Multinational companies are those that operate in different countries and have their headquarters in one country. These companies have branches in different countries to increase their market share and profits. This essay will provide insights into why multinational companies expand internationally.There are many reasons why multinational companies expand internationally.
Some of the major reasons are as follows:
Diversification of risk: Multinational companies operate in different countries,which reduces their dependency on a particular country or region. For example, if a company is operating in a country that is facing political or economic instability, it will not affect the overall business of the company because it has other branches in other countries. Therefore, by expanding globally, a company can diversify its risk.
Increased market share: Multinational companies expand their business to increase their market share. By operating in different countries, they can reach out to a larger customer base and increase their revenue and profitability. For example, a company that is operating only in the US market can expand its business to other countries and increase its market share, revenue, and profitability.
Lower production costs: By expanding their business to other countries, multinational companies can take advantage of lower production costs. For example, if a company is operating in the US, it may have to pay higher wages and taxes as compared to other countries. Therefore, by operating in a country with lower production costs, a company can save money and increase its profitability.
Access to resources: Multinational companies expand their business to gain access to resources that are not available in their home country. For example, a company that is operating in a country that does not have natural resources like oil can expand its business to other countries that have oil reserves. Therefore, by expanding globally, a company can gain access to resources that are not available in their home country.In conclusion, multinational companies expand their business to diversify their risk, increase their market share, lower production costs, and gain access to resources that are not available in their home country.
However, expanding globally also comes with challenges like language barriers, cultural differences, and legal issues. Therefore, multinational companies need to be aware of these challenges and develop strategies to overcome them.
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Plump Corporation holds 60 percent ownership of Slim Company. Each year, Slim purchases large quantities of a gnarl root used in producing health drinks. Slim purchased $150,000 of roots in 20X7 and sold $40,000 of these purchases to Plump for $60,000. By the end of 20X7, Plump had resold all but $15,000 of its purchase from Slim. Plump generated $90,000 on the sale of roots to various health stores during the year. Required: Prepare the journal entries recorded by Plump and Slim during 20X7 relating to the initial purchase, intercorporate sale, and resale of gnarl roots. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Journal entries recorded by Slim Company: Journal entries recorded by Plump Corporation: Prepare the worksheet consolidation entries needed as of December 31, 20X7, to remove all effects of the intercompany transfer in preparing the 20X7 consolidated financial statements. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Journal entries recorded by Slim Company:
1. Purchase of gnarl roots:
Inventory (gnarl roots) 150,000
Accounts payable 150,000
Explanation: Slim Company records the purchase of gnarl roots by debiting the inventory account and crediting accounts payable.
2. Intercompany sale to Plump:
Accounts receivable (Plump) 60,000
Sales revenue 60,000
Cost of goods sold 40,000
Inventory (gnarl roots) 40,000
Explanation: Slim Company records the intercompany sale by debiting accounts receivable from Plump and crediting sales revenue. The cost of goods sold is debited and the inventory account is credited.
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A retail product delivery company advertises that it will deliver your products within 16 days of purchase. A sample of 64 customers is taken. The average delivery time in the sample is 16.8 days. The population standard deviation is 6.6 days. Test (at 95% confidence level) whether the claim of product delivery within 16 days is acceptable or not, following the steps below.
1. State the hypothesis in this scenario and how it can be tested.
2. Calculate the test statistic. Would you reject the null hypothesis or not? Explain why.
A hypothesis is a claim or presumption regarding a population parameter in statistical hypothesis testing. It is used to determine whether a claim about the population based on sample data has sufficient evidence to sustain it or to reject it.
1. Hypothesis:
Null hypothesis (H0): The average delivery time is equal to or less than 16 days.Alternative hypothesis (H1): The average delivery time is greater than 16 days.To test this hypothesis, we can use a one-sample t-test.
2. Calculation of the test statistic:
The formula for calculating the t-test statistic in this scenario is:
t = (sample mean - population mean) / (sample standard deviation/sqrt (sample size))
t = (16.8 - 16) / (6.6 / sqrt(64))
= 0.8 / (6.6 / 8)
= 0.8 / 0.8258
= 0.9691
To determine whether to reject the null hypothesis or not, we need to compare the calculated t-value with the critical t-value at the desired confidence level (95% confidence level in this case). Since the alternative hypothesis is that the average delivery time is greater than 16 days, we are conducting a one-tailed test. With a sample size of 64, degrees of freedom (df) = n - 1 = 63.
Using a t-table or statistical software, we can find the critical t-value for a one-tailed test at the 95% confidence level with 63 degrees of freedom. Let's assume the critical t-value is 1.671. Since the calculated t-value (0.9691) is less than the critical t-value (1.671), we fail to reject the null hypothesis.
Therefore, based on the given sample, there is not enough evidence to conclude that the average delivery time is greater than 16 days.
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i. What is a project?
ii. Who are the key players in project management?
iii. What is the role of a project manager?
iv. Explain the priority matrix in detail.
v. What is the work breakdown structure?
i. Project: Temporary endeavor with defined objectives to create unique outcomes.
ii. Key players: Project manager, team members, stakeholders, sponsors.
iii. Project manager: Plans, organizes, and oversees project from start to finish.
iv. Priority matrix: Decision-making tool categorizing tasks based on urgency and importance.
v. Work breakdown structure: Hierarchical decomposition of project scope into manageable components.
i. A project is a temporary endeavor undertaken to create a unique product, service, or result. It has a defined beginning and end, specific objectives, and requires coordinated effort to achieve its goals.
ii. The key players in project management include the project manager, who is responsible for overall project success, the project team members, stakeholders, sponsors, and other individuals or groups involved in project planning, execution, and control.
iii. The role of a project manager is to plan, organize, and oversee the entire project from initiation to completion. They are responsible for setting project goals, defining scope, allocating resources, managing risks, communicating with stakeholders, and ensuring successful project delivery within the given constraints.
iv. The priority matrix, also known as the Eisenhower Matrix, is a decision-making tool used to prioritize tasks based on their urgency and importance. It categorizes tasks into four quadrants: urgent and important, important but not urgent, urgent but not important, and not urgent or important, helping to determine priorities effectively.
v. The work breakdown structure (WBS) is a hierarchical decomposition of the project scope into smaller, more manageable components called work packages. It represents the deliverables, tasks, and activities required to complete a project. The WBS provides a visual representation of the project's scope and helps in organizing and understanding the work involved.
