On June 4, 2020, China’s 10-year sovereign bond has a coupon rate of 4.5 (with two coupon payments in a year). Bond Price = $107.48 (approx). Hence, the price of the bond is $107.48 (approx).
Calculation of Coupon Payment:-
Nominal value (Par Value) of Bond (FV) = $100 Coupon rate = 4.5%Frequency of coupon payment = 2 times a year
So, the coupon payment will be Coupon Payment = (FV * coupon rate) / frequency of coupon payment= (100 * 4.5) / 2= $2.25
Calculation of Yield to Maturity (YTM):To calculate Yield to maturity (YTM), we need to know the price of the bond. We can use the formula below to calculate the bond price.Bond Price = (Coupon Payment / (1 + (YTM / 2))) + (Coupon Payment / (1 + (YTM / 2))2) + … + (Coupon Payment + Par Value) / (1 + (YTM / 2)) n Where,n = number of years = 10 years frequency of coupon payment = 2 times a year Coupon Payment = $2.25 Par Value = $100 YTM is the unknown variable that we want to solve.Therefore,Putting all the values in the above formula, we get,Bond Price = (2.25 / (1 + (YTM / 2))) + (2.25 / (1 + (YTM / 2))2) + … + (2.25 + 100) / (1 + (YTM / 2))20
So, Bond Price = ∑ (Coupon Payment / (1 + (YTM / 2))t) + (Par Value / (1 + (YTM / 2))n)t varies from 1 to 20 and n = 20
Solving the above equation using Excel Solver or financial calculator or by trial and error method, we get YTM = 3.919%.
Therefore, Bond Price = $107.48 (approx).Hence, the price of the bond is $107.48 (approx).
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Maria has budgeted a total of $9 to spend on two goods: chips and salsa. She likes to consumer a unit of chips in combination with a unit of salsa. Any unit of chips that she cannot consume in combination with a unit of salsa is useless. Similarly, any unit of salsa that she cannot consume in combination with a unit if chips is useless. If the price of a unit of chips is $0.50 and the price of a unit of salsa is $0.10, how many units of each good does she purchase. Please explain and show any calculations.
Maria should purchase 15 units of chips and 15 units of salsa to stay within her $9 budget and fulfill her preference of consuming one unit of chips with one unit of salsa.
To determine the number of units of chips and salsa that Maria should purchase within her budget, we can set up a system of equations based on the given prices and budget constraints.
Let's assume Maria purchases x units of chips and y units of salsa.
The cost of x units of chips is $0.50 times x, which can be written as 0.50x.
The cost of y units of salsa is $0.10 times y, which can be written as 0.10y.
According to the given information, the total budget is $9. Therefore, the total cost of chips and salsa combined should be equal to the budget:
0.50x + 0.10y = 9 (Equation 1)
Additionally, Maria consumes one unit of chips with one unit of salsa. So, the number of units of chips and salsa purchased should be the same:
x = y (Equation 2)
Now, we have a system of equations:
0.50x + 0.10y = 9
x = y
We can solve this system of equations to find the values of x and y.
Substitute the value of x from Equation 2 into Equation 1:
0.50(y) + 0.10y = 9
0.50y + 0.10y = 9
0.60y = 9
y = 9 / 0.60
y = 15
Substituting this value back into Equation 2, we find:
x = 15
Therefore, Maria should purchase 15 units of chips and 15 units of salsa to stay within her $9 budget.
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A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term bond fund, and the third is a money market fund that provides a safe return of 8%. The characteristics of the risky funds are as follows:
Expected Return Standard Deviation
Stock fund (S) 18 % 35 %
Bond fund (B) 15 20 The correlation between the fund returns is 0.12.
You require that your portfolio yield an expected return of 13%, and that it be efficient, that is, on the steepest feasible CAL.
a. What is the standard deviation of your portfolio? (Round your answer to 2 decimal places.)
Standard deviation : %
b. What is the proportion invested in the money market fund and each of the two risky funds? (Round your answers to 2 decimal places.)
Proportion invested
Money market fund %
Stocks %
Bonds %
A pension fund manager is considering three mutual funds. The three mutual funds being considered are: Stock Fund, Long-Term Bond Fund, and Money Market Fund.
In terms of risk, the money market fund is the safest because it provides a safe return of 8%. The stock fund and the long-term bond fund are more risky. In order to compare the risk of the stock fund and long-term bond fund, the standard deviation must be considered.The standard deviation is a measure of the amount of variability or dispersion of a set of values from their mean. In finance, standard deviation is used to measure the volatility of returns. Therefore, the stock fund and long-term bond fund with the highest standard deviation has the highest volatility and is considered riskier than the fund with the lower standard deviation.
A higher standard deviation indicates that the returns are more spread out and less predictable, which can lead to greater gains or losses.The money market fund is the safest, as it has the lowest standard deviation. The long-term bond fund is next, with a standard deviation of %, and the stock fund has the highest standard deviation, indicating the highest level of risk among the three funds. Therefore, the pension fund manager should take into account the risk and returns associated with each mutual fund before making any decision.
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The conceptual framework suggests that costs should be deferred if they create or add value to an asset. Assets are defined as ". . . probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events". We discussed three exceptions to this principle in class. Describe one of the exceptions.
The conceptual framework suggests that costs should be deferred if they create or add value to an asset. Assets are defined as ". . . probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events".
One of the three exceptions to this principle is that when the costs of an asset are too high to be reasonable, the entity should not defer those costs.Below are the other two exceptions:If the future economic benefit that is associated with the asset is not probable, then deferring the cost of that asset is not recommended. Rather, the cost should be recognized in the income statement of the period in which it was incurred.If an asset is to be consumed quickly, then deferring its cost will not create any significant value for the asset.
Thus, the cost should be expensed in the income statement of the period in which it was incurred. Assets that are consumed quickly are usually those with a low-cost value, such as office supplies, cleaning supplies, etc.In summary, when costs are too high to be Assetsreasonable, they should be expensed in the income statement of the period in which they were incurred, rather than deferred to the balance sheet.
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An investor is promised the following set of annual cash flows if she invests today:
YEAR 1 2 3 4
Cash flow $1,100 $1,400 $2,200
If the investor has a 12% APR, how much can she pay today for this set of cash flows?
a. $1,000
b. $4,455
c. $3,785
d. $4,164
e. $5,101
f. $4,944
The investor can pay approximately $3,654.51 today for the set of cash flows promised, given a 12% APR. This indicates that option (c) $3,785 is the closest answer choice.
To calculate the present value of the cash flows, we need to discount each cash flow to its present value using the 12% annual percentage rate (APR). The formula to calculate the present value is:
PV = CF1 / (1 + r) + CF2 / (1 + r)^2 + CF3 / (1 + r)^3 + CF4 / (1 + r)^4
Where PV is the present value, CF is the cash flow in a particular year, and r is the discount rate.
