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3 years ago

For a profitable firm, an increase in which one of the following will increase the operating cash flow?

1 answer:

3 0

Employee salaries

The employee salaries is something that comes under the Operating Activities of a business, in its Cash Flow Statement. Therefore an Operating Cash Flow would be Employee Salaries in this case.

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Singh Co. reports a contribution margin of $960,000 and fixed costs of $720,000. (1) Compute the company’s degree of operating l

Alex

Answer: 1. Degree of Operating Leverage = 4

2. $384,000

Explanation:

1. Degree of Operating Leverage is calculated by dividing the Contribution margin by the Net Operating income.

Now, the Contribution margin is the difference between Price and Variable Cost. This means that if you remove fixed costs from it as well you get your profit.

Therefore 1. can be calculated thus,

Degree of Operating Leverage = Contribution Margin / Net Operating income

Degree of Operating Leverage = 960,000 / 960,000 - 720,000

Degree of Operating Leverage = 4

2. When Sales increases by a certain percentage we multiply that percentage by the Degree of Operating Leverage to find out how much Income will increase by.

Because sales went up by 15%, Singh Co. can expect that income would rise by,

= 15% * 4

= 60%.

Now income is Contribution margin - fixed costs so we have,

Income = 960,000 - 720,000

Income = $240,000

An increase of 60% would be

= 240,000( 1+ 60%)

=$384,000

$384,000 is the amount of income that Singh Co. can expect.

4 0

3 years ago

What is the world's most expensive drink?

vivado [14]

Tequila Ley, at $ 3,500,000

3 0

3 years ago

Jilk Inc.'s contribution margin ratio is 60% and its fixed monthly expenses are $48,000. Assuming that the fixed monthly expense

Kryger [21]

Answer:

The best estimate of the company's net operating income in a month is $34,800.

Explanation:

This can be calculated using the following steps:

Step 1: Calculation of contribution margin

This can be calculated using the formula for calculating the contribution margin ratio as follows:

Contribution margin ratio = Contribution margin / Sales ........... (1)

where,

Substituting the values in the question into equation (1) and solve for contribution margin, we have:

60% = Contribution margin / $138,000

Contribution margin = 60% * $138,000 = $82,800

Step 2: Estimation of the company's net operating income in a month

This can be calculated using the following formula:

Net operating income = Contribution margin - Fixed expenses ......... (2)

Substituting the $82,800 obtained in Step 1 for contribution margin and the fixed monthly expenses of $48,000 in the question into equation (2), we have:

Net operating income = $82,800 - $48,000 = $34,800

Conclusion

From Step 2 above, the best estimate of the company's net operating income in a month is therfore $34,800.

4 0

3 years ago

What is demand in marketing?

solniwko [45]

Market demand is the total quantity demanded across all consumers in a market for a given good. Aggregate demand is the total demand for all goods and services in an economy.

5 0

3 years ago

Read 2 more answers

"SMART" goals stands for: A. Specific, measurable, attainable, results-oriented, and time bound B. Specific, merit-based, accept

dedylja [7]

Answer:The answer is A

Explanation:

SMART are five steps in setting a business goal, S means specific, M means measurable A means Attainable / Achievement, R means Realistic/ Result Oriented, T means Time based

Specific : A specific goal has a much greater chance of being accomplished than general goal.great goal are well focused. In order to set a specific goal, the following questions must be answered such as who is involved? , what do I want to accomplish? What are the requirements needed to achieve the goal? What are the purpose of accomplishing the goal?

Measurable : This established the basis for measuring the level of progress towards the accomplishment of the goal.when a goal is measured, it enables the goal setter to stay on track to reach the target goal.it spurs the goal setter to continue the effort required to accomplish the goal. In measuring a goal questions such as how much? how many? how will I know when it is accomplished? must be answered.

Attainable : When a business goal is identified, it is important to begin to figure out ways to achieve the goal. The goal setter has to develop the attributes, abilities, skills,and the financial capacity to reach the goal. The goal can be attainable, when the goal setter plan the step wisely and also established a framework that allows the carrying out of the steps so outlined.

Realistic / Result Oriented : The business goal can be realistic or result oriented, when such a goal represents objective ahead which the goal setter are both willing and able to work towards. A goal can be both high and realistic, the goal setter is the one to decide just how high the goal is to know the substantial progress that had been made.

Time based: A goal should be within a specified time frame within which when such a goal is expected to have been accomplished.

7 0

3 years ago