following sale. Bad debts have been negligible. The company's monthly selling and administrative expenses are given below: Fixed: Advertising. Rent Wages and salaries.. Utilities. Insurance Depreciation.. June.. July August. September Assets Cash.. Accounts receivable ($26,000 February sales; $320,000 March sales). Inventory Prepaid insurance.. Fixed assets, net of depreciation Total assets.. 50,000 30,000 28,000 25,000 All selling and administrative expenses are paid during the month, in cash, with the exception of depre- ciation and insurance. Insurance is paid on an annual basis, in November of each year. The company plans to purchase $16,000 in new equipment during May and $40,000 in new equipment during June; both purchases will be paid in cash. The company declares dividends of $15,000 each quarter, payable in the first month of the following quarter. The company's balance sheet at March 31 is given below: Liabilities and Shareholders' Equity Accounts payable. Dividends payable Common shares Retained earnings. Total liabilities and shareholders' equity. 4% of sales $200,000 18,000 106,000 7,000 3,000 14,000 $ 74,000 346,000 104,000 21,000 950,000 $1,495,000 $ 100,000 15,000 800,000 580,000 $1,495,000 The company wants a minimum ending cash balance each month of $50,000. All borrowing is done at the beginning of the month, with any repayments made at the end of the month. The interest rate on these loans is 1% per month and must be paid at the end of each month based on the outstanding loan balance for that month. Required: Prepare a master budget for the three-month period ending June 30. Include the following detailed budgets: 1. 2. 3. 4. A sales budget by month and in total. A schedule of expected cash collections from sales, by month and in total. C. A merchandise purchases budget in units and in dollars. Show the budget by month and in total. d. A schedule of expected cash disbursements for merchandise purchases, by month and in total. A cash budget. Show the budget by month and in total. A budgeted income statement for the three-month period ending June 30. Use the variable costing approach. A budgeted balance sheet as of June 30. a. b. ACCT2014 MANAGERIAL ACCOUNTING II Assignment I Case 9-27 In addition to the questions in the case, please include in your case assignment, the following: 1. A brief introduction stating the nature of the business and some details about the way the business operates, the objective/s of the company as expressed in the budget. Include in the introduction, the basic assumptions you have made in your projections. 2. An action plan - a list of strategies to be considered in order to carry out the budget 3. A brief conclusion – indicate how your projections will make a difference in the upcoming period.
Knockoffs Unlimited is a nationwide distributor of low-cost imitation designer necklaces. The company holds an exclusive franchise for the distribution of these necklaces. Sales have been growing rapidly, necessitating the addition of new members to the management team. The company has faced budgeting challenges in the past, leading to cash shortages. As the responsible individual for planning and budgeting, the objective is to prepare a master budget for the next three months, starting from April 1.
Assumptions:
Sales will continue to grow steadily over the next three months.
All sales are on credit, with no discounts, and payable within 15 days.
Collection patterns for accounts receivable are as follows: 20% collected in the same month, 70% collected in the following month, and 10% collected in the second month following sale.
Bad debts are negligible.
Ending inventories should be equal to 40% of the next month's sales in units.
Purchases are paid for 50% in the month of purchase and the remaining 50% in the following month.
All selling and administrative expenses are paid in cash during the month, except for depreciation and insurance.
Insurance is paid annually in November.
New equipment purchases will be made in May and June and paid in cash.
Dividends of $15,000 will be paid each quarter.
Action Plan:
Improve budgeting practices to avoid cash shortages.
Monitor sales growth and adjust production and inventory levels accordingly.
Implement a systematic approach to collecting accounts receivable.
Review and optimize selling and administrative expenses.
Plan and manage equipment purchases to support growth.
Ensure the minimum ending cash balance of $50,000 is maintained.
Evaluate borrowing needs and interest payments.
The master budget and supporting schedules provide a comprehensive financial plan for the next three months. By accurately forecasting sales, collections, purchases, and cash flows, the company can make informed decisions to prevent cash shortages and optimize operations. The budgeted income statement and balance sheet provide insights into the financial performance and position of the company. With proper implementation and monitoring of the budget, Knockoffs Unlimited aims to achieve its objectives of sustained sales growth, efficient cash management, and improved profitability.
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Intro You have estimated the following free cash flows for a project Year 0 1 2 3 Free Cash Flow -$1,800 $780 $840 $600 The weighted average cost of capital is estimated to be 10%. Part 1 What is the Net Present Value of the project? 0+ decimals Save
The Net Present Value (NPV) of a project is calculated by discounting the project's future cash flows to their present value and subtracting the initial investment. In this case, we have estimated free cash flows for a project over a three-year period and a weighted average cost of capital (WACC) of 10%.