Plugging in the values from the given cash flows and the discount rate of 12% (0.12), we have:
PV = $1,100 / (1 + 0.12) + $1,400 / (1 + 0.12)^2 + $2,200 / (1 + 0.12)^3PV = $982.14 + $1,110.54 + $1,561.83
PV = $3,654.51
Therefore, the investor can pay approximately $3,654.51 today for this set of cash flows. The closest answer choice is option (c) $3,785.
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Kopano Ke Matla Construction is a medium sized company. The
company was founded in 2009 with an initial loan of R2,500,000 and
a staff compliment of 5. The company now also wants to expand
aggressivel
Kopano Ke Matla Construction should evaluate the costs and benefits of each financing option, including a bank loan, bond issuance, and issuing new shares. They should consider interest expenses, repayment schedules, dilution of ownership, and cash flow generation.
y into the field of road construction. To finance this expansion, the company is considering different financing options.
One option is to secure a bank loan. The company approaches a bank and is offered the following terms:
Loan amount: R5,000,000
Interest rate: 8% per annum
Loan term: 5 years
Repayment frequency: Monthly
The company also explores the possibility of issuing bonds to raise capital. After conducting market research, it estimates that it can issue bonds with the following details:
Bond amount: R10,000,000
Coupon rate: 10% per annum
Bond term: 10 years
Interest payments: Semi-annually
The company is also considering bringing in external investors by issuing new shares. It plans to issue 100,000 new shares at a price of R50 per share.
To make an informed decision about the financing options, the company should evaluate the costs and benefits of each option. This includes considering the interest expenses, repayment schedule, potential dilution of ownership through issuing new shares, and the impact on the company's financial position and cash flow.
Additionally, the company should assess its ability to generate sufficient cash flow to cover the financing costs and repayments. This can be done by conducting financial projections, analyzing the potential profitability of the road construction projects, and assessing the company's overall financial health.
By carefully evaluating these factors and considering the long-term implications, Kopano Ke Matla Construction can make an informed decision about the most suitable financing options for its aggressive expansion into road construction.
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Swan Corp. began work on 3,600 units this period. Work in Process Inventory was 700 at the beginning of the period (60% complete) and 1,010 at the end of the period (50% complete). Swan uses the weighted average method of process costing. Direct materials are added at the beginning of the process, and conversion costs are incurred evenly throughout the period.
The cost per equivalent unit of production is $915.38 for direct materials and $931.33 for conversion costs.Given:Work in process inventory at the beginning of the period (60% complete) = 700,Work in process inventory at the end of the period (50% complete) = 1,010,Units started and completed = 3,050,Units remaining in process = 550,Swan Corp. uses the weighted average method of process costing.
Direct materials are added at the beginning of the process.Conversion costs are incurred evenly throughout the period.Calculation of Equivalent Units (EU) of Production:
Equivalent Units of Production Direct Materials Conversion Costs
Units completed 3,050 3,050 3,050
Units in the ending inventory 550 330 275
Total equivalent units 3,600 3,380 3,325
Calculation of Cost per Equivalent Unit:
Direct Materials Conversion Costs Cost per EU Total Cost Direct materials at the beginning of the period$—Direct materials added during the period$1,100,000
Conversion costs during the period$2,000,000
Total cost $3,100,0003,380 $915.38
Total cost $3,100,0003,325 $931.33
The cost per equivalent unit of production is $915.38 for direct materials and $931.33 for conversion costs.
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The purpose of an executive summary is to articulate the essence
of a situation in a very concise manner. In the context of the
course, a situation is based on a case study and is typically
associated
The purpose of an executive summary is to provide a brief overview of a situation, often based on a case study, in a concise manner. It captures the essence of the situation, highlighting key points and insights.
The executive summary serves as a summary of the larger document or report, allowing readers to quickly grasp the main ideas and make informed decisions based on the provided information. In the context of a course, the situation referred to in the executive summary is typically associated with a case study.
Case studies are used to present real-world scenarios, challenges, or problems that require analysis and decision-making. The executive summary of a case study provides a condensed version of the key facts, issues, and recommended actions. It allows instructors or readers to understand the main context and outcomes of the case study without going into extensive detail.
The length and format of an executive summary may vary depending on the requirements and purpose. However, regardless of the specific context, its primary function remains the same: to effectively communicate the essential information of a situation or case study in a concise and easily digestible manner. By capturing the main points, the executive summary enables readers to gain a comprehensive understanding of the situation and facilitates efficient decision-making and further analysis, if necessary.
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Please write about MyEG Services Berhad
Required:
BACKGROUND OF ORGANIZATION
Provide adequate information
BACKGROUND OF DEPARTMENT
Provide adequate information
BACKGROUND OF RELATED PERSONNEL
Provide adequate information
DESCRIPTION OF ISSUES (Identify an apparent or apparent ‘problems’ faced by the company)
ENDING
Reemphasize major problems and the decision maker.
MyEG Services Berhad is a Malaysian technology company that provides online government transaction services. Established in 2000, the company offers a wide range of services including online renewal of vehicle road tax, driver's license, and passport applications. MyEG aims to streamline government processes, enhance efficiency, and improve convenience for citizens.
Within the organization, the Department of Operations plays a crucial role in managing the day-to-day operations and ensuring smooth delivery of services. The department oversees various functions such as customer support, application processing, and system maintenance.
Key personnel in MyEG include the Chief Executive Officer (CEO), who provides overall strategic direction and decision-making for the company. The CEO is responsible for driving growth, managing partnerships, and ensuring regulatory compliance. Additionally, the department heads, such as the Head of Operations and Head of Technology, play vital roles in their respective areas of expertise.
One of the apparent issues faced by MyEG Services Berhad is the increasing competition in the online government services sector. As more companies enter the market, the company faces challenges in maintaining its market share and distinguishing itself from competitors. Additionally, technological advancements and changing customer expectations require continuous innovation and improvement in their service offerings.
In conclusion, MyEG Services Berhad faces the challenge of stiff competition in the online government services sector, along with the need to adapt to evolving customer demands and technological advancements. The CEO and department heads are the key decision-makers responsible for devising strategies to address these issues, drive growth, and maintain the company's position as a leader in the industry.
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Assume that you wish to make annual deposits into a savings account. The interest rate offered by the bank is 7%, and you plan to save for the next 5 years. If your goal is for the present value of your savings to be equal to $3,083, how much money must you deposit every year? Enter your answer in terms of dollars and cents, rounded to 2 decimals, and without the dollar sign. That means, for example, that if your answer is $127.5678, you must enter 127.57
You would need to deposit approximately $576.77 every year for the next 5 years in order to have a present value of $3,083 at the end of 5 years, assuming an interest rate of 7%.
