Additionally, the information I have is based on the training data available to me, which cuts off in September 2021.
Therefore, I recommend referring to the latest reports, official sources, or Air Canada's website for the most up-to-date and accurate information regarding the number of employees in the company. However, please note that this information may have changed since then. For the most accurate and up-to-date information, I recommend checking Air Canada's official website or contacting their investor relations or human resources department.
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Think about a good/product that is available in your local grocery store. Describe one example each of an event that would 1) increase demand for that good; 2) decrease demand; 3) increase supply; and 4) decrease supply. Please be creative and think about factors not just for the grocery store and consumer, but also for producers and distributors, other goods, and non-consumers.
1) A widely reported health research demonstrating the product's beneficial impact on general wellbeing could result in an increase in demand for a specific food in a neighbourhood grocery store. As individuals become increasingly concerned about their health and look for products that offer specific benefits, this can lead to a spike in consumer interest.
2) If a rival releases a brand-new, cutting-edge product with improved features or a lower price point, demand for the same good may decline. This can deter customers from buying the original product, decreasing demand. The discovery of a production method or technological advancement that is more effective is a circumstance that might boost the supply of the good. This might allow producers to raise their As a result, there is a greater supply of the goods in the grocery shop. 4) In contrast, a decline in supply could be brought on by a natural disaster or unfavourable weather conditions that have an impact on the production or delivery of the good. For instance, a drought in the area where the product's essential ingredients are cultivated may cause a deficiency and lower supply in the supermarket.
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Sunset Ltd. purchased new machinery worth $820,000. The machine
will allow the company to increase production by 35,000 units per
year at $39 per unit. Variable costs per unit are $15 and the fixed
co
(a) The Pro-Forma Statement of Comprehensive Income calculates the revenue = $1,365,000, variable costs = $525,000, fixed costs = $200,000, depreciation expense = $152,200/year , and net income after taxes for the next year = $292,680.
(b) The Present Value of the CCA Tax Shield is equal to $83,390.
(a) The Pro-Forma Statement of Comprehensive Income is prepared by considering the revenue from the increased production, deducting the variable costs, fixed costs, and depreciation expense. The net income before taxes is then adjusted for taxes to determine the net income after taxes.
Revenue: 35,000 units/year * $39/unit = $1,365,000
Variable costs: 35,000 units/year * $15/unit = $525,000
Fixed costs: $200,000
Depreciation expense: ($820,000 - $59,000) / 5 years = $152,200/year (straight-line method)
Net income before taxes: Revenue - Variable costs - Fixed costs - Depreciation expense = $487,800
Net income after taxes: Net income before taxes * (1 - Tax rate) = $292,680 (assuming a tax rate of 40%)
(b) The CCA Tax Shield is calculated by multiplying the CCA expense, which is determined using the CCA rate, by the tax rate. The Present Value of the CCA Tax Shield is obtained by discounting the CCA Tax Shield using the required rate of return.
CCA expense: $820,000 * 30% = $246,000 (assuming a CCA rate of 30%)
Tax shield: CCA expense * Tax rate = $246,000 * 40% = $98,400
Present Value of the CCA Tax Shield: $98,400 / (1 + Required rate of return) = $98,400 / (1 + 18%) ≈ $83,390
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Sunset Ltd. purchased new machinery worth $820,000. The machine will allow the company to increase production by 35,000 units per year at $39 per unit. Variable costs per unit are $15 and the fixed costs per year are $200,000. The machinery is valued to be worth $59,000 after 5 years. Depreciation using the straight-line method. The required rate of return on the project using this machinery is 18% and a marginal tax rate of 40% is applicable to the company. (a) Develop the Pro-Forma Statement of Comprehensive Income for the next year. (8 points) (b) If the CCA rate applicable on the machinery is 30%, compute the present value of the CCA tax shield for the machinery.
Jim purchases $10,000 par value bonds with a 10 percent coupon rate and a 7 percent yield to maturity. Jim will hold the bonds until maturity. Thus, he will earn a return of ___ percent.
Jim purchases $10,000 par value bonds with a 10 percent coupon rate and a 7 percent yield to maturity. Jim will hold the bonds until maturity. Thus, he will earn a return of 10 percent.
How do we calculate the rate of return on a bond investment?
The rate of return on a bond investment is determined by a combination of its coupon rate, yield to maturity (YTM), and the time remaining until maturity.
A bond's coupon rate is the interest rate paid to bondholders on the bond's face value.
The YTM of a bond is the interest rate that investors can expect to receive if they hold the bond until maturity. Bondholders will receive the full face value of the bond when it matures.
The formula to calculate the rate of return on a bond investment is:
Rate of return = (Annual interest income + Capital gain or loss) / Initial investment x 100, Where: Annual interest income = coupon rate x face value, Capital gain or loss = (face value - purchase price), Initial investment = purchase price of the bond
In this problem, Jim purchased $10,000 par value bonds with a 10 percent coupon rate and a 7 percent yield to maturity. He will hold the bonds until maturity. Thus, he will earn a return of 10 percent since the coupon rate is equal to the rate of return when the bond is held to maturity
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Exercise 15-6 (Algo) Finance lease; lessee [LO15-2]
Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2021. Edison purchased the equipment from International Machines at a cost of $127,024. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
Related Information:
Lease term 2 years (8 quarterly periods)
Quarterly rental payments $17,000 at the beginning of each period
Economic life of asset 2 years
Fair value of asset $127,024
Implicit interest rate 8%
(Also lessee’s incremental borrowing rate)
Required:
Prepare a lease amortization schedule and appropriate entries for Manufacturers Southern from the beginning of the lease through January 1, 2022. Amortization of the right-of-use asset is recorded at the end of each fiscal year (December 31) on a straight-line basis.
The right-of-use asset is amortized on a straight-line basis at the conclusion of each fiscal year (December 31).
Date Payment Interest Charges Liability Reduction for Lease Asset Right-of-Use
1/1/21 $17,000.00 $0.00 $17,000.00 $127,024.00
3/31/21 $17,000.00 $1,013.12 $15,986.88 $111,768.00
6/30/21 $17,000.00 $1,013.12 $15,986.88 $95,512.00
9/30/21 $17,000.00 $1,013.12 $15,986.88 $79,256.00
12/31/21 $17,000.00 $1,013.12 $15,986.88 $63,000.00
1/1/22 $0.00 $0.00 $63,000.00 $0.00
The lease debt at the beginning of the period is multiplied by the implicit interest rate of 8% to determine the interest expenditure. The lease liability reduction is computed by deducting the interest cost from the payment total.
Financial accounting classifies as an asset any resource that a business or other economic organisation owns or manages. Physical or intangible resources of any kind that may be used to produce positive economic value are considered. Assets are items that have a monetary value and may be converted into other things, while money itself is also seen as an asset.
