The firm that would suffer the greatest decline in profits if sales volume declines by 15% is Mason Company.
The cost of a company is made up of fixed cost and variable cost. Fixed cost is the cost that does not vary with output of the company. It remains fixed no matter the level of output. An example of fixed cost is rent. Variable cost is the cost that varies with output. If output increases, variable cost increases and if output falls, output decreases.
If sales volume decreases, the output of Mason Company would decline more compared with the output of Kelley company because it has a higher fixed cost. So, we when sales reduces, its cost would would not reduce as many as the cost of Kelley company.
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Question Completion:
If Delicious Catering had recorded transactions using the Accrual method, how much net income (loss) would they have recorded for the month of May? If there is a loss, enter it with parentheses or a negative sign.
Answer:
Delicious Catering
Using the Accrual method, Delicious Catering would have recorded for the month a net income of $1,670.
Explanation:
Data and Calculations:
Prepaid Rent for 3 months = $1,500
Rent expense for the month = $500 ($1,500/3)
Utilities expense = $190
Service Revenue:
Cash for meals = $2,400
Credit 2,000
Total $4,400
Salary Expense = !,700
Depreciation expense = $340
Kitchen Equipment = $2,500
Income Statement for the month of May:
Service Revenue $4,400
Expenses:
Rent $500
Utilities expense 190
Salary expense 1,700
Depreciation expense 340
Total expenses $2,730
Net Income $1,670
Answer:
Convertible bonds
Explanation:
One advantege of convertible bonds for the issuer is that bondholders are willing to accept a loxer interest rate because they have an option of converting their bonds to common stock.
If a company wants to issue bonds at an interest rate that is lower than the current market interest rate, they should offer convertible bonds.
The two measures of instability in economic growth are high unemployment rates and inflation
Answer:
a) yes
b) no
c) yes
d) no
Explanation:
a) if the A/R balance grow higher than the sales is an indicator that our collection cycle increase thus, customer extend their financiation providing less cash flow
b) this is the opposite as (a) here we extend our financing agaist our suppliers. The payment cycle increases thus, decreasing the overall cash demand
c) If the assets were puirchased on cahs a huge amount was used alrady affecting the liquidity of the company.
If the company finance the purchase of the long term assets, in the future the company will have to dedicate a portion of their future cahs flow to pay up interest and principal which is what we should analize; wether or not the company will have difficulties in the future and the answer is yesin both scenarios.
d) no. It will not, as marketable securities are generally short-term and easily converted into cash in the short term. They do not generate cash flow problems in the long run as the company can sale them anytime to obtain cash.