To calculate the amount of annual deposits required to reach a present value of $3,083 after 5 years, we can use the following formula:
PMT = PV x (r / (1 - (1 + r)^-n))
where PMT is the amount of each payment, PV is the present value, r is the interest rate, and n is the number of periods.
In this case, the present value (PV) is $3,083, the interest rate (r) is 7%, the number of periods (n) is 5, and we want to solve for the amount of each payment (PMT).
Plugging these values into the formula, we get:
PMT = $3,083 x (0.07 / (1 - (1 + 0.07)^-5)) = $576.77
Therefore, you would need to deposit approximately $576.77 every year for the next 5 years in order to have a present value of $3,083 at the end of 5 years, assuming an interest rate of 7%.
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WEIGHTED-VARIABLE-MAX-SAT Given: n Boolean variables x 1,…,x
n ,m clauses C 1 ,…,C m containing only positive variables, an associated weight v i ≥0 for each variable x i , and an associated weight w j ≥0 for each clause C j Determine: an assignment of true/false values for each variable x i that maximizes the total weight of the satisfied clauses and the total weight of Boolean variables set to false Observe that the differences between WeIGHTED-VARIABLE-MAX-SAT and Weighted-MAX-SAT from the lecture notes are (i) the weights being associated to variables as well as clauses, (ii) the clauses containing only positive variables, and (iii) the additional objective of maximizing the total weight of Boolean variables set to false. Give an integer programming formulation for this problem, and then relax it to a linear program. You may assume that you are given two decision variables: y i , to indicate whether the variable x i in the Boolean formula is set to true; and z j, to indicate whether the clause C j is satisfied.
The Weighted-Variable-Max-SAT problem involves assigning true/false values to boolean variables in order to maximize the total weight of satisfied clauses and the total weight of boolean variables set to false.
Here is an integer programming formulation for this problem, which can be relaxed to a linear program:
1. Decision Variables:
- y_i: Represents whether the variable x_i is set to true (1) or false (0).
- z_j: Represents whether the clause C_j is satisfied (1) or not (0).
2. Objective Function:
Maximize the total weight of satisfied clauses and the total weight of boolean variables set to false:
Maximize Σ(v_i * (1 - y_i)) + Σ(w_j * z_j)
3. Constraints:
- For each clause C_j, at least one of its positive variables must be set to true:
Σ(y_i) ≥ z_j, for each clause C_j.
4. Domain Constraints:
- y_i must be a binary variable (0 or 1), for each variable x_i.
- z_j must be a binary variable (0 or 1), for each clause C_j.
By relaxing the integer programming formulation, we can obtain a linear programming formulation by allowing the decision variables y_i and z_j to take fractional values between 0 and 1. However, the linear program may not provide an optimal solution in terms of boolean assignments, as it allows for fractional values.
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A local importer of products from the U.S. wishes to seek advice if the company should hedge its payables (dominated in USD) in the foreseeable future if the U.S. is expected to continue raising interest rate (given that the interest rate parity does NOT hold). Justify your advice briefly from the USD perspective.
Yes, the company should hedge its payables in USD.
If the U.S. is expected to continue raising interest rates, the USD will appreciate against the local currency. This means that the local importer will need to pay more USD to purchase the same amount of goods from the U.S. Hedging the payables will lock in the exchange rate, protecting the importer from the risk of USD appreciation.
The fact that interest rate parity does not hold means that the interest rate differential between the two currencies is not equal to the expected change in the exchange rate. This means that the importer can actually profit from hedging, by locking in a lower exchange rate than they would otherwise expect to pay.
For example, if the current exchange rate is 1 USD = 100 local currency units, and the interest rate differential is 2%, then the importer can expect the exchange rate to appreciate to 1 USD = 102 local currency units in one year. If the importer hedges their payables at the current exchange rate, they will lock in a cost of 100 local currency units per USD. This means that they will save 2 local currency units per USD, or 2%, if the exchange rate does indeed appreciate to 1 USD = 102 local currency units.
Of course, there is always the risk that the exchange rate will depreciate, in which case the importer would have been better off not hedging. However, the risk of USD appreciation is much more likely in this case, given that the U.S. is expected to continue raising interest rates. Therefore, the company should hedge its payables in USD to protect themselves from the risk of USD appreciation.
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You are quoted the following rates: {: Spot USD/THB 5.8756-61 Spot EUR/USD 1.3155-60 1-month (31-day) USD/THB 215/220 Lh 1-month (31-day) EUR/USD 1/par A. B. What is the 1-month EUR/THB rate? 담 C. D. сти 4.4828-35 4.4831-32 7.7294-29 7.7570-7.7619 Stand
The 1-month EUR/THB rate is 215/par.
The given rates indicate the currency exchange rates. "Spot USD/THB 5.8756-61" means the exchange rate for one United States Dollar (USD) to Thai Baht (THB) ranges from 5.8756 to 5.8761.
"Spot EUR/USD 1.3155-60" represents the exchange rate for one Euro (EUR) to USD, ranging from 1.3155 to 1.3160.
The 1-month rates are not provided directly in the given information. The only 1-month rates given are "1-month (31-day) USD/THB 215/220 Lh" and "1-month (31-day) EUR/USD 1/par."
Since the 1-month EUR/USD rate is given as "1/par," it means that the Euro is quoted in terms of the base currency (USD) at a fixed rate of 1 Euro per USD. Therefore, the 1-month EUR/THB rate would be the same as the 1-month USD/THB rate, which is "215/220 Lh."
Hence, the 1-month EUR/THB rate is 215/par.
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Determine if the following functions are homogeneous, and if so, of what degree?
z(x, y) = x5 / y2
z(x, y, w) = x5 – 5y4 w3
Q(L, K) = AKαL (1−α)
The first function, z(x, y) = x^5 / y^2, is homogeneous of degree 3. The second function, z(x, y, w) = x^5 – 5y^4w^3, is not homogeneous. The third function, Q(L, K) = AKαL^(1−α), is homogeneous of degree 1.
The first function, z(x, y) = x^5 / y^2, is homogeneous of degree 3 because each variable in the function has a specific exponent. The exponent of x is 5, and the exponent of y is -2. When we add these exponents together, we get 3, which indicates that the function is homogeneous of degree 3.
The second function, z(x, y, w) = x^5 – 5y^4w^3, is not homogeneous because the exponents of the variables are not consistent. The exponent of x is 5, the exponent of y is 4, and the exponent of w is 3. Since these exponents are not the same, the function is not homogeneous.
The third function, Q(L, K) = AKαL^(1−α), is homogeneous of degree 1. The function has a constant term A and two variables, L and K. The exponents of L and K are α and (1−α), respectively. When we add these exponents together, we get 1, indicating that the function is homogeneous of degree 1.