An organization's balance sheet displays the asset's dollar value. It safeguards a person's or a business's cash and other valuables. Assets may be classified into two basic categories: physical and intangible assets. Tangible assets can be divided into current assets and fixed assets, among other classifications.
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Luther Corporation
Consolidated Income Statement
Year ended December 31 (in $millions)
2006
2005
Total sales
610.1
565.5565.5
Cost of sales
(500.2)
(360.6360.6)
Gross profit
109.9
204.9204.9
Selling, general, and
administrative expenses
(40.5)
(39.539.5)
Research and development
(24.6)
(20.420.4)
Depreciation and amortization
(3.6)
(3.13.1)
Operating income
41.2
141.9141.9
Other income
minus−minus−
minus−minus−
Earnings before interest and taxes (EBIT)
41.2
141.9141.9
Interest income (expense)
(25.1)
(15.615.6)
Pretax income
16.1
126.3126.3
Taxes
(5.5)
(44.20544.205)
Net income
10.6
82.09582.095
Price per share
$16
$15
Sharing outstanding (millions)
10.2
8.0
Stock options outstanding (millions)
0.3
0.2
Stockholders' Equity
126.6
63.6
Total Liabilities and Stockholders' Equity
533.1
386.7
Refer to the income statement above. Luther's return on equity (ROE) for the year ending December 31, 2005 is closestto:I had to break the problem up...
The return on equity (ROE) for Luther Corporation for the year ending December 31, 2005, is approximately 86.1%.
This means that for every dollar of average stockholders' equity, Luther generated a return of 86.1 cents. ROE is a measure of profitability and efficiency, indicating how effectively a company is utilizing shareholder investments to generate profits. In this case, Luther Corporation's ROE suggests that the company had a strong performance in 2005, generating significant earnings relative to the equity invested by shareholders. It indicates that Luther's management was successful in generating profits and creating value for its shareholders during that period.
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Q1. A) With the aid of appropriate diagrams discuss the effects of changes in supply on a demand curve and explain the major factors that bring about such a change in the market. Using this diagram justify for the reason why we purchase goods at lower prices during the harvesting period of farm products. B) As the financial controller of a large manufacturing firm, briefly explain the investment decision process to your new Managing Director
A systematic investment decision process, the financial controller helps the company make informed investment choices that align with its financial goals and maximize shareholder value.
A) When there is a change in supply in a market, it can have significant effects on the demand curve. Let's consider the market for farm products as an example.
1. Effects of Changes in Supply on the Demand Curve:
- Increase in Supply: If the supply of farm products increases, represented by a rightward shift of the supply curve, it results in a new equilibrium point. As a result, the market price decreases, and the quantity demanded increases. This is illustrated by a movement along the demand curve to a higher quantity demanded at a lower price.
- Decrease in Supply: Conversely, if the supply of farm products decreases, represented by a leftward shift of the supply curve, it leads to a new equilibrium point with a higher market price and a lower quantity demanded. This is shown by a movement along the demand curve to a lower quantity demanded at a higher price.
2. Factors Affecting Supply Changes in the Market:
- Input Costs: Changes in the costs of inputs, such as labor, fertilizers, or machinery, can impact the supply of farm products. For example, if input costs increase, it may reduce the profitability of farming, leading to a decrease in supply.
- Technological Advancements: Improvements in agricultural technology, such as new farming techniques or genetically modified crops, can increase productivity and thus impact the supply of farm products.
- Weather Conditions: Weather plays a crucial role in agricultural production. Natural disasters, droughts, or other adverse weather events can negatively affect crop yields, leading to a decrease in supply.
During the harvesting period of farm products, we often observe lower prices for goods due to an increase in supply. This can be explained by the temporary surge in production during this period. Farmers typically harvest and bring their products to the market simultaneously, resulting in a higher quantity supplied. As a result, the market supply curve shifts to the right, leading to lower prices. Consumers can take advantage of this situation by purchasing goods at lower prices during the harvesting period.
B) As the financial controller of a large manufacturing firm, the investment decision process involves several key steps:
1. Identify Investment Opportunities: The first step is to identify potential investment opportunities that align with the company's strategic objectives. This could involve expanding existing operations, acquiring new assets, or investing in research and development.
2. Evaluate Investment Proposals: Once investment opportunities are identified, the financial controller, along with the management team, evaluates the investment proposals. This involves analyzing the expected cash flows, assessing the risks involved, and considering the potential returns on investment.
3. Capital Budgeting: The financial controller helps in the capital budgeting process, which involves estimating the initial investment required, considering the expected cash inflows and outflows over the project's life, and calculating the net present value (NPV), internal rate of return (IRR), and other financial metrics to assess the project's viability.
4. Risk Assessment: Evaluating the risks associated with the investment is crucial. The financial controller assesses factors such as market conditions, competition, regulatory changes, and financial risks to ensure the investment aligns with the company's risk tolerance and overall financial stability.
5. Financing Decisions: Once an investment proposal is deemed viable, the financial controller determines the optimal financing mix. This may involve considering internal funds, external debt, equity financing, or a combination thereof.
6. Monitoring and Performance Evaluation: After the investment is made, the financial controller monitors the performance of the investment, compares actual results against projected figures, and conducts regular financial analysis to ensure the investment is generating the expected returns.
By following a systematic investment decision process, the financial controller helps the company make informed investment choices that align with its financial goals and maximize shareholder value.
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Essay Question: What kind of capacity problems do super markets periodically experience, list five problems and explain in detail? Also, what are some alternatives to deal with those problems?
Supermarkets periodically face a capacity problem. A capacity problem occurs when demand exceeds supply or when the available capacity is insufficient to meet the demand. This essay will explain five kinds of capacity problems that supermarkets usually experience and suggest alternatives to address them.
1. Inadequate capacity for parking and unloading of goods: During peak periods, supermarkets frequently experience capacity problems in their parking lots and unloading areas. As a result, delivery vehicles might queue up outside the store, blocking traffic and making it difficult for other vehicles to park. Alternative: Supermarkets can increase their unloading and parking capacity by expanding their existing facilities or developing additional ones. They could also coordinate with local authorities to offer customers parking spaces in nearby lots or car parks.
2. Queuing and crowding: Queuing and crowding are the most typical capacity issues in supermarkets. This problem occurs when the store's maximum occupancy is reached, and there isn't enough space to handle the flow of customers. This may result in long queues at checkout counters, blocking of aisles, and increased waiting times. Alternative: Supermarkets may decrease queue times and congestion by implementing self-checkout systems or enabling online purchases and home delivery.