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3 Examples of organizational process assets updates resulting from the Control Schedule process include:
Select one:
a. Revenue achieved from the sale of the project's product.
b. Lessons learned, causes of variance and the reasoning behind the corrective actions chosen.
c. Proposals for follow-up projects.
d. New organization charts illustrating the available resources for the project.
The correct answer is b. Lessons learned, causes of variance, and the reasoning behind the corrective actions chosen.
The Control Schedule process involves monitoring and controlling the project schedule to ensure it is on track. As part of this process, updates to the organizational process assets may occur. Examples of such updates include:
b. Lessons learned, causes of variance, and the reasoning behind the corrective actions chosen: This information is valuable for future projects and can be documented as part of the organizational process assets. It helps improve project performance and avoid similar issues in the future.
a. Revenue achieved from the sale of the project's product: While revenue information may be important for project evaluation, it is not specifically related to updating organizational process assets in the context of the Control Schedule process.
c. Proposals for follow-up projects: While proposals for follow-up projects may arise during the project execution, they are not directly related to updating organizational process assets in the Control Schedule process.
d. New organization charts illustrating the available resources for the project: Although updating organization charts can be a part of project management activities, it is not specifically related to the Control Schedule process or updating organizational process assets.
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Pay-per-view broadcasts are public goods. Ob.private goods. Oc. club goods. d. common resources.
Pay-per-view broadcasts can be classified as private goods. Private goods are characterized by two main characteristics: excludability and rivalry.
Excludability means that access to the good can be restricted or limited to those who pay for it. In the case of pay-per-view broadcasts, viewers must pay a fee to access and watch the broadcast. Rivalry refers to the fact that one person's consumption of the good reduces the quantity available for others. In the context of pay-per-view broadcasts, each viewer's consumption is independent and does not affect the ability of others to consume the broadcast, as it is broadcasted to individual viewers. Therefore, pay-per-view broadcasts are considered private goods.
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Search for articles about reverse auctions. What are three
advantages and three
disadvantages of using reverse auctions to purchase products and
services for
businesses? For consumers?
Reverse auctions are a type of e-auctions where the roles of the buyers and sellers are reversed, meaning the sellers compete for buyers' business by submitting successively lower bids on the products or services. The use of reverse auctions has increased rapidly in recent years. Many companies use reverse auctions to buy goods and services, while some websites use reverse auctions to sell products.
A reverse auction is an online bidding process where the buyer purchases goods and services. The auction occurs when several sellers bid for a contract to sell products or services to a buyer.
Advantages of reverse auctions to purchase products and services for businesses are:
1. Lower Costs: The most significant benefit of reverse auctions is that they help to reduce the price of products and services significantly.
2. Enhanced Competition: Competition among suppliers is intensified, resulting in better prices and services.
3. Greater Efficiency: Reverse auctions may aid in the streamlining of procurement procedures, allowing more effective budgeting and supply chain management.
Disadvantages of reverse auctions to purchase products and services for businesses are:
1. Quality concerns: While the goal of reverse auctions is to purchase high-quality products at a low price, quality may sometimes be jeopardized by the price pressure.
2. Relationship concerns: Reverse auctions may sour the relationship between the business and the supplier.
3. Loss of value: In reverse auctions, the focus is solely on the lowest price, which may result in a loss of value.
For consumers, the advantages of using reverse auctions are:
1. Competitive Pricing: By giving consumers a chance to bid, reverse auctions help to reduce prices and save money.
2. Easy to Use: Consumers can participate in reverse auctions from the comfort of their own homes.
3. Saves Time: Reverse auctions save time, as buyers do not need to visit multiple retailers to find the best deals.
Disadvantages of using reverse auctions for consumers are:
1. Unreliability: Since the reverse auction process is competitive, there is no guarantee that consumers will obtain the item they bid on.
2. Limited product selection: Because reverse auctions focus on a specific item or set of items, they may not offer the same range of goods as traditional auctions.
3. Limited personalization: Reverse auctions do not provide the same degree of personalization as traditional auctions, making it difficult for buyers to find what they are looking for.
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If a firm considers increasing its output and the extra revenue from producing one more unit is smaller Ithan the marginal cost of making the unit, then producing that extra unit C will decrease economic profit, but increase accounting profit C will increase the firm' profit C will decrease the firm' profit c will have no effect on the firm' profit
If the extra revenue from producing one more unit is smaller than the marginal cost of making the unit, producing that extra unit will decrease economic profit.
To determine the effect of producing an additional unit on the firm's profit, we need to consider the relationship between marginal revenue and marginal cost. Marginal revenue (MR) represents the additional revenue generated from producing one more unit, while marginal cost (MC) represents the additional cost incurred in producing that unit.
When MR is less than MC, it means that the additional revenue generated from producing one more unit is smaller than the additional cost incurred. This implies that the firm would be incurring a higher cost to produce the unit than the revenue it would generate, resulting in a decrease in economic profit.
In economic analysis, economic profit takes into account both explicit costs (such as wages, raw materials, and other expenses) and implicit costs (such as the opportunity cost of the resources used in production). Economic profit is the difference between total revenue and total cost, including both explicit and implicit costs.
If the extra revenue from producing one more unit is smaller than the marginal cost, it suggests that the firm is not efficiently allocating its resources. Producing that extra unit would result in a higher cost than the revenue generated, leading to a decrease in economic profit. This is because the firm is not covering its costs adequately and is not maximizing its overall profitability.
