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dezoksy [38]
3 years ago
14

Bright Slope Corp. has provided the following information:Balance SheetCash $ 10,000 Accounts Payable $ 5,000Marketable Securiti

es 5,000 Accruals 2,000Accounts Receivable 25,000 Notes Payable (8%) 12,000Inventory 35,000 Total Current 19,000 Total Current 75,000 Long-Term Debt (10%) 48,000Net Fixed Assets 80,000 Common Stock 32,000 Retained Earnings 56,000Total Assets $155,000 Total L&E $155,000Current year sales $100,000Current year Net Income $7,500Current year dividends $3,000Consider the following additional information:Expected sales grow next year is $20,000Fixed assets will increase by $12,000, net of depreciationMarketable securities will not change.The short term notes payable will be rolled over.The company will maintain its current profit margin and dividend payout ratio,(6 points) Compute Bright Slope’s Additional Funds needed.(4 points) Explain the effect of Bright Slope’s management of working capital.
Business
1 answer:
Julli [10]3 years ago
8 0

Answer:

Answer : Retained earning = 61400

Explanation:

Sales next year (100000+20000) = 120000  

Increase in sales = 120000-100000/100000= 20%

Current profit margin = 7500/100000= 7.5%

Dividend Payout ratio = Dividend / net jncome = 3000/7500 = 40%

New profit margin = 120000 x 7.5% =9000

New Dividend = 9000 x40% = 3600

Performance Balance sheet

Cash 10000(1+0.2)                                         12000

Marketible securities (no change)                5000

Account Receivable 25000(1+0.02)                30000

Inventory 35000(1+0.02)                                42000

Total Current Asset                                        89000

Net Fixed Asset (80000+12000)                         92000

Total Asset                                                        181000

Accounts payable 5000(1+.02)                         6000

Accruals 2000(1+.02)                                         2400

Notes Payable 8% (no change as rolled over) 12000

Total Current Liabilities                                         20400

Long Term Debt 10%                                         48000

Common stock                                                 32000

Retained Earning                                                 61400

Balancing figure (additional funding)                 19200

                                                                               181000

Retained earning = Old balance + (Current year net income - dividend paid)  

                                56000+ ( 9000-3600) =61400

2) changes in working capital.

Working capital means Current asset - current liabilities  

Earlier it was 75000 - 19000 = 56000

Now its 89000 - 20400 = 68600

Working capital has been increased by 68600 - 56000 =12600

(working capital is the amount needed to run business day to day activities.)

Although sales increased by 20% but working capital doesn't increase by 20% because payable were rolled over. So its bad management as company management is expanding its businesses not from current business retained earning but by deferring payables

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Mountain Products has decided to raise $6 million via a rights offering. The company will issue one right for each share of stoc
Scorpion4ik [409]

Answer:

 Value of  one right   = $2.63

Explanation:

<em>A right issue is the issue of additional new shares to existing shareholders in proportion to their existing shareholdings at a price less than the current market price.</em>

<em>The value of rights is the difference between the theoretical ex-right price and the right price . </em>

Value of rights= Theoretical ex-right price - Right price

<em>The theoretical ex-right price is the price at which a share is expected to settle after the right issue assuming all the rights are taken</em>

Theoretical ex-rights price = Total value of shares after right issue/Number of shares after right issues

<em />

1 unit  of old share       at   $25.25 =  $25.25

I unit of right share   at       $20.00= <u>$20.00</u>

Total value of 2 shares                     <u>$ 45.25</u>

Theoretical ex-rights price  = 45.25/2 =$22.63

Theoretical ex-rights price=$22.63

Value of rights= Theoretical ex-right price - Right price

                       =  22.63 - 20.00

 Value of  one right   = $2.63

6 0
3 years ago
Harry’s shoe store has noticed a significant increase of revenue of $123,000. The manager has also determined that the total exp
Elis [28]

Answer:

Net loss; $5,000

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$123,000 (income)

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-5,000

5 0
3 years ago
Due to the presence of diminishing returns to capital, doubling the amount of physical capital available for one worker to use w
Ainat [17]
Had to look for the options and here is my answer:

Because of the existence of diminishing returns to capital, increasing the physical capital amount by two that is available for one worker to utilize will enlarge the outcome by less than a factor of two. 
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Whenever Madelyn thinks about being a veterinarian, she experiences a positive, enthusiastic feeling. Because her feeling isn’t
m_a_m_a [10]

Answer:

Intuition

Explanation:

-Goal refers to something that you want to achieve.

-Destiny refers to events that are meant to happen in the future to a person.

-Intuition refers to something that you know from a feeling without having to analyze it.

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According to the definitions, Madelyn identifies the feeling as her intuition.

4 0
3 years ago
One of your clients purchased 100 shares of XYZ common stock at $30 per share and sells them one year later at $35 per share. Th
SCORPION-xisa [38]

Answer: 20%

Explanation:

Return on investment = return/investment (cost)

Return = 3500 - 3000 = $500 + $100 dividend = $600

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ROI = 600 / 3000 = 0.2

20%

8 0
3 years ago
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