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a) Based on the given information, the best location for the Warriors to relocate to is Jackson, with a total weighted score of 61.00 (Enter your response rounded to two decimal places.) b) Jackson just raised its incentive package, and the new score is 85. Why doesn't this impact your decision in part (a)? A. Because Jackson is already the better site. B. Even if the score is 85, Jackson's total weighted score drops to 57, just ahead of Mobile. C. Even if the score is 85, Jackson will stay as the second choice. Ken Gilbert owns the Knoxville Warriors, a minor league baseball team in Tennessee. He wishes to move the Warriors south, to either Mobile (Alabama) or Jackson (Mississippi). The table below gives the factors that Ken thinks are important, their weights, and the scores for Mobile and Jackson. Factor Incentive Player satisfaction Sports interest Size of city Weight 0.45 0.30 0.20 0.05 Mobile 1248 75 20 45 65 Jackson 55 55 90 35
a) Based on the given information, the best location for the Warriors to relocate to is Jackson, with a total weighted score of 61.00. b) The increase in Jackson's incentive package to a score of 85 does not impact the decision in part (a) because even with the higher score, Jackson's total weighted score drops to 57, just ahead of Mobile.
The correct answer is C.
In the given scenario, Ken Gilbert, the owner of the Knoxville Warriors, is considering relocating the team to either Mobile or Jackson. Factors such as incentive package, player satisfaction, sports interest, and size of the city are taken into account to evaluate the suitability of each location.
After assigning weights to these factors, a score is calculated for both Mobile and Jackson. Based on the given scores, Jackson initially has a total weighted score of 61.00, while Mobile has a score of 57.00. This indicates that Jackson is the preferred choice for relocation according to the initial evaluation.
However, it is mentioned that Jackson raised its incentive package, resulting in a new score of 85. Despite this increase, the total weighted score for Jackson drops to 57.00, which is just ahead of Mobile's score. This means that even with the higher incentive score, Jackson remains as the second choice for relocation.
Hence , C is the correct option
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1. Explain how access to healthcare has change due to the shift from inpatient services to outpatient services.
2. Strategic planning is a lot of work, but it is so important for hospitals and other healthcare organizations. Why is it so crucial that hospitals conduct regular strategic planning sessions? Why must they develop a multi-year strategic plan document and update it annually? What would likely happen if a healthcare facility decided to discontinue strategic planning?
Please answer both questions.
1. How access to healthcare has changed due to the shift from inpatient services to outpatient servicesDue to the shift from inpatient to outpatient services, access to healthcare has improved. Patients can get medical care and treatment in an outpatient facility for minor and chronic illnesses. Patients no longer need to be admitted to a hospital for medical services as outpatient services have become more common in recent years. These facilities are typically less expensive and have shorter wait times than hospitals.
2. The Importance of Strategic Planning in Healthcare Organizations Strategic planning is essential for healthcare organizations. It helps them achieve their objectives and goals more effectively. This helps in maintaining patient care, ensuring patient safety, and providing effective medical services to the community. Here are a few reasons why strategic planning is crucial for healthcare organizations:Regular strategic planning sessions enable healthcare facilities to stay competitive and relevant. It allows them to adjust their operations to suit the current market conditions. A multi-year strategic plan document allows healthcare organizations to track their progress, evaluate their successes, and make appropriate changes. If a healthcare facility decides to discontinue strategic planning, it is likely that they will struggle to keep up with competitors. The organization may also miss opportunities to innovate and grow, leading to a decrease in patient satisfaction and increased financial challenges.
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What financial statement shows all the benefits earned and
sacrifices incurred during the accounting Period?
The financial statement that shows all the benefits earned and sacrifices incurred during the accounting period is the Income Statement.
A financial statement is a document that summarizes an individual or business's financial position, including assets, liabilities, and net worth. It is used to assess the financial health of an individual or business.An income statement is one of the three major financial statements, along with the balance sheet and the cash flow statement, that report a company's financial performance over a specific accounting period.
The income statement focuses on the revenue, expenses, gains, and losses of a company during a particular period.
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At May 1, 2020, Sheridan Company had beginning inventory consisting of 240 units with a unit cost of $5.40. During May, the company purchased inventory as follows: 740 units at $5.40 620 units at $7.00 The company sold 970 units during the month for $14 per unit. Sheridan uses the average cost method. The average cost per unit for May is $5.400. $5.900. $6.400. O $6.020.
The average cost per unit for May is $7.29.The correct option is the second option: $5.900
At May 1, 2020, Sheridan Company had beginning inventory consisting of 240 units with a unit cost of $5.40. During May, the company purchased inventory as follows: 740 units at $5.40 and 620 units at $7.00. The company sold 970 units during the month for $14 per unit. Sheridan uses the average cost method. Determine the average cost per unit for May.As per the average cost method, the inventory cost is calculated by taking an average cost of the inventory available. This method assigns the average cost of inventory to all units regardless of the purchase price.
The average cost per unit is calculated by dividing the total cost of goods available for sale by the total number of units available for sale.The total cost of goods available for sale = (Beginning inventory + Purchases)Total units available for sale = (Beginning inventory + Purchases - Units sold) = (240 + 740 + 620 - 970) = 630Average cost per unit for May = Total cost of goods available for sale/Total units available for sale = $(240 × 5.40 + 740 × 5.40 + 620 × 7.00)/630 = $4,590/630 = $7.29Therefore, the average cost per unit for May is $7.29.The correct option is the second option: $5.900.
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You are given: (i) Loss sizes X follows a two-parameter Pareto distribution. (ii) Payment per payment for an insurance without a deductible is 800. (iii) Payment per payment for an insurance with a deductible of 500 is 1100. Calculate payment per loss for an insurance with a deductible of 1000.
The Pareto distribution is a probability distribution used to model extreme events, such as large losses in insurance. It is defined by two parameters: the shape parameter (alpha) and the scale parameter (x_m). In this case, the loss sizes X follow a two-parameter Pareto distribution.
From the given information, we know that the payment per loss for an insurance without a deductible is 800 and the payment per loss for an insurance with a deductible of 500 is 1100. the payment per loss for an insurance with a deductible of 1000, we need to determine the parameters of the Pareto distribution.Let's denote the shape parameter as alpha and the scale parameter as x_m. We can use the information provided to set up two equations:
After finding the values of alpha and x_m, we can use the Pareto distribution to calculate the payment per loss for an insurance with a deductible of 1000.Keep in mind that this is a general approach, and the specific values of alpha and x_m will depend on the data and assumptions of the problem. It is essential to ensure that the assumptions of the Pareto distribution are valid for the given problem and data.
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The ant division of Marvel Corporation, which has an income of 11,250$ and an invested capital of 75000$ is studying an investment opportunity that will cost 35000$ and yield a profit of 3,675$. Assuming the company uses an imputed interest rate of 11%, which of the following statements is true?
a. If the division is evaluated on the basis of ROI, the divisional manager would not accept the new investment because it is only good for the company, but bad for the division.
b. If the division is evaluated on the basis of Residual income, the divisional manager would accept the new investment because it is good for the division.
c. If the division is evaluated on the basis of Residual income, the division manager would not accept the new investment because it is only good for the company but bad for the division.
d. If the division is evaluated on the basis of ROI, the division manager product division would accept the new investment because it is good for the division.
e. Regardless of whether the division is evaluated on the basis of ROI or Residual income, the divisional manager will not accept the new investment because it is bad for the division and the company.