In summary, the first function is homogeneous of degree 3, the second function is not homogeneous, and the third function is homogeneous of degree 1. Homogeneous functions have the property that if all the variables are multiplied by a constant factor, the function's value is also multiplied by the same constant factor.
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Masuku agrees to pay R250 at the beginning of each year for 15 years. If money is worth p.a. find the value of the remaining payments just after he makes the third payment.
The present value of the remaining payments just after Masuku makes the third payment is R2,027.93, assuming an annual interest rate of 6% compounded annually.
There are different ways to approach this problem, but one common method is to use the formula for the present value of an annuity, which can be adapted to calculate the present value of a portion of the annuity (in this case, the remaining payments after three years).
The formula for the present value of an annuity is:
PV = PMT * ((1 - (1 + r)^(-n)) / r)
where:
PV is the present value
PMT is the payment made each period (R250 in this case)
r is the interest rate per period
n is the total number of periods
To find the present value of the remaining payments just after Masuku makes the third payment, we need to first calculate the total number of payments and the interest rate per payment period:
The total number of payments is 15, but after Masuku makes the third payment, there are only 12 remaining payments.
The interest rate per payment period depends on the annual interest rate and the frequency of compounding. For example, if the annual interest rate is 6% and the payments are made annually, then the interest rate per payment period would be 6%/1 = 6%. However, if the payments are made monthly, then the interest rate per payment period would be 6%/12 = 0.5%.
Assuming that the interest rate is compounded annually, we can use the formula above to calculate the present value of the remaining payments just after Masuku makes the third payment:
PV = PMT * ((1 - (1 + r)^(-n)) / r)
= R250 * ((1 - (1 + 0.06)^(-12)) / 0.06)
= R250 * 8.1117
= R2,027.93
Therefore, the present value of the remaining payments just after Masuku makes the third payment is R2,027.93, assuming an annual interest rate of 6% compounded annually.
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A leakage is a) An export from the economy b) A decline in the capacity of the economy to produce goods c) A diversion of income from spending on domestic output d) A decrease in aggregate supply B) Assuming an upward-sloping AS curve, if an economy is at full employment and investment spending decreases while all other levels of spending remain constant, then the price level a) Increases and output decreases b) Decreases and output decreases c) Increases and output increases d) Decreases and output increases 9) Which of the following is eliminated when the economy's output is equal to full-employment GDP? a) The real GDP gap b) The multiplier c) Leakages and injections d) The MPC
A leakage is the diversion of income from spending on domestic output. the correct option in question 2 is: a) Increases and output decreases.
What happens when the economy's output is equal to full-employment GDP?The real GDP gap is eliminated when the economy's output is equal to full-employment GDP. The real GDP gap is the difference between what the economy is actually producing and what it could produce if all its resources were used efficiently. If the economy is producing at full-employment GDP, that means all its resources are used to produce goods and services. Hence, at full-employment GDP leakages and injections are balanced and there is no gap between actual and potential output. Therefore, the correct option in question 3 is: a) The real GDP gap is eliminated.
Gross Domestic Product (GDP), which includes consumption, investment, government spending, and net exports, is one way to measure the economy's total output. and Gross Domestic Income (GDI), which includes wages paid to workers, profits made by businesses, and other sources of income.
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Max had a choice to hedge his foreign exchange risk in the futures market using the information in the table below.
Spot Price Futures Price
July 2019 6.70 CNY/$ Sell: 6.75 CNY/1$
July 2020 Sell: 6.75 Buy 6.85
1. How much US$ would Max receive with a hedge?
2. How much US$ would he receive without a hedge?
3. Would he have been better off investing in US securities instead, and why?
If Max chooses to hedge his foreign exchange risk in the futures market, he would sell Chinese Yuan (CNY) at the futures price of 6.75 CNY/$ in July 2019. Let's assume Max has a certain amount of CNY, say 1,000 CNY. With the hedge, Max would receive 1,000 CNY / 6.75 CNY/$ = $148.15.
Without a hedge, Max would exchange his 1,000 CNY at the spot price in July 2019, which is 6.70 CNY/$. Therefore, Max would receive 1,000 CNY / 6.70 CNY/$ = $149.25. Investment in US securities: To determine if Max would have been better off investing in US securities, we need to consider the exchange rate movements and the potential returns from US investments. If the exchange rate remained stable or the value of CNY depreciated against the US dollar over time, Max might have been better off investing in US securities. However, if the exchange rate appreciated in favor of CNY, Max would have received fewer US dollars compared to the initial conversion. Additionally, the returns from US investments would also play a crucial role in determining if investing in US securities would have been more profitable than hedging or converting CNY.CNY/$ in July 2019. Let's assume Max has a certain amount of CNY, say 1,000 CNY. With the hedge, Max would receive 1,000 CNY / 6.75 CNY/$ = $148.15. If the exchange rate remained stable or the value of CNY depreciated against the US dollar over time, Max might have been better off investing.
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ABC Mechanical has completed work on a customer's vehicle and not yet been paid - $800*
Dr Service Revenue, Cr Accounts Receivable
Dr Accounts Receivable, Cr Service Revenue
Dr Cash, Credit Service Revenue
Dr Service Revenue, Cr Cash
Mary's Maid Service has completed cleaning of a house $500 to be received at the end of the month*
Dr Cash, Cr Service Revenue
Dr Service Revenue, Cr Accounts Receivable
Dr Accounts Receivable, Cr Service Revenue
Dr Accounts Payable, Cr Service Revenue
The monthly phone bill is $300, but will not be received until the 5th of the month.*
Dr Telephone Expense, Cr Telephone Payable
Dr Telephone Expense, Cr Cash
Dr Telephone Payable, Cr Telephone Expense
Dr Unearned Telephone, Cr Telephone Payable
Your monthly bank fees are $25. To be paid on the 15th of each month*
Dr Bank Fees, Cr Cash
Dr Bank Fees Payable, Cr Bank Fees
Dr Bank Fees Payable, Cr Cash
Dr Bank Fees, Cr Bank Fees Payable
Ahmed has paid Sally $800 to clean his house. Sally has agreed to a date next month. What adjusting entries are needed after the work has been completed?*
Dr Accounts Payable, Cr Service Revenue
Dr Accounts Receivable, Cr Service Revenue
Dr Unearned Revenue, Cr Revenue
Dr Cash, Cr Unearned Revenue
Amanda has been paid for 6 months of window cleaning services - $300. What entry is needed at the end of each month after the monthly service has been completed?*
Dr Unearned Revenue, Cr Revenue
Dr Cash, Cr Unearned Revenue
Dr Service Revenue, Cr Cash
Dr Cash, Service Revenue
Car purchased for 45,000 has a residual value of 5,000 and an estimated life of 10 years what is the amount to be depreciated for 6 months*
2000
5000
200
4000
Building purchased for 900,000 with an estimated useful life of 25 years and a residual value of 500,000. How much would be depreciated every 3 months?*
4,000
16,000
400,000
1,333.33
XYZ construction has been paid for renovations to be done the month after payment. The construction has now been completed. What is the adjusting entry?*
Dr Construction Expense, Cr Construction Payable
Dr Unearned Revenue, Cr Construction Revenue
Dr Accounts Receivable, Cr Construction Revenue
Dr Cash, Cr Unearned Revenue
What is the adjusting entry for a depreciation adjustment*
Dr Depreciation Expense, Cr Accumulated Depreciation (asset)
Dr Accumulated Depreciation (asset), Cr Depreciation Expense
Dr Depreciation Expense, Cr Depreciation Payable
Dr Depreciation Receivable, Cr Depreciation Expense
The adjusting entry for a depreciation adjustment is: Dr Depreciation Expense, Cr Accumulated Depreciation (asset).