However, it's worth noting that producing that extra unit may still have an impact on accounting profit. Accounting profit only considers explicit costs and does not include implicit costs. If the additional revenue covers the explicit costs and contributes positively to accounting profit, then producing the extra unit would increase accounting profit. Nonetheless, from an economic perspective, which considers both explicit and implicit costs, the decrease in economic profit indicates that the firm is not better off producing that additional unit.
In summary, if the extra revenue from producing one more unit is smaller than the marginal cost of making the unit, producing that extra unit will decrease economic profit. While it may have an effect on accounting profit, the economic analysis focuses on the overall profitability of the firm, considering both explicit and implicit costs.
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EP 14-4 Securities Procedures. You were engaged to examine the financial statements of Ronlyn Corporation for the year ended June 30. On May 1, the corporation borrowed $500,000 from the bank to finance plant expansion. However, because of unexpected difficulties in acquiring the building site, the expansion had not begun as planned. To make use of the borrowed funds, management decided to invest in shares and bonds; on May 16 the $500,000 was invested in securities. Required: In your audit of investments, how would you a. audit the recorded dividend or interest income? b. determine market value? c. establish the authority for security purchases?
a) Audit the recorded dividend or interest income:To audit the recorded dividend or interest income, the following audit procedures must be followed: Check interest income on investments based on expected yield and interest rates.Check dividend income from shares and equity mutual funds as per reports of income receipts.
Ideally, the auditor should get direct confirmation from the issuer to ensure that the recorded amounts of income are correct and there are no unrecorded incomes.
b) Determine market value:To determine market value, the auditor should follow the following audit procedures:Obtain market value quotes from brokerage houses at year-end. Check the recorded market value against market quotes to ensure their accuracy and validity.If the market quotes are not available, obtain valuation reports from a third-party expert.
c) Establish the authority for security purchases: The following audit procedures need to be performed to establish the authority for security purchases:Examine the minutes of the board of directors' meetings to see if there is an authorization for the purchase of securities.Examine the company's policy on the purchase of securities, including investment parameters.Examine the broker's confirmation to determine if it has been properly authorized and approved.
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Which of the following reason is NOT a value related reason for M&A:
Group of answer choices To gain synergy To reducing corporate tax To take advantage of additional information about the target To reduce takeover risk None of the abov
The reason that is NOT a value related reason for M&A is: To reducing corporate tax.What is M&A?Mergers and Acquisitions (M&A) refer to a consolidation of businesses or assets. An M&A could include a merger, where two firms mutually decide to join into one new company.
Alternatively, an acquisition happens when one company purchases another business. With an M&A, firms expect to gain a competitive advantage, which translates into higher shareholder value. Synergy may happen when two companies come together and share knowledge, technology, or expertise, resulting in cost savings or increased revenue.To gain synergy:Synergy is often cited as the primary reason for M&A. Synergy is the increase in value by combining two companies that is more than the total value of each company.
For example, when two companies combine their sales forces, they may be able to sell more of their product, resulting in cost savings and higher revenue.To take advantage of additional information about the target:Another value related reason for M&A is to take advantage of additional information about the target company. The buyer may have specialized knowledge about the target company's industry, products, or customers that the target company lacks.
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Consider a Stackelberg model in which firm 1 sets output q, and then firm 2 observes q₁ before setting 92 1 Equlibrium, O a. Firm 1 chooses a function, and firm 2 chooses a number. O b. Both firms c
In a Stackelberg model where firm 1 sets output q₁ and firm 2 observes q₁ before setting q₂, the equilibrium outcome is such that firm 1 chooses a quantity function and firm 2 chooses a quantity in response.
The Stackelberg model is a game-theoretic framework in which one firm, known as the leader, determines its output quantity before the other firm, the follower, makes its decision. In this case, firm 1 acts as the leader by setting its output level, q₁. Firm 2, as the follower, observes the output choice of firm 1 and then decides its own output level, q₂, based on this information.
The equilibrium outcome in this model is that firm 1 chooses a function for its output quantity, meaning it determines its output level based on some strategic calculation. Firm 2, having observed the choice of firm 1, responds by selecting its own output level accordingly.
Overall, in the Stackelberg model, the leader-follower dynamic leads to an equilibrium where firm 1 chooses a function for its output and firm 2 responds based on the observed choice of firm 1.
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Carla Lopez deposits $2,000 a year into her retirement account. If these funds have an average earning of 5 percent over the 40 years until her retirement what will be the value of her retirement account? Use Exhibit 1-8. (Round time value factor to 3 decimal places and final answer to the nearest whole number.) Future value of retirement accou
The value of Carla Lopez's retirement account will be approximately $247,857.
To calculate the future value of Carla Lopez's retirement account, we can use the formula for compound interest. We know that Carla deposits $2,000 every year for 40 years, and the funds earn an average of 5% annually. To find the future value, we can use the time value factor table (Exhibit 1-8).
First, we calculate the time value factor (TVF) using the formula TVF = (1 + interest rate)^number of years.
In this case, the interest rate is 5% (0.05) and the number of years is 40. So, TVF = (1 + 0.05)^40 = 12.115.
Next, we calculate the future value by multiplying the annual deposit by the TVF:
Future value = annual deposit * TVF = $2,000 * 12.115 = $24,230.
Therefore, the value of Carla Lopez's retirement account will be approximately $24,230.
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During the month, Job AB2 used specialized machinery for 450 hours and incurred $550 in utilities on account, $300 in factory depreciation expense, and $100 in property tax on the factory. Prepare journal entries for the following: If an amount box does not require an entry, leave it blank. Question Content Area
A. Record the expenses incurred.
B. Record the allocation of overhead at the predetermined rate of $1.50 per machine hour.
To record the expenses incurred for Job AB2, we would make the following journal entries:
Utilities Expense (or Factory Overhead) $550
Accounts Payable $550
This entry records the incurrence of $550 in utilities expense on account.
