Answer:see how long they have to measure it
Explanation:
<span>Calculate the total revenue. Add up the cost of all goods. Subtract the cost of goods from the total revenue. Hope this helped. </span>
Answer:
Neither of the options are correct because the correct answer is $60,000
Explanation:
The accrued interest payable is dependent upon the contract and in the contract timing of interests, principal payments and interest rates are agreed. So interest rate agreed must be used not the market rate. The interest accrued can be calculated on the principal amount not paid yet.
The first payment has been paid and the principal amount not yet paid is:
Principal amount not yet paid = $27,00,000 - $27,00,000/3 = $18,00,000
The interest accrued at the end of year relates to only 4 months (1 September to 31 December) which can be computed on principal amount not yet paid.
Interest accrued = 10% interest rate * 4/12 months * $18,00,000 principal amount unpaid
Interest accrued = 0.1 * 4/12 * $18,00,000 = $60,000
Answer:
a-1. Calculate the ROI for both North and South divisions.
- ROI North Division = net profit / cost of investment = $6,000,000 / $30,000,000 = 20%
- ROI South Division = net profit / cost of investment = $30,000,000 / $320,000,000 = 9.38%
a-2. If Solomons measures performance using ROI, which division had the better performance?
- North Division, since its ROI is much higher
b-1. Calculate the EVA for both North and South divisions. (The divisions have no current liabilities.)
- North Division EVA = (net investment) x (actual return on investment – percentage cost of capital) = $30,000,000 x (20% - 8%) = $3,600,000
- South Division EVA = (net investment) x (actual return on investment – percentage cost of capital) = $320,000,000 x (9.38% - 8%) = $4,416,000
b-2. If Solomons measures performance using economic value added, which division had the better performance?
- It should choose South Division because its EVA is higher.
c. Would your evaluation change if the company’s cost of capital was 16 percent?
1. When evaluated by ROI?
- No it would not change because ROI doesn't consider cost of capital.
2. When evaluated by EVA?
- Yes it would change because South Division's EVA would be negative, while North Division's will decrease but remain positive.
North Division EVA = (net investment) x (actual return on investment – percentage cost of capital) = $30,000,000 x (20% - 16%) = $1,200,000
South Division EVA = (net investment) x (actual return on investment – percentage cost of capital) = $320,000,000 x (9.38% - 16%) = -21,184,000
Answer:
A company purchases inventory on credit.
Explanation:
Current liabilities are those that have to be settled within the fiscal year. The statement above does not specify if the credit has to be paid within the fiscal year, but most likely it has to, because inventories do not usually represent a long-term debt.
So under this sceneario, purchasing inventory on credit would represent an increase in the current liabilities of the firm.