Based on the given information, a simplified balance sheet and income statement for the firm is given.
How to explain the informationHere's a simplified balance sheet as of the end of 2020:
Balance Sheet (as of December 31, 2020)
Assets:
Cash: $100
Accounts Receivable: $500
Inventories: $700
Marketable Securities: $200
Net Plant and Equipment: $2,600
Total Assets: $4,100
Liabilities:
Notes Payable: $240
Accounts Payable: $220
Accruals: $160
Long-term Debt: $1,400
Total Liabilities: $2,020
Stockholders' Equity:
Common Stock: $980
Retained Earnings: $1,100
Total Stockholders' Equity: $2,080
Total Liabilities and Stockholders' Equity: $4,100
Now, let's prepare a simplified income statement for the year 2020:
Income Statement (for the year 2020)
Revenues:
Sales Revenue: $4,800
Costs and Expenses:
Cost of Goods Sold: $1,800
Total Operating Expenses: $600
Depreciation Expense: $400
Interest Expense: $150
Total Costs and Expenses: $2,950
Net Income:
Income Before Taxes: ($4,800 - $1,800 - $600 - $400 - $150) = $850
Taxes (25% of Income Before Taxes): $212.50
Net Income: $637.50
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A company proposes to invest in two divisible projects which are expected to generate the following cash flows. Cash flows Year Project A Project B
1 10,000 10,000
2 60,000 30,000
Additional information
1. The cost of capital applicable to both projects is 12%
2. Project A requires sh. 20,000 and Project B 10,000 initial investment. 3. The funds available are restricted as follows;
Years Cash available
0 1,000,000
1 800,000
4. Funds not utilized one year will not be available in the subsequent years. Required;
i. Formulate a linear programming model to solve the above problem. ii. Solve the problem graphically and comment on the proportion of investing on the two projects.
The graphical solution of this linear programming problem will involve plotting the feasible region defined by the constraints and identifying the corner points of the region. The corner point that maximizes the objective function will represent the optimal investment proportions between the two projects.
To formulate a linear programming model for the investment decision between Project A and Project B, we can define the following variables:
Let x be the amount invested in Project A (in thousands of shillings).
Let y be the amount invested in Project B (in thousands of shillings).
The objective is to maximize the total cash flows generated from the investments, which can be represented as: Maximize Z = 10x + 60y + 10x + 30y
Subject to the following constraints:
The total investment should not exceed the available funds:
x + y ≤ 1,000 (in thousands of shillings)
Project A requires an initial investment of 20,000 (in thousands of shillings):
x ≥ 20
Project B requires an initial investment of 10,000 (in thousands of shillings):
y ≥ 10
The funds available in each year should be utilized:
x + y ≤ 800 (for year 1)
The graphical solution of this linear programming problem will involve plotting the feasible region defined by the constraints and identifying the corner points of the region. The corner point that maximizes the objective function will represent the optimal investment proportions between the two projects.
Based on the graphical solution, the proportion of investing in the two projects will depend on the intersection of the feasible region and the objective function. The specific proportion will vary depending on the values and slopes of the constraints and objective function.
It is important to note that the actual graphical solution and interpretation of the proportion will require the specific values and plot of the feasible region and objective function.
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QUESTION 3
(20 Marks)
REQUIRED
Use the information provided below to prepare the following for January and February 2024:
3.1
Debtors Collection Schedule
(4 marks)
3.2
Cash Budget
(16 marks)
INFORMATION
The following information supplied by Orbit Enterprises:
1.
Orbit Enterprises expects to have an unfavourable bank balance of R36 000 on 31 December 2023.
2.
Expected sales are as follows:
November 2023
R400 000
December 2023
R500 000
January 2024
R440 000
February 2024
R460 000
3.
Credit sales account for 60% of the total sales. The rest of the sales is for cash.
4.
The amounts owed by debtors are usually collected as follows:
20% is collected in the same month as the credit sales for a 2% cash discount.
75% is collected in the month after the sale.
5% is written off as bad debts.
5.
Forty percent (40%) of the purchases of inventory will be on credit. Creditors are paid two months after the purchase. The rest of the purchases will be for cash. A cash discount of 10% is expected to be received on 50% of the cash purchases. Purchases have been forecasted as follows:
November 2023
R380 000
December 2023
R340 000
January 2024
R300 000
February 2024
R260 000
6.
The monthly salary expense of R100 000 is expected to increase by 7% from 01 February 2024.
7.
Interest on loan for three months at an interest rate of 15% p.a. on the loan balance of R200 000 will be paid on 31 January 2024.
8.
Advertising expenses are paid monthly and are estimated to be a fixed percentage of the total sales of the previous month. The advertising expense for December 2023 is expected to be R16 000.
9.
The proprietor’s cash drawings are expected to amount to R24 000 per month.
10.
Other cash operating expenses are expected to increase by 5% per month. Cash operating expenses for December 2023 are expected to amount to R40 000.
Debtors Collection Schedule will be:
| January 2024 | February 2024
---------------------------------------------------
Credit Sales | R264,000 | R276,000
Collections:
Same month | R52,800 | R55,200
Next month | R375,000 | R330,000
Bad debts | R22,000 | R23,000
Total Collections | R405,800 | R362,200
How to calculate the amountJanuary 2024 Collections: 20% of January credit sales collected in January with a 2% cash discount: R264,000 * 20% * (1 - 2%) = R52,800
75% of December credit sales collected in January: R500,000 * 75% = R375,000
Bad debts written off: R440,000 * 5% = R22,000
Total collections in January 2024: R52,800 + R375,000 - R22,000 = R405,800
February 2024 Collections: 20% of February credit sales collected in February with a 2% cash discount: R276,000 * 20% * (1 - 2%) = R55,200
75% of January credit sales collected in February: R440,000 * 75% = R330,000
Bad debts written off: R460,000 * 5% = R23,000
Total collections in February 2024: R55,200 + R330,000 - R23,000 = R362,200
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Consider that the market demand function For IBM Computer represented as a. Calculate Price elasticity of demand when d=20,000-0.5P, Ceteris paribus the price per unit is Birt 10,000. b. It the demand for IBM Computer aces elsarric, inelastic or Unitary elastic? C. Interpret the result
A. The price elasticity of demand is PED ≈ -0.67.
B. The demand for IBM computers is inelastic because the absolute value of the price elasticity of demand (PED) is less than 1.
