All categories

3 years ago

What's a good way of understanding capital budgeting in finance

1 answer:

3 0

Capital budgeting is a step by step process that businesses use to determine the merits of an investment project. The decision of whether to accept or deny an investment project as a part of a company´s growth initiatives, involves determining the investment rate of return that such a project will generate.

You might be interested in

A company with excess capacity must decide between scrapping or reworking units that do not pass inspection. The company has 19,

ANTONII [103]

Answer:

Incremental income as scrap=$66,500

Incremental income when re-worked= $81,700

Explanation:

Unit contribution from selling as scrap is the equal to the scrap value = 3.50

Unit contribution when reworked and sold as scrap =Selling price - cost of re-work= $8.90-4.60= $4.3

Incremental income as scrap = $3.50×19,000= $66,500

Incremental income when re-worked= $4.3 × 19,000 = $81,700

Incremental income as scrap=$66,500

Incremental income when re-worked= $81,700

5 0

3 years ago

Free Spirit Industries Inc.’s current ratio is 1.3333, and tis quick ratio is 0.7467; Jong Foodstuffs Inc.’s current ratio is 1.

ivolga24 [154]

Answer:

1. Jong Foodstuffs Inc. has a better ability to meet its short-term liabilities that Free Spirit. - TRUE

2. A current ratio of 1 indicates that the book value of the company’s current assets is equal to the book value of its current liabilities. - TRUE

3. If a company has a quick ratio of less than 1 but a current ratio of more than 1 and if the difference between the two ratios is large, then the company depends heavily on the sale of its inventory to meet its short-term obligations. - TRUE

4. Compared to Free Spirit, Jong Foodstuffs has less liquidity and a lower reliance on outside cash flow to finance its short-term obligations. FALSE

5. An increase in the current ratio over time always means that the company’s liquidity position is improving. FALSE

Explanation:

Current Ratio = Current Asset / Current Liabilities

Quick Ratio = (Current Assets – Inventories) / Current Liabilities

The Current Ratio is a liquidity measure that shows the ratio between current asset and current liabilities. It tells how many dollars of the current asset are per dollar of current debts, that gives an idea of the company`s ability to perform its debts.

The Quick Ratio is also a liquidity indicator, but using its most liquid assets, to pay its current liabilities at maturity. The inventory, although it is a current asset, is not considered, since it cannot be converted into cash in a very short term.

The difference between the Quick Ratio and the Current Ratio, implies that while both are measures of the company's ability to pay its debts, the quick ratio also tells how much the company depends on its inventory to get that objective.

As both ratios are bigger in Jong Foodstuffs Inc.’s case, statement 1 is True and statement 4 is False. Because how ratios are calculated, and the meaning of its terms, statement 2 and 3 are True. And because an increased in current ratio, may implicate a rise in inventory, and therefore a decreased in quick ratio, statement 4 is False.

5 0

3 years ago

When hope springs purchases refillable bottles for its water, it submits its orders directly from its computer system to its sup

Ipatiy [6.2K]

Answer:Electronic data interchange (EDI)

Explanation:

Because manual operation in business tend to cause sluggish processing of documents, Electronic data interchange (EDI) is adopted which is the use of standard electronic format to replaces paper-based documents like purchase orders or invoices, postal mail, fax so that business operations and recordings can flow straight through to the appropriate application.

Using a standard format like ANSI, EDIFACT etc for EDI documents is necessary so that computers in use understands each piece of information is and in what format it should document so as to pass relevant information to a receiver.

Because the exchange of EDI documents is typically between business partners, Electronic Data Interchange is important because it helps to eliminates manual data entry errors ,Streamline transaction processing leading to Increases productivity because it easier and more cost-effective since business do not require more staff.

6 0

3 years ago

Mill Co.’s allowance for credit losses was $100,000 at the end of Year 2 and $90,000 at the end of Year 1. For the year ended De

MatroZZZ [7]

Answer:

The amount worth $6,000 will be debited to the account in Year 2

Explanation:

When the uncollectible accounts are written off, then the debit is created to the allowance and the credit to the accounts receivable. The starting balance in the allowance account is $90,000 and the ending balance is $100,000 and the expense of bad debt is $16,000

The write off is computed as:

Write off = Beginning balance + Bad debt expense - Ending balance

= $90,000 + $16,000 - $100,000

= $106,000 - $100,000

= $6,000

Therefore, the amount of $6,000 is to be write off in Year 2

7 0

3 years ago

Many companies use the Internet to allow consumers to design customized products; for example, Nike allows customers to order sh

Alja [10]

Answer:

The correct answer is A. micro-marketing.

Explanation:

In micro marketing strategy marketers give their advertising ans selling efforts on a small group of tightly targeted consumers.

For example, the market can be grouped into small groups based on a commitment to a product class or readiness to purchase a given brand.This grouping can be based on following aspect of customers

1). Locayion

2). Relationships

3). Job Title

4). Industry

5). Size

5). Customer Needs

6). Brand Loyalty

7). Customer Recovery

8). Price Sensitivity

Nike allows customers to order shoes with custom color combinations is a type of need based micro-marketing.

4 0

3 years ago