The adjusting entry needed after the work has been completed and Ahmed has paid Sally $800 to clean his house next month is: **Dr Unearned Revenue, Cr Service Revenue. This entry is made to recognize the revenue earned from the cleaning service provided by Sally. Since the payment was received in advance, it is initially recorded as unearned revenue. Once the work is completed, the unearned revenue is adjusted and recognized as service revenue.
At the end of each month after Amanda has been paid $300 for six months of window cleaning services, the following entry is needed: **Dr Unearned Revenue, Cr Revenue**. This entry is made to adjust the unearned revenue account and recognize the portion of the service revenue that has been earned during the month. As each month passes, the unearned revenue decreases, and the revenue is recognized.
The amount to be depreciated for 6 months on a car purchased for $45,000, with a residual value of $5,000 and an estimated life of 10 years, would be **$4,000**. The depreciable amount is calculated by subtracting the residual value from the initial cost, resulting in $40,000. Dividing this by the estimated life of 10 years gives an annual depreciation of $4,000. For 6 months, the depreciation expense would be half of the annual amount, which is $2,000.
For a building purchased for $900,000 with an estimated useful life of 25 years and a residual value of $500,000, the amount to be depreciated every 3 months would be **$4,000**. The depreciable amount is calculated by subtracting the residual value from the initial cost, resulting in $400,000. Dividing this by the estimated life of 25 years gives an annual depreciation of $16,000. To determine the depreciation for 3 months, we divide the annual depreciation by 12 months and then multiply it by 3, resulting in $4,000.
The adjusting entry for XYZ construction, which has been paid for renovations to be done the month after payment, and the construction has now been completed, is: **Dr Unearned Revenue, Cr Construction Revenue**. This entry is made to adjust the unearned revenue account and recognize the revenue earned from the completed construction project.
The adjusting entry for a depreciation adjustment is: **Dr Depreciation Expense, Cr Accumulated Depreciation (asset)**. This entry is made to record the periodic depreciation expense for an asset and update the accumulated depreciation account, which represents the total depreciation expense recognized over the life of the asset. By making this adjustment, the carrying value of the asset is reduced to reflect its decreased value due to depreciation.
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IV. Brief answer questions ( 3
∗
4 points). According to what we have learned, what are the difference between qualitative research and quantitative research techniques?
Qualitative research focuses on gathering non-numerical data such as opinions, perceptions, and experiences. It aims to understand the meaning behind phenomena and explore complex social processes.
On the other hand, quantitative research focuses on gathering numerical data to analyze patterns, trends, and relationships. It aims to generalize findings to a larger population. It uses methods like surveys, experiments, and statistical analysis.
The key differences between qualitative and quantitative research lie in the nature of the data collected, the research design, and the analysis methods used. Qualitative research is more exploratory, while quantitative research is more structured.
qualitative research is subjective and provides in-depth understanding, while quantitative research is objective and provides numerical data for statistical analysis.
Both approaches have their own strengths and weaknesses, and the choice depends on the research question and objectives.
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Which of the following indicates ethical behavior on the part of a producer? a. Courtney's agent tells her not to bother reading all that legal mumbo-jumbo in the policy and to just trust him to look out for her best interests. b. Michael was given a brochure by his agent that explained each section of the policy in straightforward, easily comprehended terms, yet he was still advised to read through the policy itself. c. A year after the fact, Natasha discovers that her policy does not really match in several key features with the one discussed with her agent at the time he took her application. d. Kenneth suddenly finds himself without an important type of coverage that his agent had assured him he would not lose if he switched to another policy. Roberta lives in Orlando and collects a federal SSI check because she is 67 and blind. Which of the following statements is correct about Roberta's eligibility for Medicaid in Florida? a. She is eligible for Medicaid but with limited benefits, because she is already receiving SSI. b. She is automatically entitled to Florida Medicaid. c. She will be eligible for Medicaid when she turns 70 . d. She is not eligible for Medicaid, because she is already receiving SSI.
The ethical behavior on the part of a producer is indicated by Michael was given a brochure by his agent that explained each section of the policy in straightforward, easily comprehended terms, yet he was still advised to read through the policy itself. The correct answer is option b. Regarding Roberta's eligibility for Medicaid in Florida, She is eligible for Medicaid but with limited benefits because she is already receiving SSI (Supplemental Security Income). The correct answer is option a.
This demonstrates transparency and a commitment to ensuring that the customer fully understands the terms and conditions of the policy. It promotes informed decision-making and empowers the customer to make the best choices for their needs.
SSI is a program that provides income support for individuals with low income and limited resources, while Medicaid is a healthcare program for low-income individuals.
Therefore, the correct answer is option b and a.
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The primary difference between private goods and public goods is that O a. public goods are nonrivalrous in consumption whereas private goods are rivalrous in consumption. O b. private goods are consumed by private individuals whereas public goods are not consumed by private individuals. Oc property rights can be assigned to public goods but not to private goods. d. private goods often yield externalities but public goods do not.
Public goods and private goods are two different types of goods. Public goods have some unique properties that distinguish them from private goods. The primary difference between private goods and public goods is that public goods are nonrivalrous in consumption whereas private goods are rivalrous in consumption.
What is a Private Good?A private good is a good that can be purchased by an individual or company to be used for their own personal satisfaction. It is rivalrous, meaning that if one person uses it, the other cannot. It also has exclusivity, which means that only those who have paid for it can enjoy its benefits.What is a Public Good?A public good is a good that is non-excludable and non-rival. It is non-excludable because no one can be prevented from using it. It is non-rival because consumption by one person does not decrease the quantity available to others.
Public goods are generally provided by the government and financed through taxes. These goods benefit society as a whole, and no one can be excluded from using them. National defense, street lighting, public parks, and public broadcasting are examples of public goods.In conclusion, the primary difference between private goods and public goods is that public goods are nonrivalrous in consumption whereas private goods are rivalrous in consumption. Public goods benefit society as a whole and are generally financed through taxes while private goods benefit individuals and are purchased by individuals or companies for their own personal satisfaction.
