The measure of a product, service, or company's profitability is its profit margin. The bigger the percentage representing the profit margin, the more profitable the company is.
Profitability is gauged by profit margin. Finding the profit as a proportion of revenue is used to calculate it.
Profit margin=44.9%
Explanation to the answer:
Profit margin =Net income / sales
=7,050,000 / $ 15,700,000
=0.44904
=44.9%
Profit margin =44.9%
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Answer:
35,000 stocks
Explanation:
Dividends can be either distributed in cash or distributed as new stock. In this case the company decided to issue stock instead of cash payments. Since the company has 500,000 outstanding and the board declared a 7% dividend, then 35,000 stocks should be issued (= 500,000 x 7%).
Whether shareholders receive money or stocks, they still have to include the dividends as part of their gross income.
Answer:
Option a
Explanation:
In simple words, value maximization refers to the process under which the managers of an organisation tries to make or increase the existing economic profits, that is, the money left with the organisation after paying for the obligations of all the money providers including the lat in hierarchy, the equity shareholders.
Value maximization can be performed by changing the capital structure which affects the payment obligations. The value maximization affects all the stakeholders of the organisation therefore, the decision should be made by tasking into consideration them all.
Answer:
c. It will increase.
Explanation:
Break even point is the level of activity at which a firm neither makes a profit nor a loss.
<em>Break - even units = Fixed Costs ÷ Contribution per unit </em>
therefore,
<u>Existing break-even point in units :</u>
Break - even units = $16,000 ÷ ($40 - $18) = 727.27 or 728 units
<u>New break-even point in units :</u>
Break - even units = $21,000 ÷ ($40 - $16) = 875 units
Conclusion :
The results show that break-even point in units will increase from 728 units to 875 units as a result of the changes
