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Dmitry_Shevchenko [17]
3 years ago
12

You are trying to value the common stock shares BeGood Company using a market multiples approach. Begone just reported annual ea

rnings of $1.74 per share. BeGood is a privately held corporation and has three main publicly traded competitors. Below, the most recent price/earnings multiples are presented for each competitor: Competitor P/E Multiple
BeSafe 11.20
Y-Not 13.25
R-U-Sure 14.88
Based on this information, determine the share price of BeGood. Use the market multiple approach and compute to the second decimal place
Business
1 answer:
lakkis [162]3 years ago
7 0

Answer:

$22.81

Explanation:

We can easily calculate share price for BeeGood company just by multiplying the current earnings per share with an average P/E ration of competitors

P/E = Price earning ratio

EPS = Earning per share

Formula: Share price = PE x EPS

Share price = \frac{(11.2+13.25+14.88)}{3} x $1.74

Share price = $22.81

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A vice president of operations wants to evaluate the impact of reducing manufacturing expenses on the firm's return on assets. W
frosja888 [35]

Available Options Are:

a. Cost of Goods Sold

b. Net Profit Margin

c. None of these

d. Asset Turnover

Answer:

Option B. Net Profit Margin

Explanation:

The increase or decrease in cost of Goods sold can not tell whether the return on assets has increased or decreased becuase it would only tell that the expense are decreased or increased not the profit. Which means it only tells one side of the story hence Option A is incorrect.

Option B is correct because it talks about the profit. If the manufacturing cost has been decreased then the it must increase the profit. Because if the profits has increased then the return on asset will increase. Hence the Option B is correct here.

Option D is incorrect because asset turnover formula is:

Asset Turnover = Sales / Total Assets

The decrease in manufacturing cost will not increase the sales because sales and total assets are independent of manufacturing expenses hence the Option D is incorrect.

3 0
3 years ago
Maxim Corp. has provided the following information about one of its products: Date Transaction Number of Units Cost per Unit 1/1
Setler [38]

Answer:

Cost of goods sold as per average cost method = $92,458.5

Explanation:

As for the information provided as follows:

Opening Inventory             265 units     @         $153 each      = $40,545

Purchase                             465 units     @         $173 each      = $80,445

Purchase                             165  units     @         $213 each      = $35,145

Total data                            895 units                                        = $156,135

Average cost per unit = $156,135/895 = $174.45

In average cost method simple average is performed, whereas in weighted average weights are assigned.

Sale is of 530 units

Cost of goods sold as per average cost method = $174.45 \times 530 = $92,458.5  

7 0
2 years ago
Casey Nelson is a divisional manager for Pigeon Company. His annual pay raises are largely determined by his division’s return o
baherus [9]

Answer:

NPV: $180,285.49

IRR: 21.336%

simple rate of return: 72.13%

Explanation:

6,100,000 investment

contribution margin 3,000,000

fixed expense:       <u>     900,000  </u>

EBITA                         2,100,000

We will calculate the NPV without the depreciation, as the depreciation is the distribution of the investment cost over the project life.

If we include the depreciation we will be counting the investment amount twice. Entirely at Time 0  and then subtracting on each cash inflow.

We will calculate the NPV at 20% as is the company's discount rate. Even if the current division returns are in 24% as the company accepts project which yields 20%.

C \times \frac{1-(1+r)^{-time} }{rate} = PV\\

C 2,100,000

time 5 years

rate 20% = 20/100 = 0.2

2100000 \times \frac{1-(1+0.2)^{-5} }{0.2} = PV\\

PV $6,280,285.49

NPV = PV of cash inflow - investment

6,280,285.49 - 6,100,000 = 180,285.49

<u>the IRR:</u>

The internal rate of return is the rate at which the NPV of a priject is zero.

We calculate this using excel formula IRR

or a financial calculator

it could also be done with trial and error using the PV tables.

<u>I will explain you in Excel</u>

FIrst, you write the inflow and outflow per year:

-6,100,000

2,100,000

2,100,000

2,100,000

2,100,000

2,100,000

then we write on another cell:

=IRR(

then, select the cells

and press enter

21.336%

<u>the simple rate of return:</u>

(total return - investment) / investment

(2,100,000 x 5 - 6,100,000) / 6,100,000 =

4,400,000 / 6,100,000 = 0.721311475 = 72.13%

7 0
3 years ago
Anita is an entrepreneur who is interested in starting a hair salon. Anita consulted her friend Ali, who is a businessman, to ge
Varvara68 [4.7K]

ANSWER 1. Capital

EXPLANATION: Calculating capital is necessary for a business. It is the basic duty of an entrepreneur to calculate capital before starting any business to check the financial capacity of the entrepreneur. Calculating capital also helps to estimate if any outside finance is necessary to start the business.

ANSWER 2: Set of Services

EXPLANATION: Choosing and categorizing set of services is necessary before starting any business. This will help in acquiring expert and trained set of labors to carry out the work. The clients will also come to know of the services that are available in the business. Expert and trained set of labors are difficult to find in any market.

ANSWER 3: Total Cost of Ownership

EXPLANATION: Total cost of ownership is a financial estimate intended to help buyers and owners determine the direct and indirect costs of a product or system. Each and every piece of equipment that Anita buys is added to the cost of the ownership of the business.

4 0
3 years ago
Read 2 more answers
Which of the following is deductible as interest on Schedule A? a.Interest on a loan for a 90-foot yacht (a qualified residence)
vodomira [7]

Answer:

Correct option is A.

<u>Interest on a loan for a 90-foot yacht (a qualified residence) with a kitchen, 3 baths and 5 bedrooms</u>

Explanation:

Assesses are permitted a conclusion for unmistakable intrigue paid or collected during the expense year. Sum and sort of derivation is reliant intentionally for which cash is obtained. Enthusiasm on credit for lease, business and eminence exercises is deducted for balanced gross pay. Enthusiasm on credit if there should be an occurrence of individual utilise like speculation intrigue, qualified home intrigue, contract intrigue prepayment punishments, intrigue identified with aloof action. Enthusiasm on credit used for buying resources producing charge excluded salary isn't deductible.

 

Following interest is not deductible as an itemised deduction:

1. Credit investigation fees

2. Service charges

3. Premium on convertible bonds

4. Interest paid to carry single premium life insurance  

5 0
3 years ago
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