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qaws [65]
2 years ago
11

The new CFO thinks that inventories are excessive and could be lowered sufficiently to cause the current ratio to equal the indu

stry average, 2.85, without affecting either sales or net income. Assuming that inventories are sold off and not replaced to get the current ratio to the target level, and that the funds generated are used to buy back common stock at book value, by how much would the ROE change
Business
1 answer:
yan [13]2 years ago
4 0

Answer:

4.50%

Explanation:

Note:<em> Question is incomplete but very similar one is attached as picture below</em>

Current ROE = Net Income / Equity = $21,000 / $280,000 = 7.50%

Current Inventory = $210,000

Target Current ratio = 2.70

1. Current assets at target Current ratio = Current Liabilities * Target current ratio = $70000 * 2.70 = $189,000

2. Reduction in Inventories = Present Current assets - Current assets under target current ratio

Reduction in Inventories = $14000 + $70000 + $210000 - $189000

Reduction in Inventories = $105000

3. Reduction on common equity using sale of inventory = Current Equity - reduction

Reduction on common equity using sale of inventory = $280,000 - $105,000

Reduction on common equity using sale of inventory = $175,000

4. Change in ROE = New ROE - Current ROE

Change in ROE = [21000 / 175000] - 7.50%

Change in ROE = 12% - 7.50%

Change in ROE = 4.50%

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To understand how the weights of the cereal boxes vary among four different adjustable stabilizer settings of the rotary valve o
malfutka [58]

Answer:

The correct answer is letter "B": the independent variable.

Explanation:

Multiple regression is a mathematical model used concerning two or more variables when one value is to be used. The independent variable is the reason for the research, and the variables are dependent when they represent the value factors that need to be evaluated and are why the analysis is being carried out.

In the example,<em> the independent variable is the weight of the boxes</em> and <em>the dependent variables are the adjustable stabilizer settings of the rotary valve on the filling machine in three different production shifts</em>.

8 0
3 years ago
Other things the same, which bond would you expect to pay the lowest interest rate?
Elis [28]

Answer:

d) a bond issued by the U.S. government

Explanation:

A bond issued by the US government will be expected to pay the lowest interest rate because the default risk is almost 0 with the US government which means that it is a risk free investment for the lender. The investor will be willing to lend money to US government at the lowest interest rate out of all the options because it is the safest investment therefore the investor's required rate of return is the lowest for US government.

3 0
2 years ago
A7X Corporation has ending inventory of $701,073 and cost of goods sold for the year just ended was $7,461,613. a. What is the i
tatyana61 [14]

Answer:

(A) Inventory turnover= 10.64 times

(B) Days sales in inventory= 34.30 says

(C) Shelf life= 34.30 days

Explanation:

A7X corporation has an ending inventory of $701,073

The cost of goods sold for the year is $7,461,613

(A) The inventory turn over can be calculated as follows

= cost of goods sold/ending inventory

= 7,461,613/701,073

= 10.64 times

(B) The day sales in inventory can be calculated as follows

= 365/inventory turnover

= 365/10.64

= 34.30 days

(C) A unit of inventory sit on the shelf for 34.30 days before it is sold

6 0
3 years ago
The difference between a financial aid package and total cost of collage can be made up by ______.
Gennadij [26K]
Personal savings and student loans
6 0
1 year ago
Read 2 more answers
Suppose that the market price for a bottle of vitamins is $2.54 and that at that price the total market quantity demanded is 105
Mars2501 [29]

Answer:please refer to the explanation section

Explanation:

The question is incomplete, The amount that each firm must produce is not given or the Quantity/demand equation that each firm faces is not given. We use a firm's quantity/demand equation to calculate how much each firm should produce and then work out the number of firms that should exist in the industry.

let us assume quantity produced by each firm is given by this equation;

Q = 1900 + 15000Price

We need to plug the Price of $2.54 per unit Vitamin Bottle to the quantity equation. Q = 1900 + 15000(2.54) = 40 000

each firm must produce 40 000 units

Number of firms that should exist = Total Market Quantity/Firms Quantity Number of firms that should exist = 1055 560 000/40 000

Number of firms that should exist = 26389

When the price is $2.54, with each firm Producing 40000 units, 26389 firms should exist in the market to cover the total Market Quantity of 1055 560 000.

The question may provide you with the Quantity that each firm must produce, in that case you simple divide total market quantity by the firm's quantity to find number of firm that should exist.

When you are given quantity equations you use the price to work out quantity produced by each firm and then Divide the Market Quantity by Firm's quantity to find number of firms that should exist

6 0
2 years ago
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