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Dafna11 [192]
3 years ago
14

Given your understanding of cash flow, financial statements, ratio analysis and time value of money, provide an example of why t

he integration of these concepts would be important. Do not quote the text, but think through these tools and provide an example for the others in the class as to the importance and value of these ideas when they are effectively integrated.
Business
1 answer:
Alla [95]3 years ago
5 0

Answer:

The best example I can think of that would integrate all of these concepts is when a business is looking to finance some sort of project and they are seeking financing either through the issuance of bonds or a loan from a bank. Some of the concepts would be important to both parties, while others would be more important to one than the other.

Cash Flow

This would be important to both parties. The business, to make sure they have enough cash flow to pay for the financing. And the financiers, for the same reason.

Ratio Analysis

This would be important to both parties for the same reason as above. Especially the "current ratio" (current assets / current liabilities) and the "working capital" ratio (current assets - current liabilities).

Financial Statements

This would be of most importance to the financiers. They would want to see the total picture of a company's financial strength.

Time Value of Money

This would be of most importance to the company itself. They would want to know if the project was worth the total amount they would be paying on the bonds or the loan

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Crane Corporation acquires a coal mine at a cost of $404,000. Intangible development costs total $101,000. After extraction has
Svet_ta [14]

Answer:

The journal entry to record depletion is  :

Debit : Depletion Expense $74,235

Credit : Accumulated Depletion $74,235

Explanation:

<em>Depletion Expense = Depletion rate × units extracted during the year</em>

where,

<em>Depletion rate = (Cost - Salvage Value) ÷ Estimated total units</em>

Therefore,

Depletion rate = ($404,000 + $101,000 + $80,800 - $161,600) ÷ 4,040 tons

                        = $ 105 per ton

Therefore,

Depletion Expense = $ 105 per ton × 707 tons

                                = $74,235

<u>Journal Entry :</u>

Debit : Depletion Expense $74,235

Credit : Accumulated Depletion $74,235

8 0
3 years ago
An economy begins in long-run equilibrium, and then a change in government regulations makes holding money less attractive. a. (
deff fn [24]

Answer: Demand Curve shifts left

Explanation:

Money is now less attractive to hold so people will demand less of it. This will cause the demand curve in the monetary market therefore to shift to the left.

Shifts in the demand curve for money are usually caused when a non-interest determinant of demand changes such as a decrease in income.

7 0
3 years ago
Klose Outfitters Inc. believes that its optimal capital structure consists of 60 percent common equity and 40 percent debt, and
Eduardwww [97]

Answer:

WACC 10.38305%

Explanation:

<em><u>First we solve for the source of financing:</u></em>

Expansion: 5,900,000

60% Equity: 3,540,000

Retained Earnins 2,000,000

then 1,540,000 will be common equity

40% debt: 2,360,000 It can raise up to 3,000,000 so it will be sufficient

D  2,360

E  1,540

RE 2000

V  5,900

Now we can solve for Weighted average cost of capital

WACC = K_e(\frac{E}{E+RE+D}) + K_{re}(\frac{P}{E+RE+D}) + K_d(1-t)(\frac{D}{E+RE+D})

Ke 0.15

Equity weight 0.261016949 (1,540,000 / 5,900,000)

Kre 0.12

RE Weight  0,338983  (2,000,000 / 5,900,000)

Kd 0.1

Debt Weight 0.4 ( 2,360,000 / 5,900,000)

t 0.4

WACC = 0.15(0.261016949152542) + 0.12(0.338983050847458) + 0.1(1-0.4)(0.4)

WACC 10.38305%

5 0
3 years ago
Three major segments of the transportation industry are motor carriers, such as YRC Worldwide; railroads, such as Union Pacific;
Usimov [2.4K]

Answer:

The assets turnover for the three companies are as follows:

YRC Worldwide Union      1.54  

Pacific C.H.                       0.40  

Robinson Worldwide Inc     4.84  

Asset turnover implies how much sales generated by an organization from $1 of asset deployed to the business.

Judging from the above,Robinson Worldwide Inc  was the most effective in using its assets to generate sales.It generated $4.84 in sales for every $1 of asset used.

Explanation:

        YRC Worldwide Union Pacific C.H.  Robinson Worldwide Inc

Asset turnover=net sales/average total assets    

Sales                      4,334,640.00   16,965,000.00   9,274,305.00  

Average Total Assets 2,812,504.00   42,636,000.00   1,914,974.00  

Asset turnover=net sales/average total assets

                                         1.54                             0.40                  4.84

                                                       

8 0
3 years ago
If john can produce 10 chairs or 20 lamps during a week while mary can produce 12 chairs or 22 lamps in the same​ time, who has
Norma-Jean [14]

Mary has the competitive advantage for chairs and lamps.

Absolute comparative advantage is the ability to produce something more efficiently than someone else..

5 0
3 years ago
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