Factory Depreciation Expense $300
Accumulated Depreciation $300
This entry recognizes $300 in depreciation expense for the factory.
Property Tax Expense $100
Accounts Payable $100
This entry records the property tax expense of $100 on account.
B. Record the allocation of overhead at the predetermined rate of $1.50 per machine hour:
To allocate overhead at the predetermined rate of $1.50 per machine hour, we would make the following journal entry:
Work-in-Process Inventory (Job AB2) $675
Factory Overhead $675
This entry allocates overhead to Job AB2 based on the number of machine hours used (450 hours × $1.50 per hour = $675).
Note: The allocation of overhead to specific jobs is typically done at the end of the period or when the job is completed. This journal entry reflects the allocation of overhead to Job AB2 based on the given information.
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The most useful tool for assessing debt capacity is:
a) personal risk analysis.
b) debt service ratios such as the GDS and TDS ratios.
c) bank statement.
d) financial advisor.
The use of financial
The most useful tool for assessing debt capacity is debt service ratios such as the GDS and TDS ratios.The correct answer is option B.
Debt capacity refers to the amount of debt that a company can take on and manage. A business may borrow funds to fund growth, pay off current debt, or invest in new projects. Determining a company's debt capacity is critical to avoid defaulting on debt payments. Debt service ratios, such as the gross debt service (GDS) and total debt service (TDS), are commonly used to assess a company's debt capacity.
It determines whether the firm has enough cash flow to pay off its debts on time. A personal risk analysis isn't typically used to assess a company's debt capacity. A bank statement can provide information about a company's transactions, but it isn't an appropriate tool for determining debt capacity.
While a financial advisor may provide advice on debt capacity, they aren't the most useful tool for assessing it.
Thus, debt service ratios such as the GDS and TDS ratios are the most useful tool for assessing debt capacity.
Hence, option B is the right answer.
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What business concepts can be associated with the movie:
"Trading Place (1983)"? Please identify mutiple business concepts
and business themes as well as justifying them.
Business Concepts associated with the movie "Trading Places (1983)": 1. Insider Trading2.
Market Manipulation3. Commodities Trading4. Social Class and Wealth Disparity5. Risk ManagementIn "Trading Places," the concept of insider trading is central to the plot, as the main characters exploit confidential information for financial gain. Market manipulation is also highlighted, as characters attempt to manipulate the price of orange juice futures. Commodities trading is depicted as a high-stakes business with significant financial implications. The movie explores social class and wealth disparity, emphasizing the impact of socioeconomic status on business opportunities. Finally, risk management is demonstrated as characters navigate unpredictable market conditions and make strategic decisions to minimize losses.
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Consider a society with three citizens - call them P1, P2 and P3. The citizens have to collectively choose among three alternatives - call them a, b, c. Suppose the preferences of the citizens are the following: P1: a>b>c. P2: b>c>a. P3: c>b>a. i. Using a majority voting rule, arrive at the social ranking between a, b and c. Is there a Condorcet winner? (15 marks) ii. Describe what "single-peaked preferences" mean. Is there a relationship between having single-peaked preferences and obtaining a Condorcet winner? Explain briefly. (15 marks)
Using a majority voting rule, we can determine the social ranking between alternatives a, b, and c based on the preferences of the citizens. Let's analyze the preferences of each citizen and tally the votes:
P1: a > b > c
P2: b > c > a
P3: c > b > a
By counting the number of first-place rankings, we can see that a has 1 vote, b has 1 vote, and c has 1 vote. Since there is no alternative that receives a majority of first-place rankings, there is no Condorcet winner in this scenario. The society's preferences do not align to favor one alternative over the others when considering the majority voting rule.
ii. "Single-peaked preferences" refer to a situation where individuals have a clear and unique peak in their preference ordering. It means that each person's preferences are centered around a specific point and decrease in preference as they move away from that point. When preferences are single-peaked, it is possible to determine a Condorcet winner. A Condorcet winner is an alternative that would beat any other alternative in a one-on-one comparison with all individuals in the society. However, in the given scenario, the preferences are not single-peaked, as each citizen has a different ordering of alternatives. Therefore, there is no direct relationship between having single-peaked preferences and obtaining a Condorcet winner.
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When specifying PPE which of the following should be considered?
When specifying PPE, considerations include hazards, compliance, suitability, comfort, and training.
(i) Hazards and Risks : Identify the specific hazards and risks present in the workplace to determine the appropriate types of PPE required for protection.
(ii) Compliance with Regulations: Ensure that specified PPE meets relevant regulatory standards and requirements, such as those set by health and safety agencies.
(iii) Suitability and Effectiveness: Select PPE that is suitable for identified hazards, providing necessary level of protection against those hazards.
(iv) Comfort and Fit: Consider the comfort and fit of PPE to encourage proper usage by workers and minimize discomfort to their tasks.
(v) Training and Education: Determine the training and educational needs related to specified PPE, ensuring that employees are adequately trained on its proper use, maintenance, and limitations.
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The given question is incomplete, the complete question is
What should be considered when specifying PPE?
Critically assess the way Jeff Bezos dealt with stakeholders with a particular focus on employees of Amazon.
Jeff Bezos dealt with stakeholders in a main answer with a particular focus on the employees of Amazon. However, the way Bezos treated Amazon's employees has been widely criticized by some stakeholders. Amazon employees' working conditions, including low pay .
long working hours, and a lack of job security, have been highlighted as a significant issue by critics. As a result, there are calls the way in which Bezos treated Amazon employees. There has been a lot of controversy surrounding Jeff Bezos' treatment of Amazon employees. While some stakeholders believe he has done a great job of managing the company and creating jobs, others feel that he has not done enough to improve working conditions for Amazon workers .Be that as it may it is important to note that Bezos' focus has been on driving growth for the company, and he has been successful in this regard.