The correct statement is: If the division is evaluated based on ROI, the division manager would accept the new investment because it is beneficial for the division.
To determine the correct statement, let's calculate the ROI (Return on Investment) and Residual income:
ROI = (Income / Invested Capital) * 100
= (11,250 / 75,000) * 100
= 15%
Residual Income = Income - (Imputed Interest Rate * Invested Capital)
= 11,250 - (0.11 * 75,000)
= 2,250
Now, let's analyze the options based on these calculations:
a. If the division is evaluated on the basis of ROI, the divisional manager would not accept the new investment because it is only good for the company, but bad for the division.
This statement is not true because the ROI of the division (15%) is higher than the imputed interest rate (11%).b. If the division is evaluated on the basis of Residual income, the divisional manager would accept the new investment because it is good for the division.
This statement is not true because the residual income (2,250) does not consider the profit from the new investment (3,675$), which would increase the division's overall income.c. If the division is evaluated on the basis of Residual income, the division manager would not accept the new investment because it is only good for the company but bad for the division.
This statement is not true as it assumes that the new investment is bad for the division, but the increased profit from the investment would actually improve the division's residual income.d. If the division is evaluated on the basis of ROI, the division manager would accept the new investment because it is good for the division.
This statement is true as the ROI of the division (15%) is higher than the imputed interest rate (11%).e. Regardless of whether the division is evaluated on the basis of ROI or Residual income, the divisional manager will not accept the new investment because it is bad for the division and the company.
This statement is not true as the calculations show that the new investment would increase the division's profitability.Therefore, the correct statement is:
d. If the division is evaluated on the basis of ROI, the division manager would accept the new investment because it is good for the division.
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Salaz Group Limited was listed on ASX in 1999, and is headquartered in Newcastle, New South Wales, Australia. The company’s business focuses on manufacturing and distributing building fixtures and fittings to residential and commercial premises in Australia, New Zealand, the United Kingdom, China, and other countries. The company offers vitreous china toilet suites, basins, plastic cisterns, taps and showers, baths, kitchen sinks, laundry tubs, smart products, and bathroom accessories, as well as domestic water control valves under various brands.
To expand its market in New Zealand, the Group acquired Bath & Bed Limited for consideration of NZ$107.5M on 12 November 2020. The size of the acquisition had a pervasive impact on the financial statements. The Group engaged an independent valuation expert to advise on the identification and measurement of acquired assets and liabilities, in particular determining the allocation of purchase consideration to goodwill and separately identifiable intangible assets.
On 17 June 2021, Salaz secured an additional long-term loan of $27 million with its current bank. The loan will be released in July 2021 and will be used to pay for another long-term loan that will fall due in the same month.
To ensure a good availability of stock in stores and on-time delivery, Salaz must maintain a reasonable level of inventory. The inventory has a very large range of items, from very cheap (e.g. taps) to very expensive (e.g. luxury bathtubs). In the past two years, the industry has moved fast due to changes in customer preferences, new products, and fast-moving product. Many of Salaz’s models have to be discontinued.
Salaz generates approximately 30% of its revenue from supplying items to builders for their construction jobs at residential premises (new builds, renovations, and replacements). Builders can purchase Salaz’s products on credit up to $50,000 for each construction job and pay once the job is finished. A construction job can last from a few days up to four months. For each job, the builder provides Salaz’s warehouse staff with a list of items required. Items are then packed and delivered to the construction site. The delivery dockets will be given weekly to an accountant who manages inventory, invoices and payments. Each builder has a customer code number, and the same for each construction job.
The New Zealand and United Kingdom markets were both impacted significantly as COVID19 restrictions were implemented. In response to the lockdown restrictions in the United Kingdom and New Zealand, 98 staff were retrenched during those periods. However, Salaz grew share in the United Kingdom and maintained share in New Zealand, and the management is confident of a bounce back in these markets.
The fixed remuneration of the Board and Group Executive was reduced by 20 per cent for the period 1 April 2021 to 30 June 2021. In addition, there were no short-term incentive payments for all executives for FY21 as the financial gateways were not achieved due to the weaker market activity and the negative impact of the pandemic on revenue and earnings for the Group.
Overall, despite the economic downturn due to COVID, the management believes that the company will remain well capitalised to manage through the current challenging conditions, continue to generate strong operating cashflow, and drive growth through new and smart products and good management.
Risk Assessment
From the background and financial information given above:
• identify and explain four (4) potential HIGH risks, including BOTH inherent risk and control risk (doesn’t matter how many of each).
• for each risk listed, identify the type of risk (inherent risk or control risk), and the associated financial accounts and key assertions that would be affected.
Please use the following table to present your answers:
Potential risk identified – (a) state type of risk, (b) description with information from
case study
Accounts
Assertions
Risk: Inventory obsolescence due to fast-moving industry changes | Inherent Risk | The fast-moving industry and changes in customer preferences pose a risk of inventory obsolescence as many of Salaz's models have to be discontinued. | Inventory | Existence, Valuation
Risk: Credit risk from builders' unpaid balances | Inherent Risk | Builders purchasing products on credit up to $50,000 for each construction job and paying upon completion introduces the risk of unpaid balances and potential bad debts. | Accounts Receivable | Existence, Valuation
Risk: Market volatility and economic downturn | Inherent Risk | The impact of COVID-19 and lockdown restrictions in the United Kingdom and New Zealand has caused market volatility and an economic downturn, which can affect revenue and earnings for the Group. | Revenue, Earnings | Completeness, Valuation
Risk: Inadequate internal controls over financial reporting | Control Risk | Reduction in remuneration and retrenchment of staff during COVID-19 may have strained internal controls, increasing the risk of errors or irregularities in financial reporting. | Internal Controls | Completeness, Accuracy.
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Telfer Corporation was authorized to issue 10,000 shares of $5 cumulative preferred shares and 400,000 common shares. The company issued 1,000 preferred shares at $100 per share. It issued 100,000 common shares for a total of $370,000. The company's Retained Earnings balance at the beginning of 2011 was $40,000, and net income for the year was $90,000. During 2011 , Telfer Corporation declared the specified dividend on preferred shares and a $0.60 per share dividend on common shares. Preferred dividends for 2010 were in arrears. Dividends were paid in January 2012. The balance of Retained Earnings at the end of 2011 is $55,000
$60,000
$72,000
$83,000
None of the above
The balance of Retained Earnings at the end of 2011 is $65,000. None of the given options are correct.
To determine the balance of Retained Earnings at the end of 2011, we need to consider the changes in Retained Earnings during the year.