C. The negative value of the price elasticity of demand (-0.67) indicates an inverse relationship between price and quantity demanded.
To calculate the price elasticity of demand (PED), we need to use the formula:
PED = (% change in quantity demanded) / (% change in price)
a. Given the demand function d = 20,000 - 0.5P and the price per unit is $10,000, we can calculate the quantity demanded at this price by substituting P = $10,000 into the demand function:
d = 20,000 - 0.5 * 10,000
d = 20,000 - 5,000
d = 15,000
Now, let's consider a small change in price. Let's say the price decreases to $9,500, and the quantity demanded changes to 15,500. We can calculate the percentage changes:
% change in quantity demanded = (15,500 - 15,000) / 15,000 * 100 = 3.33%
% change in price = (9,500 - 10,000) / 10,000 * 100 = -5%
Now we can calculate the price elasticity of demand:
PED = (% change in quantity demanded) / (% change in price)
PED = 3.33% / -5%
PED ≈ -0.67
b. The demand for IBM Computer is inelastic because the absolute value of the price elasticity of demand (PED) is less than 1. In this case, the PED is approximately -0.67, indicating that a 1% change in price will lead to a smaller percentage change in quantity demanded.
c. The negative value of the price elasticity of demand (-0.67) indicates an inverse relationship between price and quantity demanded. In other words, as the price of IBM Computers increases, the quantity demanded decreases, and vice versa. However, since the demand is inelastic, the change in quantity demanded is proportionately smaller than the change in price. This suggests that consumers are not highly responsive to price changes, and IBM Computers are relatively price-insensitive.
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Limitations of EPS/EBIT analysis include
O A. lack of diversity
OB. dividends and EPS ranges
OC. lack of control
O D. continuity and ratio analysis
O E. timing and control
The limitations of EPS/EBIT analysis include: lack of control. The Option C.
How do the limitations of EPS/EBIT analysis affect its effectiveness?One of the main limitations of EPS/EBIT analysis is the lack of control. This analysis relies on historical data and assumptions about future performance which means it does not provide a comprehensive view of the company's current situation.
It also does not account for the timing of earnings and expenses, which can significantly impact the financial results. For example, a company may have a high EPS due to a one-time event or a temporary increase in earnings which may not be sustainable in the long term.
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(25 Marks)
Question 4
Pontsho, Sello, Siya, Pretty, Samkelisiwe
Hydroshiny's investment in the new hairstyling tool has been creating quite a bit of hype. People are
placing their online orders for the item. Leon decides to purchase a motor vehicle to assist with the
business deliveries. Leon contacts an insurance company, as he is required to ensure that the vehicle is
insured before he is allowed to take delivery from the dealership. The insurance broker asks Leon as to
who will be the designated driver. Leon states that he will be the only individual driving the vehicle,
although Leon knows that he will be employing his nephew, 18-year-old Jim as a driver. Jim has very
little driving experience and has recently obtained his license. Leon also states that the vehicle will be
used for personal use only, in order to receive a low monthly premium. The insurance company
consequently classifies him as a low risk driver, as he has had his driver's license for 27 years. Whilst
undertaking deliveries Jim collides with another vehicle. Both vehicles are extensively damaged.
4.1 Based on Leon's actions above you are required to fully discuss the insured's duty of disclosure.
(10 Marks)
4.2 Based on the set of facts above has Leon acted in an ethical manner? Provide a detailed explanation.
(5 Marks)
4.3 You are appointed to assess the facts of the matter and propose a recommendation to the insurance
company. Based on the facts presented above fully discuss whether the insurance company ought to
honour the agreement to indemnify Leon against the damage.
(10 Marks)
The insured's duty of disclosure requires them to provide accurate and complete information to the insurance company regarding the risks involved in the policy.
What is the insured's duty of disclosure when obtaining insurance?In this scenario, Leon failed to fulfill his duty of disclosure by not disclosing that he would be employing his nephew, Jim, as a driver and that the vehicle would be used for business deliveries.
By stating that he would be the only driver and that the vehicle would be used for personal use only, Leon misrepresented the actual risks associated with the policy. This misrepresentation resulted in the insurance company classifying him as a low-risk driver and offering a lower premium.
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training napkin folding you experience for about
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Why is this so?As a culinary expert, I have honed my expertise in various napkinfolding techniques.
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Full Question:
Although part of your question is missing, you might be referring to this full question:
Write about The art of folding napkins based on your experience
Instructi on:
• Download one arti cle on any concept related to Human Resource Management .
• Review and prepare a report
• The report should not exceed 4 page with its cover page
Answer:
ExplanatiRTICLE REVIEW
Prepare a comparative income statement for any company extracting their P&L statement for the years 2020-21 & 2021-22. Analyse the incline and decline in the different elements in the P&L Statement and provide detailed insights.
Answer:
this is my own answer
Explanation:
hi
How to Prepare a Comparative Income Statement?
Step 1: Specify absolute figures of items like goods sold, net sales, selling expenses, etc., relating to the accounting period under consideration for analysis.
Step 2: Calculate the absolute change in the items mentioned in the income statement.
