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boyakko [2]
2 years ago
11

Cold Goose Metal Works Inc. just reported earnings after tax (also called net income) of $95,000,000, and a current stock price

of $14.75 per share. The company is forecasting an increase of 25% for its after-tax income next year, but it also expects it will have to issue 2,800,000 new shares of stock (raising its shares outstanding from 5,500,000 to 8,300,000). If Cold Goose’s forecast turns out to be correct and its price-to-earnings (P/E) ratio does not change, what does the company’s management expect its stock price to be one year from now? (Note: Round intermediate calculations to four decimal places. Round the expected stock price to two decimal places.)
Business
1 answer:
aivan3 [116]2 years ago
6 0

Answer:

$12.22 per share

Explanation:

The computation of the stock price one year from now is shown below;

Current EPS = Net Income ÷ Number of shares

= $95,000,000/5,500,000

= $17.2727

Now  

P/E Ratio = Market Price per share ÷ Earnings per share

= $14.75 ÷ 17.2727

= 0.8539 times

Now

Revised EPS = $95,000,000 × 1.25 ÷ 8,300,000

= $14.3072  

So, the Price is

= 14.3072 × 0.8539

= $12.22 per share

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An October sales forecast projects that 7,000 units are going to be sold at a price of $11.50 per unit. The desired ending inven
REY [17]

Answer:

The correct answer is:

$80,500 (b.)

Explanation:

First of all, not that total anticipated October sales is the same thing as projected October sales. Therefore, this sale is calculated as follows:

Projected sales = 7,000

unit price = $11.50 per unit

Therefore

Price for 7,000 units = 11.5 × 7,000 = $80,500

5 0
3 years ago
Gonzalez Company has been in business for several years. At the end of the current year, the ledger shows:
Westkost [7]

Answer:

Debit : Bad Debts = $16,370

Credit : Allowance for doubtful debts = $16,370

Explanation:

The question states that bad debts are expected to be 5% of the accounts receivables. This means that it is: $327,400 x 5% = $16,370.

An account for allowance for doubtful debts is a contra account created, predicting that certain debtors will not be able to pay for the goods and services they purchased. The 5% may be based on historical experiences. Doubtful debts aren’t officially uncollectible, it is simply a prediction, but bad debts are, where you have officially written off a certain accounts receivable as uncollectible.

An allowance for doubtful debts is recorded in the balance sheet, directly under accounts receivables. Bad debts are recorded as an expense in the income statement.

The initial entry for allowance for doubtful debts is incorrect, hence it would have to be corrected before the new amount can be recorded. Correction:

Debit : Allowance for doubtful debts = $7900

Credit : Bad debts = $7900

The accounts will be cancelled off and the new entry can be recorded...

Debit : Bad Debts = $16,370

Credit : Allowance for doubtful debts = $16,370

When the amount is officially declared uncollectible, the allowance for doubtful debts account will be debited and the accounts receivables account will be credited.

6 0
3 years ago
How did the invention of money as a medium of exchange affect the barter system?
sergiy2304 [10]

The barter system is a form of trading in which goods are exchanged directly for other goods without the use of money or as an intermediary, without a medium of exchange. The invention of money supplemented the barter system by providing a nonperishable medium of exchange.

4 0
3 years ago
Kingbird Company sells 290 units of its products for $18 each to Logan Inc. for cash. Kingbird allows Logan to return any unused
tensa zangetsu [6.8K]

Answer:

Kingbird Company

a. The amount of Net Sales = $5,040.

b. The amount of the estimated liability for refunds = $180

Explanation:

a) Data and Calculations:

Units of products sold to Logan Inc. = 290

Selling price = $18

Sales revenue = $5,220 ($18 * 290)

Cost of each unit = $11

Expected returns = 10/290 = 0.03448

Net sales = $5,220 * (1 - 0.03448)

= $5,040

Estimated liability for refunds = $180 ($5,220 - $5,040)

8 0
3 years ago
One autumn, the weather is perfect for growing pumpkins, and the pumpkin crop is much larger than usual. Meanwhile, when hallowe
valentina_108 [34]

Answer: Price of pumpkins will fall compared to last year.

Explanation: Favorable weather leading to a larger crop than usual means that there is more supply of pumpkins this year than before.  Shifting the supply curve down to the right. At the same time, when people switch away from jack-o'-lanterns towards buying more costumes, it leads to a decline in the demand for pumpkins shifting the demand curve to the left.

The net result will be a decline in the demand for fall in the price of pumpkin. However, the effect on the quantity cannot be determined as it depends on the magnitude of shift in the two curves.

5 0
3 years ago
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