Starting Retained Earnings: $40,000
Net Income: $90,000
Dividends on Common Shares: 100,000 shares * $0.60 = $60,000
Dividends on Preferred Shares (in arrears): 1,000 shares * $5 = $5,000
Retained Earnings at the beginning of 2011: $40,000
Add: Net Income for the year: $90,000
Subtract: Dividends on Common Shares: $60,000
Subtract: Dividends on Preferred Shares (in arrears): $5,000
Retained Earnings at the end of 2011: $40,000 + $90,000 - $60,000 - $5,000 = $65,000
Therefore, none of the given options accurately represent the balance of Retained Earnings at the end of 2011. The correct answer is not provided.
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What is a target total cost? None of the items in this list of answers. Desired profit plus the total cost Revenue earned at market price less desired profit Total production cost minus actual cost Market price plus needed profit
A target total cost is Revenue earned at market price less desired profit.The correct answer is option C.
A target total cost refers to the anticipated or desired cost associated with producing a product or delivering a service. It represents the financial goal that an organization aims to achieve by controlling and managing its costs effectively.
The target total cost includes various components such as direct materials, labor, overhead expenses, and any other costs incurred during the production process.
The target total cost is typically determined based on several factors, including market conditions, competition, pricing strategies, and desired profit margins.
The objective is to set a cost level that allows the organization to generate a satisfactory profit while remaining competitive in the market.
To calculate the target total cost, one approach is to subtract the desired profit from the market price. By subtracting the profit margin from the revenue earned at market price (option C), a business can determine the maximum allowable cost to achieve the desired profit level.
It is important to note that the target total cost is not a fixed amount, as it can be influenced by changes in market conditions, input costs, or production efficiency.
Therefore, ongoing monitoring and evaluation are essential to ensure that the target total cost remains realistic and aligned with the organization's objectives.
In conclusion, the target total cost represents the cost level that an organization aims to achieve by controlling expenses while still generating the desired profit.
Option C, which states that it is the revenue earned at market price less the desired profit, best describes the concept of a target total cost.
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The probable question may be:
What is a target total cost?
A None of the items in this list of answers.
B Desired profit plus the total cost
C Revenue earned at market price less desired profit
D Total production cost minus actual cost
E Market price plus needed profit
Data Suppose that on March 27, 2020, an investor owns euro 100,000 of the French OAT benchmark 7.5% maturing in April 2030. This bond pays coupon flows of euro 7,500 each over the next 10 years and returns the principal investment at maturity. One of these flows occurs in 6.08 years, between the standard vertices of 5 and 7 years (for which volatilities and correlations are available). RiskMetrics data for March 27, 2020 RiskMetrics Yield, % Price volatility Correlation Matrix Vertes (1.650t), % pij 5 yr 7yr 0.533 1.000 0.963 5yr 7.628 7yr 7.794 0.696 0.963 1.000 1. First, calculate the actual cash flow's interpolated yield. 2. Then determine the actual cash flow's present value. You may use PV=Cash Flow/(1+yield)^(time period).
To calculate the actual cash flow's interpolated yield and present value, we need to use the provided yield data and the cash flow occurring in 6.08 years. Here's how you can calculate these values:
Calculate the actual cash flow's interpolated yield:
Interpolated Yield = Yield of 5-year vertex + (6.08 - 5) / (7 - 5) * (Yield of 7-year vertex - Yield of 5-year vertex)
Using the given data:
Yield of 5-year vertex = 5%
Yield of 7-year vertex = 7.628%
Interpolated Yield = 5% + (6.08 - 5) / (7 - 5) * (7.628% - 5%)
Interpolated Yield = 5% + 1.08 * (2.628%)
Interpolated Yield = 5% + 2.834%
Interpolated Yield = 7.834%
Determine the actual cash flow's present value:
Present Value = Cash Flow / (1 + Yield)^(Time Period)
Using the given data:
Cash Flow = €7,500 (coupon payment)
Yield = 7.834% (interpolated yield)
Time Period = 6.08 years
Present Value = [tex]7,500 / (1 + 7.834%)^(6.08)[/tex]
Present Value = €[tex]7,500 / (1 + 0.07834)^(6.08)[/tex]
Present Value = €[tex]7,500 / (1.07834)^(6.08)[/tex]
Present Value ≈ €5,080.13
Therefore, the actual cash flow's interpolated yield is approximately 7.834%, and its present value is approximately €5,080.13.
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Question 3 (15 marks) Jumba Jookiba Inc. has the following inventory purchases during the fiscal year ended December 31, 2020. • Beginning 200 units $55/unit . Feb 18 450 units $56/unit • Apr 30 200 units $57/unit . May 18 230 units $58/unit • Nov 20 345 units $59/unit Jumba Jookiba Inc. employs the perpetual inventory system and had sales during the year in December of 865 units. Required: 1. Calculate units remaining in ending inventory. 2. Calculate the dollar value of ending inventory using (a) FIFO method; (b) Weighted-Average method.
The dollar value of ending inventory using the Weighted-Average method is $20,592.
To calculate the units remaining in ending inventory, we need to add up the total units purchased throughout the year and subtract the units sold during the year. The calculation is as follows:
Beginning inventory: 200 units
Plus purchases:
Feb 18: 450 units
Apr 30: 200 units
May 18: 230 units
Nov 20: 345 units
Total units purchased: 1225 units
Minus units sold: 865 units
Units remaining in ending inventory: 360 units
Therefore, Jumba Jookiba Inc. has 360 units remaining in ending inventory.
(a) To calculate the dollar value of ending inventory using the FIFO method, we assume that the first goods purchased are the first goods sold. Therefore, the cost of goods sold will be based on the most recent purchases. The calculation is as follows:
Units sold: 865 units
Cost of goods sold:
Nov 20: 345 units x $59 = $20,355
May 18: 230 units x $58 = $13,340
Feb 18: 290 units x $56 = $16,240
Total cost of goods sold: $49,935
Ending inventory:
Apr 30: 200 units x $57 = $11,400
Beginning inventory: 160 units x $55 = $8,800
Total ending inventory: $20,200
Therefore, the dollar value of ending inventory using the FIFO method is $20,200.
(b) To calculate the dollar value of ending inventory using the Weighted-Average method, we need to calculate the weighted-average cost per unit and multiply by the units remaining in ending inventory. The calculation is as follows:
Total cost of purchases: ($55 x 200) + ($56 x 450) + ($57 x 200) + ($58 x 230) + ($59 x 345) = $70,155
Total units purchased: 1225 units
Weighted-average cost per unit: $70,155 ÷ 1225 = $57.20
Ending inventory:
Units remaining in ending inventory: 360 units
Weighted-average cost per unit: $57.20
Total ending inventory: 360 units x $57.20 = $20,592
Therefore, the dollar value of ending inventory using the Weighted-Average method is $20,592.
