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Description of Leverage Analysis and Break-Even Analysis

Please answer the following questions: 1. An analytical income statement for Detroit Heat Treating is shown below. It is based on an output (sales) level of 40,000 units. Sales $480,000 Variable costs _2_8__0_,_0_0_0 Revenue before fixed costs $200,000 Fixed costs _1_2__0_,_0_0_0 EBIT $ 80,000 Interest expense __3__0_

Business Finance Reasoning: Cash Flows and Capital Structure

Explain the reasoning behind the focus on cash flows rather than accounting profits in making our capital-budgeting decisions. Why are we interested only in incremental cash flows rather than total cash flows? If depreciation is not a cash flow item, why does it affect the level of cash flows from a project in any way? Wh

Contribution margin .

Use the formula stated: Contribution Margin = Revenue - Variable Costs (CM = R - VC) Your top two Agents ... Let's call them ... Agent J and Agent K, both bring in two "must do deals" with new extraterrestrial ah ... accounts. Agent J's is for $ 100,000 ... 50 units at sales price $2,000 per unit Agent K's is for $ 50,0


a. What is the definition of price elasticity of demand? b. Explain the relationship between price elasticity and total revenue? How does price elasticity of demand affect a firmâ??s pricing decisions? c. How does the availability of substitutes affect price elasticity of demand? Provide examples. Pleas

Corporate Finance

Manyops, Inc., is a manufacturing firm that has experienced strong competition in its traditional business. Management is considering joining the trend to the "service economy" by eliminating its manufacturing operations and concentrating on providing specialized maintenance services to other manufacturers. Management of Manyop

Financial Models

Need to show calculations in excel #1: During the year, the Senbet Discount Tire Company had gross sales of $1.2 million. The firm's cost of goods sold and selling expenses were $450,000 and $225,000, respectively. Senbet also had notes payable of $900,000. These notes carried an interest rate of 9%. Depreciation was $110,0

Comparing Performance Evaluation Methods

Top management of the Gates Corporation is trying to construct a performance evaluation system to use to evaluate each of its three divisions. This past years financial data are as follows: Division A Division B Division C Total assets

ELN Waste Management: ROI and EVA

ELN Waste Management has a subsidiary that disposes of hazardous waste and a subsidiary that collects and disposes of residential garbage. Information related to the two subsidiaries follows. Hazardous Waste Residential Waste Total assets

Incentives to Over-Invest and Under-Invest

Consider two companies: Quantum Products and Aquafin Products. Senior managers at Quantum Products are evaluated in terms of increases in profit. In fiscal 2011, Quantum Products had a net operating profit after taxes of $2,500,000 and invested capital of $25,000,000. In fiscal 2012, the company had net operating profit after ta

Finance: Garber Company: Compute cost driver rates, and ABC costing

Please see the attached file. Garber Company uses a traditional activity-based costing system to assign $600,000 of committed resource costs for customer service on the basis of the following information gathered from interviews with customer service personnel: Activity Time Percentage Estimated Cost Driver Qua

Price for Booking Airlines and Hotels

You've decided to take a trip to San Juan, Puerto Rico. You will leave one month from today and stay for 7 nights. You need to purchase a plane ticket and a hotel room. Search for these two items individually at airline and hotel web sites. What airline and hotel did you find, and what were the prices of each? Next, search f

EXERCISE 11-13. Investigating Variances

At the start of the year, Frigicor estimated that the company would produce 480 refrigeration units during the year (40 per month). Annual fixed overhead costs were estimated to be $600,000 ($50,000 per month), and estimated variable overhead costs were estimated to be $500 per unit. Standard cost per unit was set at $3,450: St

Management, CFO and Finance Functions

What is the primary goal of management. What are the primary tasks of a Chief Financial Officer (CFO) and others in the finance function of an organization.

Question about a Financial Problem

As an investor in EasternSemiconductor Corporation, what do you think of the following statements? Justify your opinion. The president of Eastern Semiconductor Corporation (ESC) stated in the company's Annual Report to Shareholders that ESC's goal is to increase the value of our common shareholder's equity. Later in the report,

S&L industry Crisis in the 1980s: Mortgage loans, market values, insolvency

See attached file. The Savings and Loan (S&L) industry had an extremely difficult time during the 1980s, as interest rate levels reached new highs. The following problem illustrates the nature of these difficulties. NOTE: This problem assumes you are familiar with the relationship between the market val

Time Value of Money Concepts

1. You deposit $5,000 in an account that earns 12% compounded annually. Compute the account balance at the end of: a. 1 year b. 20 years c. 40 years 2. You deposit $100,000 in an account that earns a 10% annual rate of return. You have decided that at the end of each year you will withdraw the interest that is credited

Loan Interest Deduction: Amortization Schedule

Loan interest deductions Liz Rogers just closed a $10,000 business loan that is to be repaid in three equal, annual, end-of-year payments. The interest rate on the loan is 13%. As part of her firm's detailed financial planning, Liz wishes to determine the annual interest deduction attributable to the loan. (Because it is a bu


Diversification is supposed to reduce risks. What does diversification mean in the context of corporate finance, and how does it reduce risks in that context? Can all risks be reduced through diversification? Can a corporation have too much diversification? response is 281 words

Corporate Finance

As an investor you have a required rate of return of 14 percent for investments in risky stocks. You have analyzed three risky firms and must decide which (if any) to purchase. Your information is Firm A B C Current Dividends $1.00

Advantages and disadvantages of various valuation methods

Describe the advantages and disadvantages of these 3 valuation methods: 1) the Discounted Cash Flow method (fundamental method) 2) the Venture Capital Method and 3) the First Chicago Method. In answering the question, assume that you plan to value a startup. response is 1,236 words plus references

Practice Problems

Problem 8-6 Cost of Assets, Subsequent Book Values and Balance Sheet preparation The following events took place at Pete's Painting Company during 2008. a. On January 1, Pete bought a used truck for $14,000. He added a tool chest and side-racks for ladders for $4,800. The truck is expected to last four years and then be so

Multiple Choice Questions - finance practice quiz

25. A common size income statement: a. uses the same dollar amount of revenues for each year. b. expresses items as a percentage of revenues. c. makes comparisons between years more difficult. d. is useful in estimating the impact of inflation. 26. Which of the following is(are) an example of a measure of leverage?