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Vesnalui [34]
3 years ago
12

Financial data for Stirling Inc. for last year are as follows:

Business
1 answer:
Tom [10]3 years ago
8 0

Answer:

profit margin: 6.04%

Assets turnover: 2.08

ROI 25.89%

Residual Income 137,330

Explanation:

<u><em>profit margin:</em></u>

income/sales = 326,480/5,404,000 = 0.060414507 = 6.0414507%

<u><em>Assets turnover:</em></u>

\frac{net \: sales}{average \: assets} \\\\where:\\average \: assets = \frac{ending + beginning}{2}

(2,561,000 + 2,629,000)/2 = 2,595,000 average assets

5,404,000/2,595,000 = 2.082466281 Assets TO

<u><em>ROI</em></u>

\frac{net \: income}{average \: equity} \\\\where:\\average \: equity= \frac{ending + beginning}{2}

(1,206,000+1,316,000)/2 = 1,261,000 average equity

326,480/1,261,000 = 25.890563%

<u>Residual Income:</u>

current income - income at desired RoR

That means calculate which income generates a ROI of 15% which is the minimum required return:

ROI = income / equity = 0.15

X/1,261,000 = 0.15

X=1,261,000 x 0.15 = 189,150

Now we calculate the diference between this number and the current income.

326,480 - 189,150 = 137,330 Residual Income

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You are evaluating a project that will cost $500,000, but is expected to produce cash flows of $125,000 per year for 10 years, w
boyakko [2]

Answer:

1. 4 years

2. No

Explanation:

Payback period calculates the amount of time to recoup the total investment made on a project. It calculates how long the cash flows generated from a project would cover the cost of the project.

The cost of the project is $500,000

Cash flows are $125,000 per year for 10 years.

In the first year, the cost of the project is reduced by $125,000 and becomes $375,000.

In the second year, the cost of the project is reduced by $125,000 and becomes $250,000.

In the third year, the cost of the project is reduced by $125,000 and becomes $125,000.

In the fourth year, the cost of the project is reduced by $125,000 and becomes $0.

The cost of the project is totally recouped in the 4th year. therefore, the payback period is 4 years.

But the company has a preferred payback period of 3 years ,therefore , the firm won't undertake the project because the payback period is more than 3 years.

3 0
3 years ago
On January 22, Jefferson County Rocks Inc., a marble contractor, issued for cash 210,000 shares of $30 par common stock at $34,
adoni [48]

Answer:

Jan. 22

Dr Cash $7,140,000

Cr Common Stock $6,300,000

Cr Paid in capital in excess of par $840,000

Feb. 27

Dr Cash $180,000

Cr Preferred Stock $135,000

Cr Paid-In Capital in Excess of Par-Preferred $45,000

Explanation:

Preparation of the entries for January 22 and February 27.

Jan. 22

Dr Cash $7,140,000

(210,000*$34)

Cr Common Stock $6,300,000

(210,000*$30)

Cr Paid in capital in excess of par $840,000

($7,140,000-$6,300,000)

Feb. 27

Dr Cash $180,000

(15,000*$12)

Cr Preferred Stock $135,000

(15,000*$9)

Cr Paid-In Capital in Excess of Par-Preferred $45,000

($180,000-$135,000)

7 0
3 years ago
As prepaid expenses expire with the passage of time, the correct adjusting entry will be a:
Nonamiya [84]

Answer:

d. debit to an expense account and a credit to an asset account.

Explanation:

When a prepayment is made, the entries recorded are Debit prepaid expense and credit Cash account to recognize the amount prepaid.

As time passes and the expenses are incurred, the entries required are debit expense account and credit prepaid expense (an asset) with the amount of the expense incurred as a result of the passage of time.

4 0
2 years ago
Listed below are accounts that appear in financial statements.
Kobotan [32]

Answer:

Dividends  - <em>Statement of Changes  in Retained Earning</em>

Dividends are payments to shareholders from a company's net income. They are derived from the Statement of Changes  in Retained Earning because this is where Net Income is sent to. After they are deducted from Retained Earnings, the Earnings form part of Equity.

Differed Revenue  - <em>Balance Sheet</em>

Differed Revenue refers to money that was received from a customer or client for goods and/or services that have not yet been delivered. The business will treat them as a liability until they are delivered so they will go under Current Liabilities in the Balance Sheet assuming they are to be fulfilled in 12 months or less which is usually the case.

Service Revenue - <em>Income Statement</em>

These are revenue that the business earns for providing a service when their main source of revenue is by selling goods. It is listed in the Income Statement just after Revenue and is added to Revenue to get Total Revenue.

7 0
3 years ago
5. ________ is a short-term security, or note, containing a borrower's promise to pay O A trade draft O Equity financing O Comme
erastovalidia [21]

Answer:

Commerical paper

Explanation:

Commerical paper is a short-term security, or note, containing a borrower's promise to pay.

There was a previous question like that, so i remember the answer.

~<u>rere</u>

5 0
1 year ago
Read 2 more answers
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