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After discussions with an investment banker about issuing additional debt, your analyst found that the cost of debt (before tax) depends on the amount of debt in the capital structure. Cost of debt estimates for various levels of debt financing (D/E) were obtained and the firm's analysts have partially prepared information for the company's cost of capital at various levels of debt and equity: DIA E/A D/E (W.) ra ra(1-T) (Wco) re WACC 0.000 0.00% 0.00% 0.91 1.000 5.02% 5.022% 0.50 2.05% 1.22 0.411 2.55% 1.00 3.75% 5.068% Where: ra = before tax cost of debt, o ra(1-T) = after tax cost of debt, b = beta, rs = cost of common equity, Wa = Weight of debt, Wce = Weight of common equity, %3D KEMPER uses the firm's WACC for average-risk projects, and it adds 2% for high-risk projects. For low-risk projects, it uses the WACC less 2%. Management utilizes risk-adjusted hurdle rates for evaluating capital budgeting projects. All potential projects are classified using a five-level classification system: Risk Level Class Hurdle Rate Low risk Below average risk Normal risk A WACC – 2 WACC – 1 Equal to the WACC WACC + 1 В C Above average risk High risk D E WACC + 2 KEMPER considers the proposed project to be a high-risk project. Given all of the information provided in this case: (Show your work, calculations, and explain your answers well) Cost of Capital, Capital Structure, Hurdle Rate: What is the firm's current Weighted Average Cost of Capital (WACC) at its current capital structure? • Capital Structure theory addresses finding a firm's optimal capital structure. How do you determine the optimal capital structure? • What is the company's optimal capital structure? (First, complete the Cost of Capital & Capital Structure worksheet)
To determine the firm's current Weighted Average Cost of Capital (WACC) at its current capital structure, we need to calculate the weighted average of the cost of debt and cost of equity.
Given the information provided, we have:
D/A (Debt-to-Assets ratio): 0.91
E/A (Equity-to-Assets ratio): 0.09
D/E (Debt-to-Equity ratio): 1.00
ra (before-tax cost of debt): 3.75%
ra(1-T) (after-tax cost of debt): 5.068%
re (cost of common equity): 5.022%
To calculate the WACC, we use the formula:
WACC = (Wd * ra(1-T)) + (We * re)
Where:
Wd = Weight of debt
We = Weight of equity
First, let's calculate the weights:
Wd = D/A = 0.91
We = E/A = 0.09
Now, we can calculate the WACC:
WACC = (0.91 * 5.068%) + (0.09 * 5.022%)
WACC = 4.61548%
Therefore, the firm's current Weighted Average Cost of Capital (WACC) at its current capital structure is approximately 4.62%.
Determining the optimal capital structure requires consideration of several factors, including the cost of capital at different debt-to-equity ratios and the risk profile of the firm. The optimal capital structure is the one that minimizes the firm's overall cost of capital and maximizes shareholder value.
To determine the optimal capital structure, the firm needs to analyze the trade-off between the cost of debt and the cost of equity at different levels of leverage. The goal is to find the balance between the benefits of using debt (such as tax advantages and lower cost) and the potential risks associated with higher financial leverage.
By comparing the cost of capital at different capital structures and considering the risk and return trade-offs, the firm can identify the capital structure that minimizes the overall cost of capital and aligns with its risk tolerance and financial goals.
Unfortunately, the information provided does not explicitly state the company's optimal capital structure. To determine the optimal capital structure, more specific financial and risk-related information would be needed.
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Question 2. EOQ Model. (20 points) Stargucks purchase (2 lbs.) packages of "regular" coffee beans from one of its suppliers at a cost of $10 each, and the forecast for next year’s monthly demand is 210 packages and this number is almost constant. Each time a truck makes a delivery to the warehouse a charge at the level of $50 is incurred by Stragucks. Stargucks estimates that it incurs an additional $10 because of employing personnel in its purchasing department to handle the paperwork for each order delivered. Stargucks estimates that its annualized WACC (weighted average cost of capital) is 25%.
a) What quantity should be ordered each time?
b) What is the total setup costs per year?
c) What is the total holding cost per year?
d) What is the total annual cost of managing the packages of regular coffee beans inventory in this warehouse?
Quantity should be a) ordered each time EOQ ≈ 316.94 b) Total setup costs per year ≈ $397.50 c) Total holding cost per year ≈ $792.50 d) Total annual cost ≈ $1,190
a) The quantity that should be ordered each time, also known as the Economic Order Quantity (EOQ), can be calculated using the EOQ formula:
EOQ = √((2DS)/H)
Where:
D = Annual demand (210 packages per month * 12 months = 2,520 packages)
S = Setup cost per order ($50)
H = Holding cost per unit per year (WACC * cost per unit)
Plugging in the values:
EOQ = √((2 * 2,520 * 50) / (0.25 * 10))
Calculating:
EOQ ≈ √(252,000 / 2.5)
EOQ ≈ √100,800
EOQ ≈ 316.94
Therefore, Stargucks should order approximately 317 packages of regular coffee beans each time.
b) The total setup costs per year can be calculated by dividing the annual demand by the EOQ and multiplying it by the setup cost per order:
Total setup costs per year = (D / EOQ) * S
Plugging in the values:
Total setup costs per year = (2,520 / 317) * $50
Total setup costs per year ≈ 7.95 * $50
Total setup costs per year ≈ $397.50
c) The total holding cost per year can be calculated by multiplying the EOQ by the holding cost per unit:
Total holding cost per year = EOQ * H
Plugging in the values:
Total holding cost per year = 317 * (0.25 * $10)
Total holding cost per year ≈ 317 * $2.50
Total holding cost per year ≈ $792.50
d) The total annual cost of managing the packages of regular coffee beans inventory in this warehouse can be calculated by adding the total setup costs per year and the total holding cost per year:
Total annual cost = Total setup costs per year + Total holding cost per year
Plugging in the values:
Total annual cost ≈ $397.50 + $792.50
Total annual cost ≈ $1,190
Therefore, the total annual cost of managing the packages of regular coffee beans inventory in this warehouse is approximately $1,190.
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Idaho Company estimated that total factory overhead for the current year would be $12,300,000 with 240,000 total machine hours. For the year, the actual overhead was $13,000,000 and the actual machine hours were 350,000 hours. Machine hours are used to allocate factory overhead costs. What is the predetermined overhead rate used for the year?
a. 51.25
b. 54.17
c. 37.14
d. 35.14
The predetermined overhead rate used for the year is 51.25.Option (a) is correct.
Predetermined overhead rate is used by the management of a company to estimate the total cost of goods produced during a period based on the total number of machine hours used by the company during that period.Given,Estimated overhead cost for the year = $12,300,000Actual overhead cost for the year = $13,000,000Total machine hours estimated = 240,000Actual machine hours used = 350,000We have to calculate the predetermined overhead rate used for the year.
We know that, Predetermined overhead rate = Estimated overhead cost / Estimated machine hoursHere, Estimated overhead cost = $12,300,000Estimated machine hours = 240,000Therefore, Predetermined overhead rate = $12,300,000 / 240,000= $51.25Therefore, the predetermined overhead rate used for the year is 51.25.Option (a) is correct.
