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emmasim [6.3K]
3 years ago
7

Line Corporation's balance sheet showed the following amounts for their liability and stockholders' equity accounts: Current Lia

bilities, $5,000; Bonds Payable, $1,500; Lease Obligations, $2,000; and Deferred Income Taxes, $300. Total stockholders' equity was $6,000. The debt-to-equity ratio is
Business
1 answer:
Lelechka [254]3 years ago
7 0

Answer:

1.47

Explanation:

Debt to equity ratio = Debt / Equity

Debt to equity ratio = (Current liabilities + Bonds payable + Lease obligations + Deferred income taxes) / Total stockholder's equity

Debt to equity ratio = ($5,000 + $1,500 + $2,000 + $300) / $6,000

Debt to equity ratio = $8,800 / $6,000

Debt to equity ratio = 1.47

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Seemore Lens Company (SLC) sells contact lenses FOB destination. For the year ended December 31, the company reported Inventory
arsen [322]

Answer and Explanation:

The Preparation of the table that shows the balances from a to d points is shown below:-

Particulars                     Inventory                   Cost of goods sold

For the year ended Reported

on December 31           $85,000                             $450,000

a. Less: Lenses held on

consignment               ($13,000)

b. Less: Office supplies ($6,500)

c. Add: Lenses in the

warehouse                   $9,500                                        ($9,500)

d. Less: Inventory which is damaged with

no scrap value              ($3,750)

Balance                           $71,250                                      $440,500

Therefore to reach the balance of inventory we simply added the reported ended on Dec 31 and lenses which is in warehouse and deduct the lenses held on consignment, office supplies and inventory which is damaged with no scrap value on the other hand to reach the cost of good sold we simply deduct the lenses in the warehouse from the year ended which is reported on Dec 31.

Also the explanation from a to d is shown below:-

a. Goods kept on consignment shall form part of the inventory of consignors until such time as they are sold. And when recording it should be removed from the inventory of consignees.

b. Office supplies are not part of an inventory firm

c. Sold items that are in the seller's hands and yet to be supplied (risk is still with the seller) are exempt from revenue and included in the inventory of companies.

d. Damaged, non-returnable items should be eliminated from inventory and reported as loss.

7 0
3 years ago
" The high cost of implementing changes to infrastructure always raises questions about priorities. Should investments in infras
Murljashka [212]

Answer:

We have important invents that are important to make infrastructure investment based on impact and probability.

Explanation:

WHICH EVENTS ARE IMPORTANT TO MAKE INFRASTRUCTURE INVESTMENTS BASED ON IMPACT AND PROBABILITY?

The low probability and high impact events are very rare and it is is very difficult to ascertain the probability of its occurrence as either there is lack of historical data or it is very minimal.

But the consequences of such events can be very largely damaging even on one single instance of occurrence. For example, a collision between two trains due to human error in signalling can have disastrous repercussions and lead to loss of precious human life and property. One such instance is capable of incurring a huge damage on infrastructure which might prove very difficult to recover from.

So even though we do not know if this low probability and high impact event will occur, we have to take precautionary measures by developing infrastructure to make it capable of avoiding such human failures by mitigating the risk by the use of advance technology.

On the other hand, the low impact high probability events can also not be ignored as a number of of low impact and minor risks may aggregate together to form a significant risk.

For example the lack of regular cleaning and maintenance at the train stations main lead to damage of hard structural infrastructure like steel and alloys over a period of time. And if such infrastructure fails to serve the expected lifetime due to damages caused by lack of maintenance, the train company will probably go bankrupt with the burden of replacing large infrastructure.

Even something as trivial as lack of air conditioning may lead to big challenges as the overall aggregated impact of overheating might cause significant damage to machinery and structures.

Therefore, we need to have a very balanced approach while addressing both categories of events : the low impact high probability events and the high impact low probability events.

While addressing the high impact low probability events should be done at the earliest, a proper plan should be devised to address the high probability low impact events based on a schedule such that their aggregate impact does not become significant

4 0
3 years ago
What is the importance of international law to businesses engaged in international trade?
Hunter-Best [27]

Answer:

The above pic might help you :)

7 0
2 years ago
In the chapter, we used Rosengarten Corporation to demonstrate how to calculate EFN. The ROE for Rosengarten is about 7.3 percen
satela [25.4K]

Answer:

Explanation:

Sustainable Growth:

The maximum growth rate a firm can achieve with no external equity financing while maintaining  a constant debt-equity ratio is known as Sustainable Growth Rate. It is the maximum rate of  growth a firm can maintain without increasing its financial leverage.

The formula for finding out the sustainable growth rate is:

sustainable\, grwth\, rate=\frac{ROE \times b}{1-ROE \times b}

Where

ROE — Retum On Equity

b — plowback or retention ratio

ROE is the product of profit margin, total asset turnover and equity multiptier.

External Financing Needed (EFN) is the increase in assets minus the addition to retained

earnings.

EFN = Increase in assets - Addition to retained earnings

The increase in assets is the product of the beginning assets and the growth rate.

Increase in assets = Beginning assets x growth rate

The addition to the retained earnings next year is the product of current net income and the

retention ratio and one plus growth rate.

Addition to retained earnings = Current net income x retention ratio x(1+ growth rate)

The ROE of Rosengarten Corporation is 7.3%, plowback ratio is 67%. Then, the sustainable  growth rate is 5.14% only. The question is whether a growth rate of 25% can be used to calculate  the EFN (External Funds Needed).

The growth rate of 25% can be used to calculate the EFN. The sustainable growth rate formula is

based on two assumptions that the company does not want to sell new equity, and that the  financial policy is fixed. If the company rises outside equity, or increases its debt-equity ratio. it  can grow at a higher rate than the sustainable growth rate.

A firm's ability to sustain growth depends on the following four factors:

1. Profit Margin: An increase in profit margin will increase the firm's ability to generate funds

internally and thereby increase its sustainable growth.

2. Dividend policy: A decrease in the percentage of net income paid out as dividends will

increase the retention ratio. This increase internally generated equity and thus increases

sustainable growth.

3. Financial policy: An increase in the debt-equity ratio increases the firm’s financial leverage.

Since this makes additional debt financing available, it increases the sustainable growth rate.

4. Total asset turnover: An increase in the firm's total asset turnover increases the sales  generated for each dollar in assets. This decreases the firm’s need for new assets as sales grow  and thereby increases the sustainable growth rate. The increasing total asset turnover is the

same as decreasing capital intensity.

The sustainable growth rate illustrates the explicit relationship between the firm's four major  areas; its operating efficiency as measured by profit margin, its asset use efficiency as measured  by total asset turnover, its dividend policy as measured by the retention ratio, and its financial  policy as measured by the debt-equity ratio.

Thus, the company could also grow faster when its profit margin increases, it it changes its dividend policy, by increasing the retention ratio or by increasing its total asset turnover.

7 0
2 years ago
Mateo gets an email from an address he doesn't recognize asking him to send money. It is a young student who is stranded oversea
Soloha48 [4]
No, most likely it’s a scam. People like to scam people to get money now a days. It’s just a way for “easy” money for people who are desperate!
7 0
2 years ago
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