To calculate the NPV, we need to discount each cash flow to its present value using the WACC. The formula to calculate the present value is: Present Value = Cash Flow / (1 + WACC)^n, where n represents the time period.
Using this formula, we can calculate the present value of each cash flow:
PV0 = -$1,800 / (1 + 0.10)^0 = -$1,800 (no discounting for Year 0)
PV1 = $780 / (1 + 0.10)^1 ≈ $709.09
PV2 = $840 / (1 + 0.10)^2 ≈ $681.82
PV3 = $600 / (1 + 0.10)^3 ≈ $496.69
Next, we sum up the present values of the cash flows:
NPV = PV0 + PV1 + PV2 + PV3
= -$1,800 + $709.09 + $681.82 + $496.69
≈ $87.60
Therefore, the Net Present Value of the project, rounded to 0 decimal places, is approximately $87.60. Since the NPV is positive, it suggests that the project's expected cash flows exceed the required return, indicating that the project may be financially viable and could generate positive value for the company.
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Odessa Company has current assets of $11.48 milion and net income of $116 millon. Curtent liablities total $4.1 milion, interest expense is $36 million, and income tax expense is $4.6 milion. What is the times interest earned ratio for this company? (Round your final answer to 2 decimal places.) Mutiple Choice 0.40 5.50. 0.36. 2.80
Odessa Company has a times interest earned (TIE) ratio of 4.35. This means that the company can comfortably meet its interest payments using its earnings before interest and taxes (EBIT). For every $1 of interest expense, the company has an EBIT of $4.35.
Times interest earned ratio is a measure that gauges a firm's ability to meet its debt obligations. It calculates the extent to which a firm can satisfy its interest payments using its earnings before interest and taxes (EBIT). Therefore, the formula is:
TIE = EBIT / Interest Expense
Now, let's calculate the TIE ratio using the given information:
Current assets = $11.48 million
Net income = $116 million
Current liabilities = $4.1 million
Interest expense = $36 million
Income tax expense = $4.6 million
First, we need to calculate EBIT.
EBIT = Net income + Interest expense + Income tax expense
EBIT = $116 million + $36 million + $4.6 million
EBIT = $156.6 million
Now, calculate the TIE ratio using the above formula:
TIE = EBIT / Interest Expense
TIE = $156.6 million / $36 million
TIE = 4.35So, the TIE ratio of the Odessa Company is 4.35.
Odessa Company has a times interest earned (TIE) ratio of 4.35. This means that the company can comfortably meet its interest payments using its earnings before interest and taxes (EBIT). For every $1 of interest expense, the company has an EBIT of $4.35.
Odessa Company generates enough operating income to pay off its interest obligations, which is considered a good sign by investors. However, it is essential to note that the TIE ratio is not the only metric to consider when evaluating a firm's solvency and profitability. The company's assets, liabilities, cash flows, and other financial ratios should also be considered.
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Flying Cow Aviation Inc.'s free cash flows (FCFs) are expected to grow at a constant long-term growth rate (gl) of 16% per year into the future. Next year, the company expects to generate a free cash flow of $7,000,000. The market value of Flying Cow's outstanding debt and preferred stock is $45,000,000 and $25,000,000, respectively. Flying Cow has 1,500,000 shares of common stock outstanding, and its weighted average cost of capital (WACC) is 23%. Given the preceding information, complete the adjacent table (rounding each value to the nearest whole dollar), and assuming that the firm has not had any nonoperating assets in its balance sheet. Term Value Value of Operations $ Value of Firm's Common Equity Value of Common Stock (per share) Oops, a more careful review of Flying Cow's balance sheet actually reports a $2,480,000 portfolio of marketable securities. How does this new information affect the intrinsic value of Flying Cow's common equity (expressed on a per-share basis) assuming no other changes to the Flying Cow financial situation? Review the statements below and select those that accurately describe Flying Cow's financial situation. Check all that apply. The revised intrinsic value of Flying Cow's common stock is $21.65 per share. The intrinsic value of Flying Cow's common stock decreases with the inclusion of the company's marketable securities portfolio into the analysis. The greater the market value of the marketable securities portfolio, the smaller the company's total intrinsic (entity) value. The intrinsic value of Flying Cow's common stock increa ses with the inclusion of the company's marketable securities portfolio into the analysis.
The revised intrinsic value of Flying Cow's common stock is $21.65 per share.
The inclusion of Flying Cow Aviation Inc.'s marketable securities portfolio of $2,480,000 into the analysis affects the intrinsic value of the company's common equity. When calculating the intrinsic value, the marketable securities portfolio is considered as part of the company's assets. As a result, the value of the firm's common equity increases, leading to an increase in the intrinsic value of Flying Cow's common stock on a per-share basis.