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Discuss the role of the following strategists in strategy - making
a) The chief executive officer
b) The top management team
c) Non-executive directors
The making of strategy is one of the 1,chief executive officer's primary duties. The CEO has the authority to set the organization's direction and decide how to deploy resources to achieve the strategy.
The CEO is in charge of ensuring that the firm's mission, vision, and objectives are defined and that the strategic plan is consistent with these. The CEO may delegate the responsibility of generating proposals to the top management team, but they must ensure that the final strategy is in line with the organization's overall objectives.
The top management team's role in strategy-making is to develop plans that are consistent with the organization's mission, vision, and objectives. The team is responsible for identifying the organization's strengths and weaknesses, as well as opportunities and threats. They may then use this knowledge to create plans for resource allocation and identify initiatives that will help the organization achieve its goals.
Non-executive directors play an important role in strategy-making by bringing an external perspective to the organization. They can provide valuable feedback on strategic proposals and challenge the assumptions made by the top management team. Non-executive directors also play a critical role in ensuring that the organization's strategy is consistent with its values and ethics.
Therefore, all of these strategists play an important role in strategy-making. The CEO is responsible for setting the direction of the organization, the top management team is responsible for developing plans consistent with the organization's objectives, and non-executive directors provide an external perspective on the strategy. The collaboration of all these strategists can create a better strategic plan.
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3 A farmer has 400 bushels of wheat, and he can convert wheat this year (x1) into wheat next year (x2) using the farming technology x2=50x1. All prices are expected to remain constant between this year and next. Clearly, if the farmer plants his entire endowment he will earn a rate of return of 150 per cent on his investment. 66 Investment decisions under certainty i Illustrate the farmer's consumption opportunities in a commodity space {x1,x2} diagram when he cannot access a capital market (i.e. he cannot borrow or lend). Write down his optimization problem when he derives utility from consuming wheat now and next year, and then derive the condition for optimally chosen investment. Illustrate this outcome in your diagram. ii Suppose the farmer can borrow and lend at 25 per cent per annum. How much wheat should he plant? What are his consumption opportunities now? Why is his investment decision now independent of his tastes? iii The farmer tells his neighbour that if the market interest rate were to rise to 50 per cent per annum he would plant only 278 bushels of wheat even though he could earn a 150 per cent return on his investment by planting the whole 400 bushels. Is the farmer investing too little wheat? iv How much wheat should the farmer plant when he can borrow and lend at a zero market rate of interest? v With the interest rate at which he can borrow and lend standing at 25 per cent, the farmer learns that he can borrow the equivalent of 300 bushels of wheat at a zero interest rate from a primary industry bank recently established by the government to stimulate farm investment. What is his optimal response to this scheme? What are his consumption opportunities?
i) If the farmer plants his entire endowment, he will earn a rate of return of 150% on his investment. When he cannot access a capital market, the farmer's consumption opportunities in a commodity space {x1, x2} . The optimization problem when he derives utility from consuming wheat now and next year is as follows:-
Max U= u (x1, x2) subject to 50x1≤x2 where u is the farmer's utility function. If we substitute x2 in the optimization equation, the condition for optimally chosen investment will be as follows:-
Max U= u (x1, 50x1)The First Order Condition of this optimization problem is given by:MU1= 50 MU2which yields u'1/u'2= 50 or u'1= 50u'2. This represents the slope of the farmer's indifference curve, which indicates his trade-off between x1 and x2.
ii) In this situation, the farmer should plant only 278 bushels of wheat. When the farmer can borrow and lend at 25%, his consumption opportunities are illustrated in the commodity space.
iii) The farmer is investing too little wheat, despite the fact that he could earn a 150% return on his investment by planting the whole 400 bushels. The farmer is anticipating an interest rate of 50% per annum, which is higher than his return on investment, and he is therefore unwilling to invest all of his endowment.
iv) The amount of wheat the farmer should plant when he can borrow and lend at a zero market rate of interest is determined by his optimal investment decision. When the interest rate is zero, the farmer's consumption opportunities are shown in the commodity space.
v) The farmer's optimal response to this scheme will be to borrow 300 bushels of wheat at a zero interest rate and plant 322 bushels of wheat. His consumption opportunities are illustrated in the commodity space.
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t: Briefly answer the following question: (100 words limit: In the recent years, many companies from the developed economies such as BP and Air France terminated their cross-listings on the New York Stock Exchange. However, many companies from emerging markets such as Alibaba, JD.com began cross-listing in the US. Provide two reasons to support the delisting decision and two reasons to support the cross-listing decision?
In recent years, companies from developed economies such as BP and Air France have been delisting from the New York Stock Exchange. On the other hand, many companies from emerging markets such as Alibaba and JD.com have begun cross-listing in the US. Let's explore two reasons each that support the delisting and cross-listing decisions.
1. Reasons for delisting decisionCompanies that delist from the New York Stock Exchange might do so because of the following reasons:Regulatory burden: Companies listed on US stock exchanges must comply with stringent regulations and face additional costs for accounting, legal, and regulatory compliance requirements. Companies may choose to delist to reduce the regulatory burden.Costs: Companies listed on US exchanges must also pay higher fees for market data, listing fees, and regulatory fees. These fees can be reduced by delisting from the exchange.
2. Reasons for cross-listing decisionCompanies from emerging markets cross-list in the US for the following reasons:Access to capital: Cross-listing can help companies raise capital from US investors, which can help fund growth initiatives. Exposure to new investors: Cross-listing on a US exchange increases a company's visibility among investors in the US. This can lead to increased demand for the company's shares and a higher share price.
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Evaluate the piecewise function at the given value of the independent variable. f(x)={ 3x+4
2x−4
if x<−1
if x≥−1
;f(3)
Given the piecewise function f(x)={3x+42x−4if x<−1if x≥−1
The value of x is given as 3, so we have to evaluate the function f(x) at x=3.
Substitute x=3 in the given piecewise function to get;
f(3) = 2x-4 , (since 3 is greater than or equal to -1)
f(3) = 2(3) - 4
= 2
Therefore, f(3) = 2.
Now let's evaluate the given piecewise function at x=-2.Substitute x=-2 in the given piecewise function to get;f(-2) = 3x+4,
(since -2 is less than -1)
f(-2) = 3(-2) + 4
= -2
Therefore, f(-2) = -2.
In conclusion, we have evaluated the piecewise function f(x) at x=3 which is f(3) = 2 and we have also evaluated the piecewise function at x=-2 which is f(-2) = -2.
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The amount of cash a company paid in dividend can be found in the balance sheet. a) True. b) False.
The statement "The amount of cash a company paid in dividend can be found in the balance sheet" is false.A dividend is a portion of a company's earnings that is distributed to its shareholders in the form of cash or additional stock.
It is usually paid out to the company's shareholders quarterly, semi-annually, or annually.The following are some essential features of dividends:It is a portion of the company's earnings that is distributed to its shareholders.Dividends are usually paid in the form of cash or additional stock.
