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3 years ago

14

ME Company has a debt-equity ratio of .57. Return on assets is 7.9 percent, and total equity is $620,000. a. What is the equity

multiplier?

1 answer:

Lera25 [3.4K]3 years ago

5 0

Answer:

8.06

Explanation

Debt equity ratio=Debt÷ Equity
Debt÷Equity=0.57
Equity=620,000 in this question
Debt=620,000*0.57=353,400.
Assets=Debt+Equity
Assets in this case=353,400+620,000=973,400
Return on asset=Profit for the year=7.9%*973,400=76898.6
Equity Multiplier=Total Equity/Profit for the year
Equity Multiplier=620,000/76898.6=8.06

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Answer:

The best option would be option d since it provides the least cost and therefor a higher possibility of being the most profitable.

a. Total cost for option a=$37,000

b. Total cost for option b=$36,250

c. Total cost for option c=$33,750

d. Total cost for option d=$30,625

Explanation:

<em>Step 1: Determine the formula total cost</em>

Total cost=direct costs+cooking cost+serving cost+improvement costs

<em>Consider option a</em>

where;

direct costs=$400×25=$10,000

cooking costs=cooking cost per catering event×number of catering events

cooking costs per year=500×25=$12,500

serving cost=serving cost per plate×number of events×number of plates per event

serving cost per plate=$12

number of events=25

number of plates per event=(80/100)×50=40

serving cost=12×25×40=$12,000

Improvement costs=$2,500

replacing;

Total cost=10,000+12,500+12,000+2,500=$37,000

<em>Consider option b</em>

where;

direct costs=$10,000

cooking costs=cooking cost per catering event×number of catering events

cooking costs per year=500×25=$12,500

serving cost=serving cost per plate×number of events×number of plates per event

serving cost per plate=$12×0.75=$9

number of events=25

number of plates per event=50

serving cost=9×25×50=$11,250

Improvement costs=$2,500

replacing;

Total cost=10,000+12,500+11,250+2,500=$36,250

<em>Consider option c</em>

where;

direct costs=$10,000×0.75=$7,500

cooking costs=cooking cost per catering event×number of catering events

cooking costs per year=500×25=$12,500

serving cost=serving cost per plate×number of events×number of plates per event

serving cost per plate=$12×0.75=$9

number of events=25

number of plates per event=50

serving cost=9×25×50=$11,250

Improvement costs=$2,500

replacing;

Total cost=7,500+12,500+11,250+2,500=$33,750

<em>Consider option d</em>

where;

direct costs=$10,000×0.75=$7,500

cooking costs=cooking cost per catering event×number of catering events

cooking costs per year=500×25×0.75=$9,375

serving cost=serving cost per plate×number of events×number of plates per event

serving cost per plate=$12×0.75=$9

number of events=25

number of plates per event=50

serving cost=9×25×50=$11,250

Improvement costs=$2,500

replacing;

Total cost=7,500+9,375+11,250+2,500=$30,625

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<h3>What are agent and broker?</h3>

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Answer:

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Cr Preferred Stock ($10 par)$13,000

Cr Paid-in Capital in Excess of Par/Preferred Stock $78,000

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Dr Cash $112,000

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Cr Paid-in Capital in Excess of Par/Common Stock $20,000

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Dr Income Summary $260,000

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Explanation:

Preparation of the Journal entries and the closing entry for net income.

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Cr Preferred Stock ($10 par) $20,000

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Cr Paid-in Capital in Excess of Par/Common Stock $20,000

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