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Vilka [71]
3 years ago
8

The following information is available for the Memphis and Billings companies:

Business
1 answer:
igomit [66]3 years ago
4 0

Answer:

(a) An income statement was prepared for Memphis and Billing Companies (b) The ROA for Memphis is = 5.6% while for Billing is  6.9%.

The ROE for Memphis is 13.9% for Billings it is 17.4%

(c) The billing company is more profitable because from the view from the stockholders it has a higher return on equity

(d) The Memphis company is the discounter

Explanation:

Solution

Given that:

(A) The Income statement for Memphis and Billing companies

                         Common size Income statement

                                  Memphis        %           Billings             %

Sales                          15,00,000    100          15,00,000        100

The cost of Goods    10,50,000     70           11,25,000        75.00

The Gross profit        4,50,000      30            3,75,000         25.0

Operating expenses  3,50,000     23.3        2,50,00            16.7

Net income                 1,00.000      6.7          1,25,000           8.3

(B) We compute the return assets which is given below:

The return on assets is = The net income/Total assets * 100

For Memphis,

The return on assets is = 5.6% ($100,000/18,00,000) * 100

Fro Billings,

The return on assets = 6.9% ($ 125,000/18,00,000) * 100

For the return on equity we have the following given below:

Return on equity is =Net income/Stockholder's equity * 100

For Memphis,

The return on equity =13.9% ($100,000/720,000) * 100

Fr Billings,

The return on equity =  17.4% ($125,000/720,000) * 100

(C) The Billing company is more profitable because it has a higher  return on rate on equity than that of the Memphis company.

(D) The Memphis has a lower  Net profit margin of 6.7% therefore it is the discounter.

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Answer:

$1,255,000

Explanation:

The increase in accounts receivable is the portion of the current year sales revenue that has not been received in cash, hence, the cash collected from customers in the year 2010 is simply the sales adjusted for the impact of accounts receivable as shown below:

cash collection=sales revenue+beginning accounts receivable-ending accounts receivable

sales revenue=$1,300,000

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8 0
3 years ago
3
iris [78.8K]

None of the options shows an alternative Tina has, a real alternative would be a credit card and cash ($190)

In economics, an alternative is an element that replaces or substitutes another. For an element to be considered an alternative it needs:

  • To belong to the same category or have the same function.
  • To be possible for the user to replace the first element using the alternative.

Based on this, let's analyze each of the options:

  • Jacket and $100: These are not alternatives because Tina wants a jacket and this product cannot be replaced with money as money will not protect Tina from cold weather.

  • Shoes and a jacket: These are not alternatives because Tina wants the two products not only one.

  • Credit card and $100: These would be alternatives if the total cost was $100. However, using a credit card Tina can pay for both products but using $100 she can only pay for one of the products.

Therefore, the options do not present alternatives; but one valid alternative is a credit card and $190.

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7 0
3 years ago
_____ 24. Audrey Corporation's cost formula for its selling and administrative expense is $47,900 per month plus $52 per unit. F
creativ13 [48]

Answer:

The estimated cost for selling and administration expenses is:

47900+52*6000=$359900

Explanation:

Audrey Corporation's cost for selling and administrative expenses present fix and variable costs. They plan a fixed cost of $47,900 and a variable cost of $52 unit.

The formula is:

SandA COST= 47900+52*Q

For April they planned to sell 6000 units.

The estimated cost for selling and administration expenses is:

47900+52*6000=$359900

If the formula is accurate the real cost of selling and administration is:

47900+52*5960=$357,820

7 0
3 years ago
An all-equity firm is considering the projects shown below. the t-bill rate is 5 percent and the market risk premium is 8 percen
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4 0
3 years ago
If the company budgets to need 4000 units to sell for a month, has a beginning inventory of 1000 units and a desired ending inve
Alecsey [184]

Answer:

5,500 units

Explanation:

The computation is shown below:

Given that

Need to sell the units in a month = 4,000 units

Beginning inventory = 1,000 units

Desired ending inventory = 2,500 units

So, by considering the above information, the units to be produced is

= Desired ending inventory + need to sell the units in a month - beginning inventory

= 2,500 units + 4,000 units - 1,000 units

= 5,500 units

5 0
3 years ago
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