Financial Reports and Influence
Why is it important for business managers to understand the information found on financial reports?
Why is it important for business managers to understand the information found on financial reports?
Fison Corp. purchased 15,000 shares of its $2 par common stock at a cost of $12 per share on April 30, 2006. The stock was originally issued at $10 per share. The entry to record the purchase of the stock should include a debit to a. Common Stock for $30,000. b. Treasury Stock for $30,000. c. Common Stock for $180,000.
7.3 The Best Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated below. Cash flows are in $ thousands, and the corporate tax rate is 34 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur a
1. What is the relationship between the price of a financial asset and the return that investors require on that asset, holding other factors constant? 2. Describe how you could estimate the required rate of return on a share of preferred stock if you know its market price and its dividend.
Please help with the following. Thank you. Briefly explain how the following items affect the capital budgeting decisions of multinational companies: (a) exchange rate risk; (b) political risk; (c) tax law differences; (d) transfer pricing; and (e) a strategic rather than a strict financial viewpoint.
I need help with the following questions 2- Debt ratio Bartley Barstools has an equity multiplier of 2.4, and its assets are financed with some combination of long- term debt and common equity. What is its debt ratio? 3-Du Pont analysis Doublewide Dealers has an ROA of 10 percent, a 2 percent profit margin, and an ROE of
A company has annual sales of $14,000. Its variable costs equal 60% of its sales, fixed costs equal $1,000. If the company's sales increase 10%, what will be the percentage increase in the company's earnings before interest and taxes (EBIT)?
The Microsoft antitrust trial (United States vs. Microsoft) has been one of the biggest investigations of antitrust behavior since the turn of the century. Split your group into two sides: one that supports the government side, and one that support's Microsoft's side. Work (via email, small group discussion board, and small grou
Jim Reed, II had meeting with his banker, Harold Holmes of First Virginia National Bank, which is the only bank that Reed's Clothier used since its establishment. The bank informed to him that they can no longer extend their line of credit and demand for the repayment of the over due note payable of $130,000 within 30 days. Ho
Sometimes market activities (production, buying and selling) have unintended positive or negative effects outside the market's scope. This is called an externality. Suppose that you are a policy maker concerned with correcting the effects of gases and particulates emitted by and local power plant. What tools would you use? What
#1 What measures can the government take to combat inflation? #2 Can you describe the good side of inflation? #3 Crude oil prices are a continuing hot topic, even though the debate may have worn thin. It is important because it impacts so much in our personal and business lives. Here's a different slant. There is a great m
Assorted problems for accounting 1. On January 1, 2007, Accounts receivable and the allowance for doubtful accounts carried balances of $30,000 and $500, respectively. During the year the company reported $70,000 of credit sales. There was $550 of receivables written-off as uncollectible in 2007. Cash collections of receivabl
Compare and contrast the goals of profit maximization and maximization's of shareholder wealth.
Ross: Chapter 7 - Problems: 7.3 The Best Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated below. Cash flows are in $ thousands, and the corporate tax rate is 34 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in
Problem # 10-18 The preferred stock of Ultra Corporation pays annual dividend of $6.30. It has a required rate of return of 9 %. Compute the price of the preferred stock. QUESTION How do you define inflation and what measures can be taken to lessen the impact of inflation on the economy?
Prepare a 750-1,000-word paper in which you do the following: a. Explain the philosophy of public finance. b. Contrast governmental accounting with nongovernmental accounting. c. Explain the relationship between budgeting and financial reporting in government.
What are the three key inputs to the valuation model? How would you determine the valuation of an asset? How would the intrinsic value differ from the market value? Use a "real life" example to help explain your answer.
Your company is considering three mutually exclusive projects. Project A will expand the existing business operations in the current location. Project B will expand the existing business operations to the adjacent county. Project C will expand into a new business operation that is not related to current business operations. Surp
Loan Amortization When Evelyn and Paul Peters were "house hunting" five years ago, the mortgage rates were pretty high. The fixed rate on a 30-year mortgage was 8.75% while the 15-year fixed rate was at 8%. After walking through many homes, they finally reached a consensus and decided to buy a $200,000 twostory house in an up a
1. Firms A and B are identical except for their level of debt and the interest rates they pay on debt. Each has $2 million in assets, $400,000 of EBIT, and has a 40% tax rate. However, firm A has a debt-to-assets ratio of 50% and pays 12% interest on its debt, while Firm B has a 30% debt ratio and pays only 10% interest on its
Can you please list the differences between depreciation, depletion and amortization?
Let us assume that economic forecasts are predicting falling GDP (Gross Domestic Product) coupled with high inflation over the next couple of years. Based on this information, if you were a portfolio manager what would your recommendations be for investing in the construction industry? Why? What about in the health care industry
Crumpley Co. has $5 M is current assets, zero debt, in 40% tax bracket, net income of $1 M. NI is expected to grow at a constant rate of 5%/year. 200,000 shares outstanding and current WACC of 13.40%. The company is considering a recapitalizaiton where it will issue $1M in debt and use proceeds to repurchase stock. Before-ta
Ferson, Inc., just paid a dividend of $3.00 on its stock. The growth rate in dividends is expected to be a constant 5 percent per year indefinitely. Investors require a 16 percent return on the stock for thr first three years, a 14 percent return for the next three years, and then an 11 percent return thereafter. What is the cur
Brennan Steel Company as lessee signed a lease agreement for equipment for 5 years, beginning December 31, 2007. Annual rental payments of $32,000 are to be made at the beginning of each lease year (December 31). The taxes, insurance, and the maintenance costs are the obligation of the lessee. The interest rate used by the le
Western Wood Product has two production departments: cutting and assembly. The company has been using a single predetermined cost driver rate based on plantwide direct labor hours. That is, the plantwide dividing plantwide cost driver rate is computed by dividing plantwide support costs by total plantwide direct labor hours. The
Suppose that during a given year: (a) The price of TV sets increases by 4 percent in Japan, (2) the dollar depreciates by 5 percent with respect to the yen, (3) consumer incomes in the U.S. increase by 3 percent, (4) the price elasticity of demanrd for imported TV sets in the U.S. is 1.5, and (5) consumers income elasticity of
The company with which you are currently employed is experiencing a financial crisis. The Chief Financial Officer (CFO) has suddenly resigned and no one is discussing the reasons why. The U.S. Securities and Exchange Commission (SEC) is investigating your company's accounting practices and from the documents they have requested,
Jordan Broadcasting Company is going public at $40 net per share to the company. There also are founding stockholders that are selling part of their shares at the same price. Prior to the offering, the firm had $24 million in earnings divided over eight million shares. The public offering will be for five million shares; thre
A large Bank Holding Company has Tier-1 capital of $40 billion and Tier-2 capital of $20 billion and risk weighted assets of $550 billion. Calculate the risk based capital ratios and determine whether they meet the required standards.