Green Landscaping Inc. is preparing its budget for the first quarter of 2020. The next step in the budgeting process is to prepa
re a cash receipts schedule and a cash payments schedule. To that end the following information has been collected. Clients usually pay 60% of their fee in the month that service is performed, 30% the month after, and 10% the second month after receiving service. Actual service revenue for 2019 and expected service revenues for 2020 are November 2019, $94,040; December 2019, $83,200; January 2020, $103,960; February 2020, $123,060; and March 2020, $131,040. Purchases of landscaping supplies (direct materials) are paid 60% in the month of purchase and 40% the following month. Actual purchases for 2019 and expected purchases for 2020 are December 2019, $18,410; January 2020, $17,530; February 2020, $19,940; and March 2020, $20,750. (a) Prepare the following schedules for each month in the first quarter of 2020 and for the quarter in total: (1) Expected collections from clients.
preference shares are not used in calculating earning per share. Earning per share is the part of the firm's profit that is attributed to common stock shares. It is an indicator of financial strength of a company. It also shows the intrinsic value of the company's shares. This can be used to determine if a share is overvalued or under valued in the equity market.
The company has 120, 000 common stock shares and issued additional 20,000 common stock shares totaling 180,000 common stock shares.
Expected rate of return Probabilities Booming 22% 5% Normal 15% 92% Recession 2% 3%
The expected rate of return on this stock is solved by multiply each expected rate of return to its corresponding probability and getting the sum of all products.
Booming: 0.22 x 0.05 = 0.011 Normal: 0.15 x 0.92 = 0.138 Recession 0.02 x 0.03 =<u> 0.0006</u> Sum total 0.1496 or 14.96% is the expected rate of return on this stock