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3 years ago

Why would a company report inventories at sales price less distribution costs?

1 answer:

3 0

I should think that unless the items sold were picked up at the store/warehouse then if this company pays for distribution costs then to know the final revenue to the company it would require the sale price minus the distribution cost or the net value to the company,

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Your firm has $500 million of investor-supplied capital, its return on investors' capital (ROIC) is 15%, and it currently has no

marusya05 [52]

Answer:

The recapitalization will make the ROE would increase

Explanation:

If the firm has no debt in its capital structure then the ROIC (return on invested capital) es equal to the ROE (return on equity) and if it makes a recapitalization with debt the equity will decrease. And remaining the operating income constant the ROE will increase.

ROE = Net Income / Stockholders Equity

6 0

4 years ago

Being Human, Inc., recently issued new securities to finance a new TV show. The project cost $14.6 million, and the company paid

Anna11 [10]

Answer: 1.6631

Explanation:

The company’s target debt-equity ratio will be calculated thus:

Let's assume x = equity

Let's assume (1-x) = debt

Total funds needed = $14,600,000 + $785,000 = $15,385,000

Then, we calculate the flotation which will be:

15,385,000 × (1 - f) = 14,600,000

15,385,000 - 15,385,000f = 14,600,000

-15,385,000f = 14,600,000 - 15385000

- 15,385,000f = -785,000

f = -785000 / -15385000

f = 0.05102

Then,

(7.6% × x) + (3.6% × 1-x) = 0.05102

(0.076 × x) + (0.036 × 1-x) = 0.05102

0.076x + 0.036 - 0.036x = 0.05102

0.076x - 0.036x = 0.05102 - 0.036

0.04x = 0.01502

x = 0.01502/0.04

x = 0.3755

Equity = 0.3755 = 3.755%

Debt = 1-x = 1 - 0.3755 = 0.6245

Debt equity ratio = Debt / Equity

= 0.6245/0.3755

= 1.6631

The debt-equity ratio is 1.6631.

8 0

3 years ago

A coupon bond that pays interest of $54 annually has a par value of $1,000, matures in 5 years, and is selling today at a $73.75

ale4655 [162]

Answer:

The current yield on this bond is 7.21 %.

Explanation:

The yield of the bond, YTM can be determined using a financial calculator as follows :

Pv = $1,000 - $73.75 = - $926.25

Pmt = $54

n = 5

p/yr = 1

Fv = $1,000

YTM = ?

Using a Financial Calculator, the yield of the bond, YTM is 7.2088 or 7.21 %

7 0

3 years ago

Highway 55 Studios has budgeted the following amounts for its next fiscal year: Total fixed expenses $ 1 comma 980 comma 000 Se

faust18 [17]

Answer:

Contribution per unit = Selling price - Unit variable cost

= $70 - $10 = $60

Break-even sales in units = Fixed cost

Contribution per unit

= $1,980,000

$60

= 33,000 units

If fixed cost reduced by $49,500, new fixed cost will be $1.930,500

33,000 = $1,930,500

$70 - VC

33,000(70 - VC) = $1,930,500

2,310,000 - 33,000VC = $1,930,500

2,310,000 - $1,930,500 = 33,000VC

379,500 = 33,000VC

379,500 = VC

33,000

VC = $11.50

Increase in variable expenses per unit

= $11.50 - $10 = $1.50

Explanation:

In this case, we need to determine the break-even point in units, which is fixed cost divided by variable expenses per unit. If total fixed expenses reduced by $49,500, the new total fixed expenses will be $1,930,500. Then, we will equate the break-even point in units to the new fixed cost divided by contribution per unit, which is selling price minus variable expenses per unit. Since break-even point in units, new fixed cost and selling price were known with the exception of variable cost, variable cost becomes the subject of the formula. The old variable expenses will be deducted from the new variable expenses so as to obtain increase in variable expenses per unit.

7 0

4 years ago

The following transactions apply to Pecan Co. for 2018, its first year of operations:1. Received $100,000 cash in exchange for i

tankabanditka [31]

Answer:

Pecan Co.

a. Accounting equation: Assets = Liabilities + Equity

Assets: Cash ($100,000 + 300,000 - 100,000 - 150,000 - 69,292) + Land ($100,000) + Accounts Receivable ($260,000) = Liabilities: Bank Loan ($245,708) + Equity: Common stock ($100,000) + Retained Earnings ($260,000 - 150,000 - 15,000)

b1: Income Statement

Service Revenue $260,000

Operating expenses 150,000

Interest expense 15,000

Net income $95,000

Balance Sheet

Cash $80,708

Accounts Receivable 260,000

Land 100,000

Total assets $440,708

Bank Loan $245,708

Common stock 100,000

Net income 95,000

Total liabilities+equity $440,708

b2. The interest expense for 2019 is $15,000 ($300,000 * 5%)

The interest expense for 2020 is $12,285.40 ($300,000 +15,000 - 69,292) * 5%.

Explanation:

a) Data and Calculations:

Cash $100,000 + 300,000 - 100,000 - 150,000 - 69,292 = $80,708

Accounts Receivable $260,000

Land $100,000

Common stock $100,000

Bank Loan $300,000 + 15,000 - 69,292 = $245,708

Service Revenue $260,000

Operating expenses $150,000

Amortization Schedule, using an online financial calculator:

Beginning Interest Principal Ending

Balance Balance

1 $300,000.00 $15,000.00 $54,292.44 $245,707.56

2 $245,707.56 $12,285.38 $57,007.06 $188,700.50

3 $188,700.50 $9,435.02 $59,857.41 $128,843.08

4 $128,843.08 $6,442.15 $62,850.29 $65,992.80

5 $65,992.80 $3,299.64 $65,992.80 $0.0

6 0

3 years ago