Answer:
1. Indication of financial statement to refer to when answering questions in the following table:
Question Financial Statement
How profitable has the firm been? Income Statement
How much of the firm's earnings are Statement of Retained Earnings
left as balance after the firm pays out
dividends to its shareholders?
2. If compensation for senior management is based on short-term performance of the firm, in the short run the firm is likely to:
a. Overstate its earnings
Explanation:
Company A's Income Statement shows its profit performance at different levels. At one level is the gross profit, which shows the difference between the net sales or service revenue and the cost of sales/service. At another level is the operating income, which is the income before interest and taxes. The next important level is the net income, which is the profit after taxes. This shows the earnings available for distribution to stockholders. The Statement of Cash Flows classifies the cash flows generated into operating, investing, and financing activities, and shows the non-cash flow adjustments.
Use this equation: 102/300=x
x*100=the answer
for quicker reference: the answer is: the baseball player hit the ball 34% of the times he was at bat
Answer:
NPV = $750,598.49
Explanation:
Payback calculates the amount of time it takes to recover the amount invested in a project from it cumulative cash flows
Payback period = amount invested / cash flow = $1,400,000 / $350,000 = 4 years
Net present value is the present value of after tax cash flows from an investment less the amount invested.
NPV can be calculated using a financial calculator
Cash flow in year 0 = $-1,400,000.
Cash flow each year from year 1 to 10 = $350,000.
I = 10%
NPV = $750,598.49
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
Answer:
1 and a half months worth of depreciation
Explanation:
The advantage of starting to depreciate an asset purchased on December is that next year you will be able to depreciate it for a full year under MACRS. Generally, when you purchase an asset, you have to use the half year convention and your depreciation expense for the first year will be low compared to the second year. But if you start depreciating your asset in the current year, even if you purchased it on December and the depreciation expense is not that significant, the next year you will be able to depreciate it at the second year rate.
Answer: $150,000
Explanation:
Seeing as the litigation expense will only be paid in 2018, it should be added back to income for 2015.
= 900,000 + 100,000
= $1,000,000
As the depreciation will reverse evenly over the next three years and with future income probable, it should be removed from income.;
= 1,000,000 - 300,000
= $700,000
Municipal Bonds have the advantage of being Tax-exempt so their interest income should be removed to calculate how much tax should be paid.
= 700,000 - 200,000
= $500,000
2015 Income Tax Payable = 500,000 * 30%
= $150,000
