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astra-53 [7]
3 years ago
12

Here is the income statement for Metlock, Inc. METLOCK, INC. Income Statement For the Year Ended December 31, 2020 Sales revenue

$449,500 Cost of goods sold 211,500 Gross profit 238,000 Expenses (including $11,700 interest and $29,700 income taxes) 78,800 Net income $ 159,200 Additional information: 1. Common stock outstanding January 1, 2020, was 22,400 shares, and 37,300 shares were outstanding at December 31, 2020. 2. The market price of Metlock stock was $13 in 2020. 3. Cash dividends of $22,600 were paid, $4,900 of which were to preferred stockholders. Compute the following measures for 2020. (Round all answers to 2 decimal places, e.g. 1.83 or 2.51%) (a) Earnings per share $enter a dollar amount (b) Price-earnings ratio enter Price-earnings ratio in times times (c) Payout ratio enter percentages % (d) Times interest earned enter Times interest earned times
Business
1 answer:
ruslelena [56]3 years ago
7 0

Answer and Explanation:

The formula and the computations are shown below:

(a) Earnings per share = ( Net Income - Preference stock dividend) ÷ (Weighted average number of outstanding shares )

= ($159,200 - $4,900) ÷ (22,400 shares + 37,300 shares) ÷ 2

= $154,300 ÷  29,850 shares

= $5.169

= $5.17

(b) Price earnings ratio = Price ÷ Earning per share

= $13  ÷  $5.17

= 2.51 Times

(c) Payout ratio = Dividend paid to equity share holders ÷ net income  

= ($22,600 - $4,900 ) ÷  ($159,200)

= $17,700 ÷ $159,200

= 11.118 %

= 11.12%

(d) Times interest earned = Earnings before interest and tax ÷ Interest expense

= ($159,200 + $11,700 + 29,700) ÷ ($11,700 )

= 17.145

= 17.15 Times

We simply applied the above formulas to determine the each ratios

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What is the economic process of withdrawing investments from low profit sectors and investing in new activities?
frozen [14]

Answer:

Creative destruction.

Explanation:

In 1942, the term creative destruction was first to be used by the notable Austrian economist known as Schumpeter Joseph.

Creative destruction is the economic process of withdrawing investments from low profit sectors and investing in new activities.

This ultimately implies that, creative destruction is a concerted effort towards the deliberate destruction or dismantling of long standing products, processes, practices, procedures or services in order to give room for innovative ideas and an improved technique for the production (manufacturing) of goods and services. Thus, the old technology or methods of production are dismantled so as to pave way for new technologies, procedures, goods and services.

8 0
3 years ago
A company can choose to use FIFO inventory costing methods for the financial statement and can elect to use either LIFO or FIFO
Oduvanchick [21]

Answer:

A. True.

Explanation:

Companies can and often do use different costing methods for financial reporting and tax reporting. The only exception is when LIFO is used for tax reporting; in this case the IRS requires that it also be used in financial statements.

LIFO assigns the highest amount to cost of goods sold - yielding the lowest gross profits and net income , which also yields a temporary tax advantage by postponing payment of some income tax.

8 0
2 years ago
Manuel wants to sell his new product in foreign countries but with the least amount of risk to himself and his business. what ma
likoan [24]

In my view one of the safest ways to enter markets in foreign countries in strategic alliance with an existing business of that market.This existing business knows about the market Manuel wants to sell its' products in. Furthermore, this would allow Manuel to prepare a strategy accordingly.But, if he forms an alliance with a business that has a bad brand image,it can get tough for Manuel business to even start.Although, I strongly believe that this is one of the safest ways to enter a new market.But,before he takes this step,Manuel must prepare a business plan.


8 0
3 years ago
Manisha could work for another firm making​ $10,000 per​ month, but she decides to open her own gourmet cheese store and pay her
Ghella [55]

Answer:

Manisha's economic profits are - $5,000.

Explanation:

Manisha could work for another firm making​ $10,000 per​ month, but she decides to open her gourmet cheese store and pay herself​ $2,000 per month.

In her first month of​ operations, she spends​ $6,000 on​ cheese, $1,000 on other​ items, and​ $2,500 on rent.

She had a great opening​ month and brought in revenues of​ $14,500.

The economic profits

= Total revenue - (Implicit costs + explicit costs)

= $14,500 - ($10,000 + $6,000 + $1,000 + $2,500)

= $14,500 - $19,500

= - $5,000

4 0
2 years ago
Swan Finance Company, an accrual method taxpayer, requires all of its customers to carry credit life insurance. If a customer di
posledela

Answer:

Recognize an income/loan repayment of $1,300, and cancel the debt of $200 from the earlier recognition of income

Explanation:

Swan would only recognize an income/loan repayment of $1,300 having already recognized an initial income of $200 of the $1,500 owed before the death of the customer.

Accounting entries would be as follows.

Debit Bank account: $1,500

Credit income/loan repayment account: :1,300

Credit receivables: $200.

The credit of $200 in receivables would be treated as shown above due to the income of $200 already recognised and which would have been treated as follows when it was recognized,

Dr: receivables $200

Cr. interest earned $200,

7 0
3 years ago
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