As a result, some of the working conditions at Amazon may not have been ideal for employees in the past, but the company has continued to grow and expand into new markets. Nevertheless, as a responsible corporate leader, Jeff Bezos needs to be aware of the impact his decisions have on all stakeholders, not just shareholders. Amazon's employees play a vital role in the company's success, and it is important that they are treated fairly and with respect. In conclusion, it is clear that Jeff Bezos has dealt with stakeholders, including Amazon employees, in a main answer. However that there is room for improvement, and Bezos needs to take steps to improve working conditions for Amazon employees. This will not only benefit the workers but also the company in the long run.
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taco bell case analysis assignment
Taco Bell's strong brand, innovative menu offerings, and effective marketing strategies have positioned it as a successful player in the fast-food industry.
Taco Bell is a fast-food restaurant chain that has experienced significant growth and success in the fast-food industry. The company's strengths lie in its strong brand recognition, innovative menu offerings, and effective marketing strategies. Taco Bell has successfully positioned itself as a leader in the Mexican-inspired fast-food segment, appealing to a wide range of customers.
One of the key factors contributing to Taco Bell's success is its ability to adapt to changing consumer preferences and introduce new menu items. For example, the introduction of the Doritos Locos Tacos was a major hit, driving sales and attracting new customers. Taco Bell also capitalized on the growing demand for plant-based options by partnering with Beyond Meat to offer vegetarian and vegan menu items.
Taco Bell's marketing efforts have been another crucial aspect of its success. The company has utilized social media platforms to engage with customers, launch creative marketing campaigns, and generate buzz around new product launches. Taco Bell's engaging and humorous advertisements have resonated with its target audience, further enhancing its brand image.
Overall, Taco Bell's strong brand, innovative menu offerings, and effective marketing strategies have positioned it as a successful player in the fast-food industry. By staying relevant, adapting to changing consumer preferences, and leveraging social media, Taco Bell has maintained its competitive edge and continued to attract a diverse customer base. However, the company should also be mindful of evolving health-conscious trends and consider expanding its healthier menu options to cater to a broader customer segment.
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Business Law:
Dan, Rachel and Zach have been in business together as dog breeders since 2015. When they started the business, they each contributed capital in the following manner:
Dan : $40,000
Rachel: $40,000
Zach: $20,000
They own 10 acres of land jointly which is used in the business. Their clients extend all over the Caribbean. The business is known as "The Paws Club". There is no written agreement between them.
In 2019 Zach entered into a contract with Paul to purchase a champion dog from Germany at a cost of $35,000 unknown to Dan and Rachel. However, because of his close relation to Paul, Zach made the purchase. He also bought for himself a brand-new Toyota Hilux for $500,000, with the latest high-tech gadgets included. He told the car dealer, that this would be used for his weekend trips. He signed the contract in the business’ name. Dan and Rachel had no knowledge of the purchase, until they received an invoice from the car dealership. Dan and Rachel are refusing to pay it. The car dealership and Paul are now demanding payment from the Paw Club based on the contracts signed by Zach. As a result of this behaviour, Dan and Rachel would like to remove Zach. Dan and Rachel are also considering registering the business to a private limited company, in which they will be both directors and shareholders.
Advise Dan and Rachel.
Dan and Rachel should seek legal advice to address the situation involving Zach's unauthorized contracts and assess their options for removing him from the business.
In the given scenario, Zach acted without the knowledge and consent of Dan and Rachel, which raises concerns about his authority to make decisions on behalf of the business. By consulting a lawyer, Dan and Rachel can evaluate the legal implications of Zach's actions and determine whether they have grounds to challenge the contracts he entered into.
Additionally, if Dan and Rachel wish to remove Zach from the business, they should understand the relevant laws and regulations governing partnerships in their jurisdiction. A lawyer can guide them through the process and provide insights into the potential consequences and steps involved in restructuring the business.
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: Financial Markets 20 pts
Read each scenario in the following table and determine the best strategy to raise financial capital. (Early-stage capital, Profits, Bonds, Stocks)
Scenario Suggested strategy:
Early-stage capital/ from profits/
issue bonds/ sell stocks
After an amazing year of record profits, this company wants to take their winning formula and open another store. They don’t like to acquire debt or new partners. This company is ready to go public and have their company trading in the New York stock exchange to raise money for the company. In business for 15 years this company needs money to develop their production process and to expand to other countries. They are confident they can pay back this debt in 7 years. A news start-up social media company needs money to develop their platform and to market their site. This new company is looking to raise funds by having a strategic partner with access to money. The company is willing to give up ownership or to borrow the funds with a repayment term of five years.
Scenario Suggested strategy:
After an amazing year of record profits, this company wants to take their winning formula and open another store. They don’t like to acquire debt or new partners.
This company is ready to go public and have their company trading in the New York stock exchange to raise money for the company. Suggested Strategy: Sell stocks.
In business for 15 years this company needs money to develop their production process and to expand to other countries. They are confident they can pay back this debt in 7 years. Suggested Strategy: Issue bonds.
A news start-up social media company needs money to develop their platform and to market their site. This new company is looking to raise funds by having a strategic partner with access to money. The company is willing to give up ownership or to borrow the funds with a repayment term of five years. Suggested Strategy: Early-stage capital (strategic partner).
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eBook H Problem Walk-Through Find the future values of the following ordinary annuities: a. FV of $400 paid each 6 months for 5 years at a nominal rate of 6% compounded semiannually. Do not round intermediate calculations. Round your answer to the nearest cent. $ b. FV of $200 paid each 3 months for 5 years at a nominal rate of 6% compounded quarterly. Do not round intermediate calculations. Round your answer to the nearest cent. $ c. These annuities receive the same amount of cash during the 5-year period and earn interest at the same nominal rate, yet the annuity in part b ends up larger than the one in part a. Why does this occur? -Select- Hide Foods
To find the future value of an ordinary annuity, we can use the formula:
FV = P * ((1 + r/n)^(n*t) - 1) / (r/n)
Where:
FV is the future value of the annuity
P is the periodic payment
r is the nominal interest rate
n is the number of compounding periods per year
t is the number of years
In this case, the periodic payment is $400, the nominal interest rate is 6%, and the compounding is semiannually (twice per year) for 5 years.
