A price floor is set at $1.00, what is the state of the market and amount of
1 answer:
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Answer:
$190
Explanation:
‘Cash Flow Statement’ is one of major financial statement that indicates the inflow and outflow of cash along with the reasons by categorizing each cash transaction in three activities i.e., operating, investing or financing activity. Non-cash transactions are not considered while preparing a cash flow statement.
Given,
Net inflow from operating activities (A) = $200
Net outflow from investing activities (B) = ($220)
Net inflow from financing activities (C) = $130
Cash at beginning of year = $80
Now,
Net increase/decrease in cash = (A) + (B) + (C)
Net increase/decrease in cash = $200 + ($220) + $130
Net increase/decrease in cash = $110
Cash at the end of year = Net increase/decrease in cash + Cash at beginning of year
Cash at the end of year = $110 + $80
Cash at the end of year = $190
Cash flow statement has been attached below:
Answer:
degree of operating R = 1.25
degree of financial = 1.51
total leverage for firm R = 1.88
degree of operating W = −4.98
degree of financial W = 13.05
total leverage for firm W = −64.989
Finance risk is more for Firm W as it has more interest to pay
Leverage is the use of fixed costs in a company’s cost structure.
Explanation:
given data
R sales = 103,000 units
sales cost = $1.98 per unit
fixed operating costs = $6,010
Interest = $10,130 per year
W sales = 103,000 units
sales cost = $2.54 per unit
variable operating costs = $0.96 per unit
fixed operating costs = $62,500
Interest = $17,400 per year
tax bracket. = 40%
solution
degree of operating R =
degree of operating R = 1.25
and
degree of financial =
degree of financial R = 1.51
and
total leverage for firm R = 1.25 × 1.51
total leverage for firm R = 1.88
and
degree of operating W =
degree of operating W = −4.98
and
degree of financial W =
degree of financial W = 13.05
and
total leverage for firm W = -4.98 × 13.05
total leverage for firm W = −64.989
and
Firm W has more fixed costs and therefore more operational risk.
and for overcome risk it have to achieve profit by increasing sales price and reduce variable operating cost.
so
Finance risk is more for Firm W as it has more interest to pay
and
Leverage is the use of fixed costs in a company’s cost structure.