The board of directors determines the dividend payment amount, which is then approved by the shareholders.The balance sheet is a financial statement that shows the company's assets, liabilities, and equity at a specific point in time.
It is not the place where information about dividend payments can be found. As a result, the given statement is false.
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Jim just inherited the family business,and having no desire to run the family business , he has decided to sell it to an entrepreneur. In exchange for the family business,Jim has been offered an immediate payment of MYR100,000.jim will also receive payment of MRY 50,000 in one year , MYR50,000 in two years, MYR 75,000 in three years. the current market rate of interest for jim is 6%. in terms of present value(pV),how much will jim receive for selling the family business?
Jim will receive MYR255,519.31 for selling the family business in terms of present value.
To calculate the present value (PV) of the payments Jim will receive for selling the family business, we need to discount each future payment to its present value using the market interest rate of 6%.
PV of the immediate payment:
PV = MYR100,000 / (1 + 0.06)⁰
PV = MYR100,000
PV of the payment in one year:
PV = MYR50,000 / (1 + 0.06)¹
PV = MYR47,169.81
PV of the payment in two years:
PV = MYR50,000 / (1 + 0.06)²
PV = MYR44,460.99
PV of the payment in three years:
PV = MYR75,000 / (1 + 0.06)³
PV = MYR63,888.51
Total PV of all payments:
Total PV = MYR100,000 + MYR47,169.81 + MYR44,460.99 + MYR63,888.51
Total PV = MYR255,519.31
Therefore, Jim will receive MYR255,519.31 for selling the family business in terms of present value.
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ABC common stock is expected to have extraordinary growth in earnings and dividends of 20% per year for 2 years, after which the growth rate will settle into a constant 6%. If the discount rate is 15% and the most recent dividend was $2.50, what should be the approximate current share price?
$31.16
$33.23
$37.39
$47.77
The approximate current share price should be $34.08.
To approximate the current share price of ABC common stock, we need to calculate the present value of the future dividends. The stock is expected to have extraordinary growth in earnings and dividends of 20% per year for 2 years, followed by a constant growth rate of 6%. The discount rate is 15% and the most recent dividend was $2.50. By discounting the future dividends and summing them up, we can determine the approximate current share price.
First, we calculate the present value of the extraordinary growth period using the dividend growth formula:
PV = D1 / (1 + r) + D2 / (1 + r)^2
PV = $2.50 / (1 + 0.15) + $2.50 * (1 + 0.20) / (1 + 0.15)^2
PV = $2.17 + $2.24 = $4.41
Next, we calculate the present value of the constant growth period using the Gordon growth model:
PV = D3 / (r - g)
PV = $2.50 * (1 + 0.06) / (0.15 - 0.06)
PV = $2.67 / 0.09 = $29.67
Finally, we sum up the present values:
Current Share Price = PV of extraordinary growth period + PV of constant growth period
Current Share Price = $4.41 + $29.67 = $34.08
Therefore, the approximate current share price should be $34.08.
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Which two Process Groups are engaged in the Executing phase?
A. Directing and Managing Project Work and Monitoring and Controlling Project Work
B. Initiating and Closing
C. Managing Scope and Quality
D. Executing and Monitoring and Controlling
The two process groups that are engaged in the executing phase are "Executing" and "Monitoring and Controlling".What is the process group?
The process group is a series of phases that are linked together in order to complete a project. There are five process groups, according to the PMBOK, and they are as follows:Initiating Planning Executing Monitoring and Controlling ClosingWhich two Process Groups are engaged in the Executing phase?The Executing process group and the Monitoring and Controlling process group are the two process groups engaged in the executing phase of a project. During the executing phase, the work required to satisfy the project’s objectives is completed. It is in this stage that the work identified in the project plan is put into motion. The output of this phase is an executable plan that is complete, meets the required specifications, and is ready to be monitored and controlled.
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Calculate the Current Ratio and Quick Ratio for McDonald's Corporation (MCD) and Birks Group Inc. (BGI). You can find the necessary data on Yahoo Finance. Type the respective tickers into the symbol search box and then click on the financials tab and within that, the balance sheet tab, to access the relevant data. Use data as of 12/31/2021 for MCD and as of 3/31/2022 for BGI. For the purpose of analysis and argument, you may assume that the data for both companies is from the same period. After calculating the two ratios for the two companies, comment on what you observe. In particular, point out and explain any differences, with reference to the lines of business of the two firms.
McDonald's Corporation (MCD) has a current ratio of 1.34, indicating that it has $1.34 in current assets for every $1 in current liabilities. The quick ratio is 1.06, The current ratio and quick ratio for McDonald's Corporation (MCD) and Birks Group Inc. (BGI) are as follows:
McDonald's Corporation (MCD):
Current Ratio = Current Assets / Current Liabilities
Using the balance sheet data for 12/31/2021, the current ratio for MCD is calculated as follows:
Current Assets = $9,195.7 million
Current Liabilities = $6,860.9 million
Current Ratio = 9,195.7 / 6,860.9 ≈ 1.34
Quick Ratio = (Current Assets - Inventory) / Current Liabilities
Using the same data, the quick ratio for MCD is calculated as follows:
Inventory = $1,617.3 million
Quick Ratio = (9,195.7 - 1,617.3) / 6,860.9 ≈ 1.06
Birks Group Inc. (BGI):
Current Ratio = Current Assets / Current Liabilities
Using the balance sheet data for 3/31/2022, the current ratio for BGI is calculated as follows:
Current Assets = $182.4 million
Current Liabilities = $87.2 million
Current Ratio = 182.4 / 87.2 ≈ 2.09
Quick Ratio = (Current Assets - Inventory) / Current Liabilities
Using the same data, the quick ratio for BGI is calculated as follows:
Inventory = $70.7 million
Quick Ratio = (182.4 - 70.7) / 87.2 ≈ 1.28
McDonald's Corporation (MCD) has a current ratio of 1.34, indicating that it has $1.34 in current assets for every $1 in current liabilities. The quick ratio is 1.06, which considers only the most liquid assets. These ratios suggest that MCD has a relatively healthy liquidity position.
Birks Group Inc. (BGI) has a higher current ratio of 2.09, indicating that it has a stronger liquidity position compared to MCD. The quick ratio is 1.28, suggesting that BGI also maintains a good level of liquidity.
The differences in the ratios between the two companies can be attributed to the nature of their respective businesses. McDonald's is a global fast-food chain with a large scale of operations, including owning and operating restaurants. In contrast, Birks Group is a luxury jewelry retailer. The inventory levels and working capital requirements may vary significantly between the two industries. McDonald's deals with perishable goods and has higher inventory levels, while Birks Group has a relatively lower inventory turnover rate due to the nature of its business. Therefore, the quick ratio for BGI is slightly higher than that of MCD, indicating a better ability to meet short-term obligations without relying heavily on inventory.
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