Using the formula, we can calculate the future value:
FV = $400 * ((1 + 0.06/2)^(2*5) - 1) / (0.06/2)
Calculating this expression without rounding intermediate calculations, the future value of the annuity is approximately $2,512.53.
b) Similarly, for the annuity where $200 is paid every 3 months, the compounding is quarterly (four times per year) for 5 years.
FV = $200 * ((1 + 0.06/4)^(4*5) - 1) / (0.06/4)
Calculating this expression without rounding intermediate calculations, the future value of the annuity is approximately $2,556.92.
c) The annuity in part b ends up larger than the one in part a because the compounding is more frequent. In part b, the annuity is compounded quarterly, resulting in more compounding periods per year compared to the semiannual compounding in part a. More frequent compounding allows the interest to accumulate more quickly, leading to a higher future value for the annuity.
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Sara has been carrying on a fashion store business in Kingston, Ontario as a sole proprietor under the name Fashions R Us since 2018. She is worried that she will lose the business. She is a single mother with no other source of income.
Sara meets Abdul at a fashion show in 2022. Abdul is a management consultant who has considerable expertise in inventory management and the use of aggressive marketing techniques. He lives in Toronto. Sara and Abdul decide to carry on the Fashions R Us business together in Kingston. They agree that:
Sara will contribute all of her ownership interest in the Fashions R Us business.
Sara will manage the business on a day to day basis, while Abdul will handle the marketing and inventory management. However, Abdul will spend most of his time in Toronto where is still maintains his consulting business.
Abdul will contribute $150,000 of his own cash into the business.
All major decisions of the business will require the agreement of both Sara and Abdul.
- What issues should Sara and Abdul address before transferring the Fashions R Us business into a general partnership between the two of them?
- How would those issues be treated differently if Sara and Abdul were to incorporate a corporation instead, and transfer the business of Fashions R Us to that corporation?
Sara and Abdul, before transferring the Fashions R Us business into a general partnership, should address key issues. They must determine ownership percentages, profit sharing ratios, and clarify roles and responsibilities in a partnership agreement. Decision-making processes should be established, outlining major decisions requiring unanimous agreement. Capital contributions need to be discussed, including the value of Sara's ownership interest and Abdul's cash contribution.
Alternatively, if they choose to incorporate a corporation, issues would be treated differently. Ownership and profit sharing would be determined by share allocation. Roles and responsibilities would be defined as directors or officers, with Sara managing day-to-day operations and Abdul handling marketing and inventory. Decision-making would be governed by the board of directors or shareholders as per corporate bylaws. Capital contributions would be used as initial capital, with terms outlined in financing and share subscription agreements. Corporate governance would be defined by bylaws and articles of incorporation.
Addressing these issues is crucial for both partnership and corporate structures to ensure clarity, alignment, and legal compliance. Seeking professional advice is recommended to tailor the agreements or structures to their specific needs and protect their interests.
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Lather of Heaven is a manufacturer of personal care products that has decided to start a new line of products called Nature, which contains only natural ingredients. What marketing strategy should Lather of Heaven use if it wants to tap a niche market of organic product users? Explain why
Lather of Heaven should use a niche marketing strategy to tap into the organic product user market.
Lather of Heaven should employ a niche marketing strategy to target the specific segment of organic product users. Niche marketing allows the company to focus its marketing efforts on a well-defined and specialized market segment. By catering exclusively to organic product users, Lather of Heaven can create a strong connection with this specific target audience.
The organic product user market is characterized by consumers who prioritize natural ingredients and seek products free from synthetic chemicals. By tailoring the Nature line to meet these specific demands, Lather of Heaven can differentiate itself from competitors and position itself as a trusted brand among organic product users.
Through niche marketing, Lather of Heaven can establish a strong brand image associated with sustainability, eco-friendliness, and personal well-being. This alignment with the values of the target market enhances brand perception and increases customer loyalty.
Moreover, by focusing on a niche market, Lather of Heaven can create a perception of higher value for its products. Organic product users are often willing to pay a premium for products that align with their preferences and beliefs. This allows Lather of Heaven to command higher prices and potentially achieve better profit margins.
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The Lim Ltd manufactures and sells PC sets. There are two divisions responsible for the manufacturing process. The existing policy of Lim's senior management is to allow division managers to act autonomously to maximize their own division's operating income. Plant A (the screening division) is located in Dongquan, while plant B (the assembling division) is located in Guizhou of the PRC. Plant B buys PC screens from Plant A and assembles the PC sets. Currently, Plant A is operating at full capacity, incurs an incremental manufacturing cost of $55 per unit. Moreover, Plant A can sell all its output to the outside market at a price of $90 per screen, after incurring a variable marketing and distribution cost of $8 per screen. If Plant B purchases screens from outside suppliers at a price of $90 per screen, it will incur a variable purchasing cost of $5 per screen. Required: 1. What is the possible range of transfer price between the two division managers? Explain 2. Now suppose that the Plant A can sell only 80% of its output capacity of 30,000 screens per month on the open market. Capacity cannot be reduced in the short run. Plant B can assemble and sell more than 30,000 TV sets per month. a. What is the minimum transfer price at which the Plant A manager would be willing to sell screens to the Plant B ? Explain b. From the viewpoint of the senior management, would internal transfer be a good choice? Explain briefly . 3.Would you recommend senior management of Lim Ltd to change its existing transfer price policy? Discuss.
1. The range of transfer prices between the two division managers will be between $55 and $82 per unit. The maximum transfer price will be equal to the cost to the outside market of $90 per screen less the incremental variable marketing and distribution cost of $8 per screen. In this case, the maximum transfer price will be $82 per unit ($90 minus $8 = $82).
