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Harlamova29_29 [7]
3 years ago
9

ints) During 2018, Falwell Inc. had 500,000 shares of common stock and 50,000 shares of 6% cumulative preferred stock outstandin

g. The preferred stock has a par value of $100 per share. Falwell did not declare or pay any dividends during 2018.Falwell's net income for the year ended December 31, 2018, was $2.5 million. The income tax rate is 40%. Falwell granted 10,000 stock options to its executives on January 1 of this year. Each option gives its holder the right to buy 20 shares of common stock at an exercise price of $29 per share. The options vest after one year. The market price of the common stock averaged $30 per share during 2018.What is Falwell's basic earnings per share for 2018, rounded to the nearest c
Business
1 answer:
Butoxors [25]3 years ago
8 0

Answer: $4.34

Explanation:

The net income for diluted earnings per share will be calculated as:

Net income: $2,500,000

Less: preferred dividend: $300,000

= $2,200,000

To calculate the number of shares goes thus:

Total shares of stock options = 10,000 × 20 = 200,000 shares

Proceeds = 200,000 × $29

= $580,000

Shares of treasury stock will be:

= $580,000/$30

= 193,333 shares

Net shares added will be:

= 200000 - 193333

= 6667

Tge total shares for the diluted earnings per share will now be:

= 500,000 + 6667

= 506,667

The diluted earnings per share:

= $2,200,000/506667

= $4.34

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Answer:

Difficult to Imitate (I)

Explanation:

The unique microprocessors developed by the company contribute to its high resource immobility. According to the resource-based view of competitive advantage, when a company is achieving resource immobility, it allows the company to create competitive advantage.

The theory of Resource-Based View is that if Trust Machines can create a company of people, processes and technologies that cannot be easily copied or imitated by competitors it means that your resources are diverse and immobile, and it can create competitive advantage.

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3 years ago
Arises when there are many firms each selling an identical​ product, many​ buyers, and no restrictions on the entry of new firms
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1.perfect competition
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3 years ago
Overview of financial planning
VMariaS [17]

Answer:

1. Operating plan.

2. Operating plan.

3. Financial plan.

4. Dividend policy.

5. B and C.

Explanation:

1. Operating plan: provides detailed implementation guidance for a firm's operations, as well as a forecast of the company's expected future free cash flows.

2. Operating plan: provides the inputs necessary for a risk management evaluation using sensitivity analysis, scenario analysis, or simulations.

3. Financial plan: Is based on knowledge of the amount of funds necessary to compensate the firm's shareholders, and the mix of debt and equity capital used to finance the firm.

4. Dividend policy: sets forth specific targets for cash or share distributions to the firm's shareholders.

Capital structure: describes specific targets for the mix of debt and equity used to finance a firm.

Financial planning can be defined as the process of estimating the amount of capital required for the smooth operations of the business and determine how to achieve the firm's set goals and objectives.

Hence, the following statements are true about financial planning;

I. Once a firm's forecasted financial statements are prepared, the firm must determine how much capital it will need to support these plans.

II. Management must monitor operations after implementing a financial plan to detect deviations from the plan and adjust accordingly.

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3 years ago
Greengage, Inc., a successful nursery, is considering several expansion projects. All of the alternatives promise to produce an
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Answer:

A. Project A

B. Project A has lowest Standard Deviation

C. Project D

Explanation:

A.

The higher the range, the more risky the project is. Based on the table, project A has the smallest range, and therefore is the least risky based on range.

B.

The standard deviation is not scale-free, i.e. it is not adjusted for the level of returns. Hence, a project that has the same distribution of returns, but a higher average return, will have a higher standard deviation. But the project is not any more risky. Hence, the standard deviation might not be an appropriate measure of risk.

C.

The Coefficient of Variation (CV) is calculated as follows:

CV = Standard deviation / expected return

Applying this formula, the coefficient of variation for each project is:

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Based on the coefficient of variation, project D has the lowest coefficient. It means that the project has the lowest risk per unit of return generated, and thus is the best project and should be chosen.

4 0
3 years ago
Firm X and Firm Y both sell the same products at the same price; both firms are the same size with identical sales levels; Firm
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Answer:

The options are given below:

A. Firm X

B. Firm Y

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Explanation:

This is because firm Y has a higher operating leverage than firm X.

<u>Operating Leverage</u> refers to a cost-accounting formula that measures the degree to which a firm can increase operating income by increasing revenue. Operating leverage actually boils down to the analysis of fixed costs and variable costs, and it is highest in companies that have a high fixed operating costs in comparison with variable operating costs. What this means is that this kind of company makes use of more fixed assets. On the other hand, operating leverage is lowest in companies that have a low fixed operating costs when compared with variable operating costs.

Companies with high operating leverage are capable of making more money from each additional sale if they do not have to incur more costs to produce more sales.

Therefore, from the scenario given above, we can conclude that firm Y has a higher operating leverage than firm X, because firm X has lower fixed costs than firm Y, and a higher variable cost than firm Y as well. Hence, firm Y has the potential to make more operating profits from its business activities.

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