Flying Cow's intrinsic value is determined by discounting its future free cash flows at the weighted average cost of capital (WACC). The higher the intrinsic value of the firm's common equity, the higher the intrinsic value of the common stock per share. The marketable securities portfolio, being an additional asset, contributes to the overall value of the company and enhances the intrinsic value of the common stock.
In this case, the specific impact on the intrinsic value of the common stock cannot be determined without additional information, such as the rate of return on the marketable securities portfolio. However, given that the marketable securities portfolio is a positive asset, it would generally have a positive effect on the company's intrinsic value.
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Objectives
Assess how a company successfully manages and encourages corporate ethical standards
Assess the multi-layers of corporate social responsibility that are exemplified by the company
Identify any contradictions or areas for improvement
Instructions
Students are to choose and write a short paper on a company that is an exemplar of ethics and social responsibility.
Review the company posted by your Professor at the end of Unit 1 in the "Important Announcements" section of the course.
Prepare a report that includes:
The background to the company and its situation and relevance to the industry (or industries) it is associated with
A discussion of how the company encourages ethical and responsible business standards.
The report should be a maximum of five pages double spaced (excluding title page and reference page), and should follow APA referencing style.
A minimum of four academic references should be included.
TATA AND SONS - COMPANY NAME
Tata and Sons, a multinational conglomerate based in India, is known for its exemplary ethics and commitment to corporate social responsibility.
This paper assesses how Tata and Sons successfully manage and encourages corporate ethical standards, as well as the multi-layers of corporate social responsibility exemplified by the company. It also aims to identify any contradictions or areas for improvement within Tata and Sons' ethical and social responsibility practices.
Tata and Sons has a rich background and is associated with various industries such as automotive, steel, information technology, telecommunications, and hospitality, among others. The company's commitment to ethical business practices is deeply rooted in its founding principles and the Tata Code of Conduct. Tata and Sons prioritize integrity, transparency, and accountability throughout their operations and interactions with stakeholders. They have established robust governance mechanisms, ethical guidelines, and compliance programs to ensure adherence to these standards.
In terms of corporate social responsibility, Tata and Sons have taken a multi-layered approach. The company actively promotes sustainable development, environmental stewardship, and social welfare. They have implemented initiatives to address social issues such as education, healthcare, and poverty alleviation through their philanthropic arm, the Tata Trusts. Additionally, Tata and Sons prioritize employee well-being, diversity, and inclusion, and actively engage in community development projects. They also promote responsible supply chain practices and engage in fair trade initiatives.
While Tata and Sons have demonstrated a strong commitment to ethical standards and corporate social responsibility, there may be areas for improvement. As the company operates in diverse industries, ensuring consistent implementation and monitoring of ethical practices across all subsidiaries and business units could be a challenge.
Additionally, stakeholders and experts have raised concerns about the impact of Tata and Sons' operations on certain communities and the environment. It is crucial for the company to address these contradictions and work towards further enhancing its sustainability practices and stakeholder engagement.
In conclusion, Tata and Sons serve as an exemplar of ethics and social responsibility. The company's commitment to ethical business practices, sustainable development, and social welfare is evident through its governance mechanisms, philanthropic initiatives, and employee-centric policies.
However, it is important for Tata and Sons to address any contradictions or areas for improvement to further strengthen their ethical and social responsibility practices. By doing so, the company can continue to serve as a role model for others in the industry and make a positive impact on society and the environment.
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Pelak Company had sales of $27,750,000, expenses of $20,000,000, and average operating assets of $12,750,000.
1. Compute the operating income.
2. Compute the margin (as a percent) and turnover ratio.
3. Compute the ROI as a percent.
Pelak Company's margin, turnover ratio, and ROI is to be computed. Given that the company's sales is $27,750,000, expenses is $20,000,000 and average operating assets is $12,750,000.
Solution-The formula for margin is as follows: Margin = Net Income / Sales Revenue - Expenses = Net Income Margin = (27,750,000 - 20,000,000) / 27,750,000Margin = 7,750,000 / 27,750,000Margin = 0.28Margin is expressed in percentage form by multiplying the result by 100.Margin = 0.28 * 100Margin = 28 %
The formula for Turnover Ratio is as follows: Turnover Ratio = Sales / Average Operating Assets Turnover Ratio = 27,750,000 / 12,750,000Turnover Ratio = 2.1765The ROI (Return on Investment) as a percent is given by multiplying the margin with turnover ratio. Roi = Margin * Turnover RatioRoi = 28% * 2.1765Roi = 60.824 %Therefore, the Margin is 28%, Turnover Ratio is 2.1765, and the ROI is 60.824%.
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