2. a. In the given scenario, if the plant A can only sell 80% of its output capacity of 30,000 screens per month on the open market, then the minimum transfer price at which the plant A manager would be willing to sell screens to the plant B will be $63.60 per unit. This price is calculated by adding the incremental manufacturing cost per unit of $55 to the forgone contribution of the outside market, which is $90 - $8 = $82 and multiplying this amount by 80% (0.8), which is the amount that can be sold in the outside market
3. The current policy of allowing division managers to act autonomously to maximize their own division's operating income can lead to suboptimal decisions that do not benefit the company as a whole. Instead, a centralized transfer pricing policy should be implemented that takes into account the costs and benefits of both divisions and ensures that the transfer price is set at a fair level.
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How much money must Mathew deposit into a bank account yielding 6% (compounded quarterly) in order to have $675,000 at the end of eight years Select one: O a. $356,679 O b. $386,194 O c. $331,190 O d. $423.503
The amount of money Mathew must deposit into a bank account yielding 6% (compounded quarterly) in order to have $675,000 at the end of eight years is $423.503. Hence, Option (D) is correct
[tex]FV = PV * (1 + r/n)^{(n*t)}[/tex]
Where:
FV = Future Value
PV = Present value (deposit amount)
r = Annual interest rate (in decimal form)
n = Number of compounding periods per year
t = Number of years
Given:
FV = $675,000
r = 6% = 0.06 (compounded quarterly)
n = 4 (quarterly compounding)
t = 8 years
Rearranging the formula:
[tex]PV = FV / (1 + r/n)^{(n*t)}[/tex]
Substituting the given values:
[tex]PV = $675,000 / (1 + 0.06/4)^{(4*8)}[/tex]
[tex]PV = $675,000 / (1 + 0.015)^{32}[/tex]
[tex]PV = $675,000 / (1.015)^{32}[/tex]
PV = 675,000/ 1.6
PV = $421,875
since it is closest to the $423,503, therefore
PV ≈ $423.503
Thus, Mathew must deposit approximately $423.503 into the bank account in order to have $675,000 at the end of eight years.
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Accounts Receivable Analysis A company reports the following: Sales $327,040 Average accounts receivable (net) 20,440 Determine (a) the accounts receivable turnover and (b) the number of days' sales in receivables. Round interim calculations to the nearest dollar and final answers to one decimal place. Assume a 365-day year. a. Accounts receivable turnover b. Number of days' sales in receivables days
The accounts receivable turnover is 16 times and the number of days' sales in receivables is 22.8
Accounts receivable turnover, which shows how frequently receivables are converted into cash over a given time period, is a financial statistic that assesses how effectively a business collects payments from its clients.
Given: Net sales = 327040
Average account receivable = 20440
Therefore, Receivable turnover can be calculated as:
= Net sales / Average receivable
= 327040 / 20440
= 16
Now, the number of days sales in receivables can be calculated as:
= 365 / Account receivable turnover
= 365 / 16
= 22.8 days
Thus, the accounts receivable turnover is 16 times and the number of days' sales in receivables is 22.8
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The FGM Corporation has 800M shares of its common stock outstanding, which is priced at $20 per share. The stock beta is estimated at 1.5. In addition, the Corporation’s 8%, $20B par, 15-year, B-rated semiannual coupon paying bonds are priced at a discount of 10% from its par. In addition, the FGM Corporation also finances its operation with 100M shares of its preferred stock, which pays annual DPS of $4 and is currently priced at $50 per share. Currently, the yield on short term Treasury securities is 2%, and the market risk premium is 9.5%. Assume that the tax rate is 21%.
(i) Compute the WACC of The FGM Corporation. < … >
(ii) Say, the flotation costs for issuing new debt, preferred stock, and common stock capital are, respectively, 3%, 8%, and 15%. Without the adjustment for flotation costs, the NPV of The FGM Corporation’s $120M project is estimated to be $8M. Compute the weighted average flotation cost, and the NPV of this project after taking into account of the flotation costs. <8.5641%; -$3,239,484>
(i) The WACC (Weighted Average Cost of Capital) of The FGM Corporation is 11.6438%.
(ii) The weighted average flotation cost is 8.2916%.
The NPV of The FGM Corporation's $120M project, after taking into account the flotation costs, is approximately -$1,949,920.
(i) To compute the WACC (Weighted Average Cost of Capital) of The FGM Corporation, we need to calculate the weights and costs of each component of capital (debt, preferred stock, and common stock) and then take the weighted average.
1. Cost of Debt:
The bonds are priced at a discount of 10%, which means the purchase price is 90% of the par value. Therefore, the cost of debt can be calculated as:
Cost of Debt = Coupon Rate / (1 - Discount Rate)
Cost of Debt = 8% / (1 - 0.10) = 8.89%
2. Cost of Preferred Stock:
The dividend per share (DPS) is $4, and the price per share is $50. Therefore, the cost of preferred stock can be calculated as:
Cost of Preferred Stock = DPS / Price per Share
Cost of Preferred Stock = $4 / $50 = 8%
3. Cost of Common Stock:
To calculate the cost of common stock, we need to use the Capital Asset Pricing Model (CAPM). The formula for CAPM is:
Cost of Common Stock = Risk-Free Rate + Beta * Market Risk Premium
Given:
Risk-Free Rate = 2%
Beta = 1.5
Market Risk Premium = 9.5%
Cost of Common Stock = 2% + 1.5 * 9.5% = 16.25%
4. Weights of each component:
The weights can be calculated by dividing the market value of each component by the total market value of all components.