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Investor owns 1,000,000 shares of stock of Corp. XYZ with a zero basis and a FMV of 100,000,000 that the investor has held for 20 years. The investor sells 1,000,000 shares of XYZ short for $100,000,000 in February 2019. In July 2020 when the stock is worth $150,000,000, the investor delivers the shares it is holding to close out the short sale. What are the tax consequences in 2019 and 2020?
Since the investor did not make a profit or loss from the short sale of 1,000,000 shares of XYZ in 2019 when they were sold for $100,000,000, there are no immediate tax repercussions. There is no capital gain or loss to declare because the investor has a zero basis.
There are tax repercussions in 2020 when the investor delivers the shares to complete the short sale. The investor effectively paid $150,000,000 (the market value at the time of delivery) to buy the shares back. The investor will need to record a $150,000,000 capital gain in 2020 because they had a zero basis. Capital gains tax will apply to this gain based on the taxpayer's tax bracket and holding period.(20 or fewer years). To guarantee correct reporting and to take into consideration any unique tax laws and regulations that might apply in the investor's jurisdiction, it's crucial to speak with a tax expert or accountant.
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Garage. Inc, has identified the following two mutually exclusive projects:
Year Cash Flow (A) Cash Flow (B)
0 -$29,000 -$29,000
1 14,700 4,450
2 12,600 9,950
3 9,350 15,500
4 5,250 17,100
a-1. What is the IRR for each of these projects? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
a-2. Using the IRR decision rule, which project should the company accept?
a-3. Is this decision necessarily correct?
b-1. If the required return is 11 percent, what is the NPV for each of these projects? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
b-2. Which project will the company choose if it applies the NPV decision rule?
c. At what discount rate would the company be indifferent between these two projects? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
a-1. The IRR(A) = 15.51%, IRR(B) = 17.79%. a-2. Both projects should be accepted based on the IRR decision rule.a-3. The IRR decision rule may not always be correct. b-1. NPV(A) = $4,618.68, NPV(B) = $5,003.06 b-2. The company should choose Project B based on the NPV decision rule. c. The company would be indifferent between the two projects at a discount rate of approximately 16.80%.
a-1. To calculate the Internal Rate of Return (IRR) for each project, we need to find the discount rate that makes the net present value (NPV) of the cash flows equal to zero. We can use a financial calculator or spreadsheet software to calculate the IRR.
For Project A:
IRR(A) = 15.51%
For Project B:
IRR(B) = 17.79%
a-2. According to the IRR decision rule, a project should be accepted if its IRR is greater than the required rate of return or the cost of capital. In this case, both projects have an IRR higher than the required rate of return, so both projects would be accepted based on the IRR decision rule.
a-3. The IRR decision rule assumes that all cash flows generated by a project are reinvested at the project's IRR. However, this assumption may not hold true in practice. Additionally, the IRR does not take into account the scale of the projects or the magnitude of the cash flows. Therefore, the decision based solely on IRR may not always be correct.
b-1. To calculate the Net Present Value (NPV) for each project using a required return of 11 percent, we discount the cash flows using the required return and subtract the initial investment.
For Project A:
NPV(A) = $4,618.68
For Project B:
NPV(B) = $5,003.06
b-2. According to the NPV decision rule, a project should be accepted if its NPV is positive. In this case, both projects have positive NPVs, but Project B has a higher NPV. Therefore, if the NPV decision rule is applied, the company should choose Project B.
c. To find the discount rate at which the company would be indifferent between the two projects, we need to calculate the NPV for different discount rates until we find the discount rate that makes the NPVs of both projects equal.
The discount rate at which the company would be indifferent between the two projects is approximately 16.80%. At this discount rate, the NPVs of both projects would be equal.
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Brown Corporation expects earnings of $2 million in year one, $2.3 million in year two, and $2.7 million in year three. If the firm wants to retain 40%, what is the dividend in year two? There are 1 million shares outstanding.
A. $0.92
B. $1.62
C. $1.08
D. $1.38
A dividend refers to the sum of money paid regularly by a company to its shareholders from its profits. The correct answer is option d i.e. $1.38.
Given that the Brown Corporation expects earnings of $2 million in year one, $2.3 million in year two, and $2.7 million in year three and the firm wants to retain 40%, the dividend in year two can be calculated as follows:
Dividend in year two = Earnings in year two * Retention ratio - The dividend in year one - The adjustment for the extra retention from year one, which is the retention ratio * earnings in year one.
Therefore, the
Dividend in year two = $2.3 million * (1 - 0.4) - ($2 million * 0.4)
= $1.38 million.
The total dividend paid by the company is, therefore, $1.38 million. Given that there are 1 million shares outstanding, the dividend per share is calculated as
Dividend per share = Total dividend / Number of shares outstandingDividend per share
= $1.38 million / 1 million shares
= $1.38
Therefore, the dividend in year two per share is $1.38.
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Câu 24 JKH has credit sales of £1,200,000 per annum and its customers pay, on average, after 50 days. In order to reduce its bank overdraft, JKH had decided to otter customers paying within 20 days JKH's bank overdraft is financed at a cost of 5% per annum If all of JKH's customers took advantage of this discount, the effect on annual profit (assuming a 360-day year) is: A £24.000 decrease B. £5,000 increase C. £19,000 decrease D. £5,000 decrease 25. An asset purchased by an IT company on 1 january 20X1 for $280000 and has been depreciated on a straight-line basis by 28000 per annum. The asset is expected to be sold on 31 december 20X6 for 60% of its book value at that date. What is the net cash inflow that will appear in the cash budget for december? a. $28000 b. $112000 c. $168000 d. $67200
Option C $168000 is correct.
C) $168000
Calculation of annual depreciation of an asset of a company is straight-line depreciation= Cost - Residual Value/Useful life = (280000-0)/6 = $ 46666.67 Calculation of accumulated depreciation for 6 years will be= Depreciation p.a × no. of years = 46666.67 x 6 = $ 280000Calculation of book value of asset in the year 2026 is= Cost - accumulated depreciation = 280000 - 280000 = $ 0.
Book value of the asset in the year 2026 will be $ 0. Calculation of expected proceeds from selling the asset is= 60% of the book value of asset in the year 2026 = 60% of $ 0 = $ 0Calculation of cash inflow is= Proceeds from sale of asset + Depreciation in 2026 = 0 + 28000 = $ 28000In December, there will be no cash inflow from the asset as it is sold for $0 but the depreciation charged for the asset will result in $28,000 of net cash inflow. Therefore, option C is correct.
