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3 years ago

1. The interest rate that the Federal Reserve Bank (the Fed) charges member banks for loans is known as the____________ .

Business

1 answer:

horsena [70]3 years ago

5 0

Answer:

1. Discount rate.

2. Increase.

Explanation:

A Federal Reserve Bank is one of the twelve regional banks of the Federal Reserve System in the United States of America. The Federal Reserve Banks are saddled with the responsibility of implementing the monetary policy designed and provided by the Federal Open Market Committee (FOMC).

Federal Reserve System also known as the Fed, was created under the Federal Reserve Act which was passed by US Congress in 1913. The Fed began its operations in the year 1914. It's a financial institution which was founded by President Woodrow Wilson and was primarily aimed at backing each banks in order to put a definitive end to the bank panics of the 1800s.

Furthermore, just like all central banks, the Fed is a government financial institution which is saddled with these responsibilities;

1. Controlling the issuance of currency in United States of America: the Fed promotes public goals such as economic growth, low inflation, and the smooth operation of financial markets.

2. Providing banking services to all the commercial banks in the country: the Fed is the "lender of last resort.

3. Regulating banking activities: it has the power to supervise and regulate banks.

The Federal Reserve Board is the governing body which essentially manages the Federal Reserve System and performs an oversight function on domestic monetary policies.

<em>Additionally, the interest rate that the Federal Reserve Bank (the Fed) charges member banks for loans is known as the discount rate. Also, the Fed can increase the money supply by lowering this rate (discount rate) and thus, empowering the member banks to lend more money.</em>

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Simon Company’s year-end balance sheets follow.At December 31 2017 2016 2015Assets Cash $ 36,335 $ 42,472 $ 42,524 Accounts rece

mina [271]

Answer:

(1) Debt Ratio in 2017 = 44.57%; Debt Ratio in 2016 = 39.33%; Equity Ratio in 2017 = 55.43%; and Equity Ratio in 2016 = 60.67%.

(2) Debt-To-Equity Ratio in 2017 = 80.42%; and Debt-To-Equity Ratio in 2016 = 64.83%.

(3) Times Interest Earned in 2017 = 4.71 times; and Times Interest Earned in 2016 = 4.22 times.

Explanation:

(1) Calculation of debt and equity ratios

Debt ratio is a ratio that is used to measure the ability of a company to pay off its liabilities with its assets. Debt ratio can be calculated using the following formula:

Debt Ratio = Total Debt / Total Assets

We can then calculate as follows:

Total debt = Accounts payable + Long-term notes payable secured by mortgages on plant assets

Total debt in 2017 = $159,605 + $120,505 = $280,110

Total debt in 2016 = $89,723 + $123,354 = $213,077

Total assets in 2017 = $628,417

Total assets in 2016 = $541,739

Debt Ratio in 2017 = $280,110 / $628,417 = 0.4457, or 44.57%

Debt Ratio in 2016 = $213,077 / $541,739 = 0.3933, or 39.33%

Equity ratio is a ratio that is used to measure the amount of assets of a company that are financed by the investments of the owners of the company. Equity ratio can be calculated using the following formula:

Equity Ratio = Total Equity / Total Assets

We can then calculate as follows:

Total equity = Common stock, $10 par value + Retained earnings

Total equity in 2017 = $162,500 + $185,807 = $348,307

Total equity in 2016 = $162,500 + $166,162 = $328,662

Equity Ratio in 2017 = 0.5543, or 55.43%

Equity Ratio in 2016 = 0.6067, or 60.67%

(2) Calculation of debt-to-equity ratio.