Market Value of Debt = $20B (par value)
Market Value of Preferred Stock = 100M shares * $50 per share = $5B
Market Value of Common Stock = 800M shares * $20 per share = $16B
Total Market Value = $20B + $5B + $16B = $41B
Weight of Debt = $20B / $41B = 0.4878 (48.78%)
Weight of Preferred Stock = $5B / $41B = 0.1219 (12.19%)
Weight of Common Stock = $16B / $41B = 0.3902 (39.02%)
5. Calculate WACC:
WACC = (Weight of Debt * Cost of Debt) + (Weight of Preferred Stock * Cost of Preferred Stock) + (Weight of Common Stock * Cost of Common Stock)
WACC = (0.4878 * 8.89%) + (0.1219 * 8%) + (0.3902 * 16.25%)
WACC = 4.3315% + 0.9752% + 6.3371%
WACC = 11.6438%
The WACC of The FGM Corporation is 11.6438%.
(ii) Weighted Average Flotation Cost:
Weighted Average Flotation Cost = (Flotation Cost of Debt * Weight of Debt) + (Flotation Cost of Preferred Stock * Weight of Preferred Stock) + (Flotation Cost of Common Stock * Weight of Common Stock)
Flotation Cost of Debt = 3%
Flotation Cost of Preferred Stock = 8%
Flotation Cost of Common Stock = 15%
Weighted Average Flotation Cost = (0.03 * 0.4878) + (0.08 * 0.1219) + (0.15 * 0.3902)
Weighted Average Flotation Cost = 0.014634 + 0.009752 + 0.05853
Weighted Average Flotation Cost = 0.082916 = 8.2916%
The weighted average
flotation cost is 8.2916%.
NPV after Flotation Costs:
Adjusted NPV = NPV without Flotation Costs - (Weighted Average Flotation Cost * Project Cost)
NPV without Flotation Costs = $8M
Project Cost = $120M
Adjusted NPV = $8M - (0.082916 * $120M)
Adjusted NPV = $8M - $9.94992M
Adjusted NPV = -$1.94992M
Therefore, the NPV of The FGM Corporation's $120M project after taking into account the flotation costs is -$1.94992M or approximately -$1,949,920.
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When a manager stops looking for alternatives as soon as she finds one that meets minimum criteria, the manager is _____________________________________.
a. using intuition
b. satisficing
c. engaging in bounded rationality
d. showing a propensity for risk
What is intuition?
a. A desire to believe that an unsuccessful course of action will eventually be successful
b. A belief that is based on a person’s unconscious application of experience
c. A belief that one should treat others fairly
d. A tendency to take risks when the potential rewards are great
When a manager stops looking for alternatives as soon as they find one that meets minimum criteria, the manager is (option) b. satisficing.
Intuition, on the other hand, refers to (option) b. a belief that is based on a person's unconscious application of experience.
1. Satisficing: Satisficing is the act of accepting the first alternative that meets a minimum set of criteria rather than seeking the optimal solution. When a manager stops exploring other options as soon as they find one that meets the minimum requirements, they are engaging in satisficing. This approach may be due to time constraints, limited information, or a desire to avoid decision-making complexity.
2. Intuition: Intuition refers to a belief or judgment that is based on a person's unconscious application of their experiences and knowledge. It is a rapid and automatic decision-making process that relies on heuristics and gut feelings rather than extensive analysis. Intuition can be influenced by past experiences, expertise, and patterns recognition. It allows individuals to make quick decisions without consciously deliberating or considering all available information.
In the context of the given options:
a. A desire to believe that an unsuccessful course of action will eventually be successful: This option describes optimism bias or wishful thinking, not intuition.
b. A belief that is based on a person's unconscious application of experience: This accurately defines intuition.
c. A belief that one should treat others fairly: This option describes a fairness norm, not intuition.
d. A tendency to take risks when the potential rewards are great: This option refers to risk propensity, not intuition.
In summary, satisficing is the managerial behavior of accepting the first alternative that meets minimum criteria, while intuition is a decision-making process based on unconscious application of experience and knowledge.
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Under the deferral method, how should endowment contributions be recognized?
a.
As revenue in the endowment fund.
b.
According to the terms of the endowment agreement.
c.
As direct increases in net assets in the period they are received.
d.
As revenue in the year they are received.
Under the deferral method, endowment contributions should be recognized as direct increases in net assets in the period they are received. Endowment funds are donations given to organizations with the objective of keeping the principal amount intact and using only the income generated for charitable purposes. The correct option is C.
A donor establishes an endowment fund and then specifies the terms and conditions under which the principal amount will be used. It's crucial to note that there are two main accounting procedures for endowment funds, which are the deferral method and the restricted method.
When using the deferral method, the endowment contributions should be recognized as direct increases in net assets in the period they are received. This approach is due to the fact that endowment contributions are subject to restrictions that are established by the donor, and the principal amount is never supposed to be spent.
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If the Fed buys 1 million of bonds from the First National Bank,
but an additional 8% of any deposit is held as excess reserves.
a. What is the total increase in checkable deposits?
b. Describe the tw
a. The total increase in checkable deposits is $1.12 million.
The excess reserve ratio can be calculated by multiplying the deposit by the excess reserve ratio. In this case, the deposit is $1 million and the excess reserve ratio is 8%, so the excess reserves are $80,000 (0.08 x $1 million).
The remaining amount of the deposit, which is $920,000 ($1 million - $80,000), is available to be loaned out. The deposit multiplier is calculated as:
1 / Required reserve ratio
In this case, the required reserve ratio is 12.5% (100% - 8%), so the deposit multiplier is:
1 / 0.125 = 8
Therefore, the total increase in checkable deposits is:
$1 million x 8 = $8 million
But we also need to add the initial deposit of $1 million:
$8 million + $1 million = $9 million
So the total increase in checkable deposits is $9 million, and the amount held as excess reserves is $80,000.
b. The Federal Reserve uses open market operations to influence the money supply by buying and selling government securities in the open market. When the Fed buys government bonds from a bank, it increases the bank's reserves and creates new checkable deposits in the bank's account.
The excess reserve ratio is the ratio of excess reserves to total deposits. Excess reserves are the reserves that a bank holds above the required reserves. The required reserve ratio is set by the Federal Reserve, and it specifies the percentage of deposits that banks must hold in reserve.
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