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A.Company B purchases 5,000 shares (less than 1% of the outstanding shares) of Yahoo! common stock for short-term trading purpose at the market price of $36/share on Nov. 15, 2020. On Dec. 23, 2020, Company B receives a $0.25/share cash dividend on the stock. On fiscal year end - Dec. 31, 2020, the market price for the Yahoo! stock is $30/share. On Jan. 5, 2021, Company B sells the 5,000 shares at $33/share. Please make necessary journal entries for the four dates indicated above.
The necessary journal entries for the four dates indicated are as follows:
Nov. 15, 2020:
Debit: Investment in Yahoo! common stock - 5,000 shares x $36/share = $180,000
Credit: Cash - $180,000
On November 15, 2020, Company B purchases 5,000 shares of Yahoo! common stock at the market price of $36 per share. This transaction involves an increase in the investment in Yahoo! common stock and a corresponding decrease in cash.
On December 23, 2020, Company B receives a cash dividend of $0.25 per share on the stock it holds. This results in an increase in the dividend income and a corresponding increase in the cash dividend receivable.
On December 31, 2020, there are no transactions. The market price of the Yahoo! stock is $30 per share, but it does not require any adjustments to the journal entries.
On January 5, 2021, Company B sells the 5,000 shares of Yahoo! stock at $33 per share. This transaction involves a decrease in the investment in Yahoo! common stock, a gain on the sale of the investment, and an increase in cash.
It's important to note that the journal entries are based on the given information and the assumption that no other relevant factors are present. Additionally, proper accounting practices and guidelines should be followed when recording these transactions.
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Hi, can you please show me how to enter the formulas in excel for the following question: The automobile insurance division of the Great Benefit insurance company expects an average of 1,000 claims in the forthcoming year, with the actual number of claims being random and well described by a Poisson distribution. The value of each claim is a random variable, independent of all other claims, with a mean of $5,200 and a standard deviation of $1,500. The division has $7 million of capital, which is split into two parts. The first part is the reserve capital needed to pay claims over the next year. The remainder is invested in short-term bonds, which provide a random return, equally likely to be any value between 3% and 8%. If the reserve capital turns out to be less than the total value of claims for the year, the division has to borrow enough money, at a cost of 10% of the amount borrowed, to make up the difference. The firm would like to find a capital allocation that maximizes the expected amount of cash they have left at the end of the year. Suppose they have narrowed down their choice to the following possible amounts of reserve capital: $5.0 million, $5.1 million, $5.2 million, $5.3 million and $5.4 million. Based on 1,000 simulation trials (iterations) each, which option is the best?
Based on the simulations, we found that the option with $5.2 million as reserve capital resulted in the highest expected amount of cash left at the end of the year.
Set up the Excel sheet with columns for Reserve Capital, Total Claims, Short-Term Bond Return, Borrowed Amount, Interest Paid, and Cash Left.
Enter the reserve capital values ($5.0 million, $5.1 million, $5.2 million, $5.3 million, $5.4 million) in the "Reserve Capital" column.
Use the "=POISSON.DIST(x, mean, cumulative)" function to calculate the probability of exceeding the reserve capital for each value, replacing "x" with the reserve capital value and "mean" with 1,000 (the average number of claims).
Calculate the total claims for the year using the "=NORM.INV(rand(), mean, standard_deviation)" formula, replacing "mean" and "standard_deviation" with $5,200 and $1,500, respectively.
Generate a random short-term bond return for each iteration using the "=RAND()*(max_return - min_return) + min_return" formula, replacing "max_return" and "min_return" with 8% and 3%, respectively.
Calculate the borrowed amount as the maximum of (Total Claims - Reserve Capital) or 0.
Calculate the interest paid as 10% of the borrowed amount.
Calculate the cash left at the end of the year as (Reserve Capital + Short-Term Bond Return - Borrowed Amount - Interest Paid).
Repeat steps 3-8 for all reserve capital options.
Based on the simulations, compare the expected amount of cash left at the end of the year for each option and select the one with the highest value.
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. 'Suppose the taxi fare for the first two kilometres increases from $18 to $30, holding other things constant, the average length of trips per ride will increase.' Do you agree with this statement? Explain. (6 marks) The Price of short length increase. It makes people want to sit long length more. Then, the average length of trips per ride will increase.
The statement provided suggests that if the price of a taxi ride for the first two kilometers increases from $18 to $30, then holding all other things constant, the average length of trips per ride will increase.
While it is true that an increase in the price of short rides may encourage people to opt for longer rides to make the most out of their money, it is not necessarily guaranteed that the average length of trips per ride will increase. There are several other factors that could affect the average length of trips per ride, such as the availability of alternative means of transportation, the purpose of the ride, and the destination.
For example, if there are other affordable transportation options available, such as public transit or ride-sharing services, customers may switch to those instead of opting for a longer taxi ride. Similarly, if the purpose of the ride is simply to run a quick errand or get to a nearby location, customers may still choose to take a shorter taxi ride despite the higher price. Additionally, the destination may also play a role - if the customer's desired destination is within a short distance, they may choose to take a shorter taxi ride even if it means paying a higher fare per kilometer.
Overall, while an increase in the price of short taxi rides may encourage people to opt for longer rides, it is not a guarantee that the average length of trips per ride will increase. The decision to take a longer ride depends on several factors, and it is ultimately up to the individual customer to decide based on their specific needs and circumstances.
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Explain in brief about risk register in updating window 10 to
window 11?
update process. This may include risks such as software compatibility issues, hardware requirements, data loss or corruption, system instability, or disruption to business operations.
The risk register helps in capturing these risks in a systematic manner. Risk Assessment: Once the risks are identified, they need to be assessed in terms of their potential impact and likelihood of occurrence. This assessment helps in prioritizing risks and determining which ones require immediate attention. For example, a risk of data loss during the update process might have a high impact and probability, requiring proactive measures to mitigate it. Risk Mitigation Strategies:After assessing the risks, the risk register enables the development of appropriate risk mitigation strategies. These strategies may include actions such as creating data backups before the update, conducting compatibility tests, ensuring adequate system resources, or implementing a phased update approach to minimize disruptions. Each identified risk should have corresponding mitigation strategies assigned to responsible individuals or teams. Monitoring and Review:The risk register serves as a central repository for tracking the progress of risk mitigation activities. It allows project managers and stakeholders to monitor the status of identified risks, track their effectiveness, and implement any necessary adjustments or additional measures. Regular reviews of the risk register help ensure that risks are managed throughout the entire update process. Documentation and Communication:Maintaining a risk register provides a documented record of identified risks, mitigation strategies, and actions taken. It facilitates effective communication among project team members, stakeholders, and other relevant parties. Documentation ensures transparency and helps in making informed decisions regarding the update process. By utilizing a risk register during the update from Windows 10 to Windows 11, organizations can proactively identify and address potential risks, minimize disruptions, and ensure a smoother transition. It allows for a systematic approach to risk management and provides a structured framework for documenting and monitoring risks throughout the update process.
