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cupoosta [38]
3 years ago
5

Keller Cosmetics maintains an operating profit margin of 7% and asset turnover ratio of 4.

Business
1 answer:
Stels [109]3 years ago
4 0

Answer:

a) 28%

b) 56%

Explanation:

Data provided in the question:

Operating profit margin = 7%

Asset turnover ratio = 4

Now,

a) ROA = Profit margin × Asset turnover ratio

= 7% × 4

= 28%

b) Given:

Debt-equity ratio = 1

Interest payments = $8,200

Taxes = $8,200

EBIT = $21,000

Now,

Total assets = Net income ÷ ROA

Also,

Net income = EBIT - tax - interest

= $21,000 - $8,200 - $8,200

= $4,600

Thus,

Total assets = $4,600 ÷ 28%

= $16428.57

also,

Total assets = Debt + Equity

or

Total assets = Equity × (\frac{\textup{Debt}}{\textup{Equity}}+1 )

or

$16428.57 = Equity × ( 1 + 1 )

or

=> Equity = $8214.28

Therefore,

ROE = Net income ÷ Equity

= $4,600 ÷ $8214.28

= 56%

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Sales revenue
Ne4ueva [31]

Answer:

may be recorded before cash is collected.

Explanation:

Sales revenue "may be recorded before cash is collected."

This is according to Accrual accounting, which unlike the cash model that requires payments to be made before sales revenue is recorded.

In the Accrual accounting model, sales revenue recording is not based on cash collection before it is recorded. Here, the revenue is recorded in as much the transferred goods are made and collection of payment is determined or expected.

4 0
2 years ago
Wendy leaves her job as a dancer to start her own dance studio. As a dancer, she made $34,000 per year. During the studio's firs
brilliants [131]

Answer:

$8,884

Explanation:

The computation of the economic profit is shown below:

= Received amount - dance earnings - insurance paid - music and licensing fees - boom box - rent and utilities

= $60,480 - $34,000 - $4,300 - $1,846 - $150 - $11,300

= $8,884

The economic profit is come from subtracting the explicit cost, implicit cost from the revenue earned and the same is reflected above

4 0
3 years ago
Comprehensive coverage under the Personal Auto Policy pays for damage to the insured auto caused by all of the following except:
Maksim231197 [3]

Answer:

c. nuclear accident

Explanation:

Personal Auto Policy is the most common policy for the insured. However, Nuclear accident is not covered under this policy. The policy covers hail, collision with animals and birds as well as falling tree branches.

5 0
3 years ago
Early in its fiscal year ending December 31, 2021, San Antonio Outfitters finalized plans to expand operations. The first stage
WARRIOR [948]

Answer:

1) assets basis:

land = $1,221,151

equipment = $462,000

furniture and fixtures = $308,000

parking lots and landscaping = $370,000

building = $11,241,600

2) interest expense:

interest on notes payable issued to buy land = $52,812

interest expense on other notes payable = $479,733

total = $532,545

Explanation:

the basis of the land (not depreciable):

  • $370,000 paid in cash
  • PV of notes payable = $770,000 / 1.08² = $660,151
  • closing costs = $37,000
  • demolition of existing structures = $87,000
  • land clearing and grading = $67,000
  • total = $1,221,151

Demolition costs as well as land grading and clearing add to the basis of the land, they are not included as part of construction costs. Therefore, they cannot be capitalized and added to the building's basis. The land is one asset and the building is a separate one, you cannot mix them. Only construction costs incurred when building the building (I don't know how else to say it) can be considered as accumulated expenditures for interest capitalization. The same applies to land improvements, they cannot be included in the construction's accumulated expenditures, they are separate assets.

interest expense on notes payable = $660,151 x 8% = $52,812

basis of equipment, furniture and fixtures (depreciable assets):

  • equipment = ($522 / $870) x $770,000 = $462,000
  • furniture and fixtures = ($348 / $870) x $770,000 = $308,000

parking lots and landscaping (depreciable land improvements):

  • $370,000

total building construction expense during 2021:

  • May 1 : $3,750,000
  • July 30:  $2,350.000
  • September 1:  $1,920,000
  • October 1 : $2,820.000
  • total = $10,840,000

weighted construction expenditures 2021:

  • May 1 : $3,750,000  x 8/12 = $2,500,000
  • July 30:  $2,350.000  x 6/12 = $1,175,000
  • September 1:  $1,920,000  x 4/12 = $640,000
  • October 1 : $2,820.000 x 3/12 = $705,000
  • total = $5,020,000

capitalized interests = $5,020,000 x 8% = $401,600

basis of building:

  • total construction expenses = $10,840,000
  • capitalized interests = $401,600
  • total = $11,241,600

interest expense on other notes payable = ($6,100,000 x 8% x 8/12) + ($6,950,000 x 8%) - $401,600 = $479,733.33 ≈ $479,733

     

6 0
2 years ago
Howard Inc. had prepaid rent of $94,000 and $105,000 at the end of 2017 and 2018, respectively. During 2018, Howard recorded $25
Paladinen [302]

Answer:

The outflow of cash in respect of rent is $270,000

Explanation:

The task is compute cash outflows on rent in the year 2018.

The prepaid rent at the end of 2017 relates to rent expense but was paid last year hence should be deducted from rent expense in the year,

On the other hand , the prepaid expense for 2018 was paid  during the year hence should be added to rent expense in order to cash cash outflow  relating to rent expense

Rent expense             $259,000

Prepaid rent 2017        ($94,000)

prepaid rent 2018      $105,000

Cash paid in 2018       $270,000

Ultimately the outflow of cash in respect of rent in the year is $270,000

4 0
2 years ago
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