The debt-equity ratio provides the proportion of financing of a company that is contributed by creditors and investors. Debt-equity ratio can be calculated using the following formula:

Debt-To-Equity Ratio = Total Debt / Total Equity

Using the data in part (1) above, we can then calculate as follows:

Debt-To-Equity Ratio in 2017 = $280,110 / $348,307 = 0.8042, or 80.42%

Debt-To-Equity Ratio in 2016 = $213,077 / $328,662 = 0.6483, or 64.83%

(3) Calculation of times interest earned

The times interest earned ratio is a ratio that is used to determine the proportionate amount of income that that is required to cover interest expenses. The times interest earned ratio can be calculated using the following formula:

Times Interest Earned = Earnings before interest and tax (EBIT) / Interest expenses

We can then calculate as follows:

EBIT = Sales - Cost of goods sold - Other operating expenses

EBIT in 2017 = $816,942 - $498,335 - $253,252 = $65,355

EBIT in 2016 = $644,669 - $419,035 - $163,101 = $62,533

Interest expenses in 2017 = $13,888

Interest expenses in 2016 = $14,827

Times Interest Earned in 2017 = $65,355 / $13,888 = 4.71 times

Times Interest Earned in 2016 = $62,533 / $14,827 = 4.22 times

7 0

3 years ago

Which management viewpoint places emphasis on the importance of understanding human beings and the motivation and encouragement

Basile [38]

<h2>Behavioral view point is pertaining to the motivation and encouragement of employees towards achievements.</h2>

Explanation:

Initially the organization was

concentrating only on the productivity of the employee
lost focus on motivating employees
not providing much "employee-friendly" atmosphere

Later on, the "Behavioral management" theory helped the organization

a shift from Production to leadership based work culture
a good work environment to satisfy the employees
Motivate to achieve good results
Reach both individual and organization's goal
Motivating by providing Increase in the wages

7 0

3 years ago

Multiple-Choice Questions on Consolidation Overview [AICPA Adapted]

boyakko [2]

Answer: 1. D. Economic entity

2. C. Circumstances prevent the exercise of control.

3. B. Consolidation used for both Sell and Vane.

4. B. In form, the companies are separate; in substance, they are one entity

Explanation:

1. When a parent–subsidiary relationship exists, it can be infered that consolidated financial statements will be prepared in recognition of the accounting concept of economic entity.

2. Consolidated financial statements are prepared when one company has a controlling interest in another unless the circumstances prevent the exercise of control.

3. Based on the information given, in Penn’s consolidated financial statements, it should be noted that Sell and Vane should be consolidated. Therefore, the correct option is B.

4. The best theoretical justification for consolidated financial statements is that in form, the companies are separate while in substance, they are regarded as one entity.

4 0

3 years ago

range the types of investments in the correct order from the least risky to the most risky investment. Tiles speculative stocks

frosja888 [35]

High risk, high returns. The higher the risk of an investment, the higher the returns or losses.

Speculative stocks investment is a high risk investment. It offers the possibility of earning substantial returns to compensate for its high risk profile.

Retirement plans are investments made in preparation for retirement. These investments have minimal risks compared to speculative stocks.

Property investments are low in risk but it is still subject to risk.

A-rated bonds are bonds that are credible and are expected to give a return to investors.

Based on my understanding, the correct order of investment from the least risky to the most risky is:

1) property
2) A-rated bonds
3) retirement plans
4) Speculative stocks.

8 0

3 years ago

When a firm decides to use skilled professionals to produce its output, what question is the firm answering? When a firm decid

Stella [2.4K]

Answer:

The correct answers are "How?"; "What?"; and "Who?" respectively.

Explanation:

To begin with, in the economics science there is a big importance that the professionals of the area give to answering the questions mentioned before. Those questions are: "What to produce?"; "How to produce it?" and "To who we produce it to?". And the importance in that resides in the fact that the economy itself as a whole and therefore the companies and small producers among them need to understand what are they going to produce for the economy, to who they will sell it to and how will the produce it.

In conclusion, when the firm decides to use skilled professionals to produce its output they are answering the question of "How?". When the firm decides to produce organic fruit rather than non dash organic fruit, then they are answering the question of "What?". And the when the firm finds out who gets the goods and services that are produced, they are answering the question of "Who?".

7 0

3 years ago