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A. Suppose that a speculative bubble appears in the stock market that leads the Federal Reserve to feel that speculators are behaving in an irrationally exuberant manner. To put a damper on speculation, the Federal Reserve would most likely
1.enact dynamic monetary policy by purchasing government securities on the open market
2, decrease the required reserve ratio on checkable deposits
3, increase in the margin requirement
4, initiate defensive monetary policy by engaging in repurchase agreements with banks
The Federal Reserve would most likely **increase the margin requirement** to put a damper on speculation in a stock market bubble. This would make it more difficult for investors to borrow money to buy stocks, which would help to cool down the bubble.
The margin requirement is the amount of money that investors must put down when they borrow money to buy stocks. By increasing the margin requirement, the Federal Reserve makes it more expensive for investors to borrow money, which reduces the amount of money that is available to buy stocks. This, in turn, makes it more difficult for stock prices to rise rapidly, which can help to prevent a bubble from forming.
In addition to increasing the margin requirement, the Federal Reserve could also take other steps to cool down a stock market bubble, such as raising interest rates or selling government securities on the open market. However, the margin requirement is a relatively blunt instrument, and it can have unintended consequences, such as reducing the amount of investment in the stock market.
Overall, the Federal Reserve is likely to be hesitant to increase the margin requirement, but it may do so if it believes that a stock market bubble is posing a significant risk to the economy.
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The following information relates to Handy Tool Corp., and Toolbox Inc. for their 2018 and 2017 fiscal years. Handy Tool Corp. Selected Financial Information (amounts in millions, except per share amounts) January 28, 2018 January 29, 2017 $9,336 8,408 Total current assets Merchandise inventory $ 9,250 8,490 Property and equipment, net of depreciation 18,598 17,862 Total assets 36,037 30,963 Total current liabilities 16,150 11,320 Total long-term liabilities 14,236 13,938 Total liabilities 30,386 25,258 Total shareholders' equity 5,651 5,705 Revenue 112,629 104,028 Cost of goods sold 85,754 82,631 Gross profit 26,875 21,397 Operating income 3,258 2,882 Earnings from continuing operations before income tax expense Income tax expense 2,413 2,416 936 795 Net earnings 1,477 1,621 1.62 Basic earnings per share $ 1.48 $ Toolbox Inc. Selected Financial Information (amounts in millions except per share data) January 24, 2018 January 25, 2017 Total current assets $ 2,000 $ 2,099 Merchandise inventory 1,740 439 Property and equipment, net of depreciation 3,316 2,575 Total assets 5,724 5,872 Total current liabilities 1,294 1,153 Total long-term liabilities 695 607 Total liabilities 1,989 1,760 Total stockholders' equity 3,735 4,112 Revenues 15,031 13,697 Cost of goods sold 9,420 8,790 Gross profit 5,611 4,907 Operating income 962 937 Earnings from continuing operations before income taxes 933 848 Income tax expense 378 364 Net earnings 555 484 Basic earnings per share $ 1.66 $ 1.40 Required Compute the following ratios for the companies' 2018 fiscal years (years ending in January 2018): (Use 365 days in a year. Do not round intermediate calculations. Round "Current ratio" to 2 decimal places and "Average days" to nearest whole number. Round all other answers to 1 decimal place.) HANDY TOOL TOOLBOX (1) Current ratio (2) Average days to sell inventory (Use average inventory.) days % (3) Debt-to-assets ratio (4) Return on investment (Use average assets and use "earnings from continuing operations" rather than "net earnings.") % (5) Gross margin percentage % (6) Asset turnover (Use average assets.) times (7) Return on sales (Use "earnings from continuing operations" rather than "net earnings.") % (8) Plant assets to long-term debt ratio days % % % times %
HANDY TOOL:
Current ratio: 0.57
Average days to sell inventory: 36 days
Debt-to-assets ratio: 0.84
Return on investment: 8.6%
Gross margin percentage: 23.9%
Asset turnover: 3.6 times
Return on sales: 2.2%
Plant assets to long-term debt ratio: 1.3 times
TOOLBOX:
Current ratio: 1.54
Average days to sell inventory: 94 days
Debt-to-assets ratio: 0.35
Return on investment: 15.5%
Gross margin percentage: 37.3%
Asset turnover: 2.6 times
Return on sales: 6.2%
Plant assets to long-term debt ratio: 4.8 times
To compute the ratios for Handy Tool Corp. and Toolbox Inc. for their 2018 fiscal years, we can use the given financial information. Here are the calculations:
HANDY TOOL:
(1) Current ratio = Total current assets / Total current liabilities
= $9,250 million / $16,150 million
= 0.57
2. Average days to sell inventory = 365 days / (Cost of goods sold / Average inventory)
= 365 days / ($85,754 million / (($8,408 million + $8,490 million) / 2))
= 365 days / ($85,754 million / ($8,449 million))
= 365 days / 10.14
= 35.98 days
(3) Debt-to-assets ratio = Total liabilities / Total assets
= $30,386 million / $36,037 million
= 0.84
(4) Return on investment = Earnings from continuing operations / Average total assets
= $2,413 million / (($30,963 million + $36,037 million) / 2)
= 0.07 or 7.0%
(5) Gross margin percentage = (Gross profit / Revenue) * 100
= ($26,875 million / $112,629 million) * 100
= 23.9%
(6) Asset turnover = Revenue / Average total assets
= $112,629 million / (($30,963 million + $36,037 million) / 2)
= 3.4 times
(7) Return on sales = Earnings from continuing operations / Revenue
= $2,413 million / $112,629 million
= 0.02 or 2.0%
(8) Plant assets to long-term debt ratio = Property and equipment / Total long-term liabilities
= $18,598 million / $14,236 million
= 1.31
TOOLBOX:
(1) Current ratio = Total current assets / Total current liabilities
= $2,000 million / $1,294 million
= 1.55
(2) Average days to sell inventory = 365 days / (Cost of goods sold / Average inventory)
= 365 days / ($9,420 million / (($439 million + $1,740 million) / 2))
= 94 days
(3) Debt-to-assets ratio = Total liabilities / Total assets
= $1,989 million / $5,724 million
= 0.35
(4) Return on investment = Earnings from continuing operations / Average total assets
= $933 million / (($5,872 million + $5,724 million) / 2)
= 0.08 or 8.0%
(5) Gross margin percentage = (Gross profit / Revenue) * 100
= ($5,611 million / $15,031 million) * 100
= 37.3%
(6) Asset turnover = Revenue / Average total assets
= $15,031 million / (($5,872 million + $5,724 million) / 2)
= 2.6 times
(7) Return on sales = Earnings from continuing operations / Revenue
= $933 million / $15,031 million
= 0.06 or 6.0%
(8) Plant assets to long-term debt ratio = Property and equipment / Total long-term liabilities
= $3,316 million / $695 million
= 4.77
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