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bagirrra123 [75]
3 years ago
7

Saffron Industries most recent balance sheet reports total assets of $42,000,000, total liabilities of $16,000,000 and stockhold

ers' equity of $26,000,000. Management is considering using $3,000,000 of excess cash to prepay $3,000,000 of outstanding bonds. What effect, if any, would prepaying the bonds have on the company's debt-to-equity ratio
Business
1 answer:
alexandr402 [8]3 years ago
7 0

Answer:

A) Prepaying the debt would cause the firm's debt-to-equity ratio to improve from .62 to .50.

Explanation:

The computation of the impact is as follows:

The Debt equity ratio is

= Total liabilities ÷ total equity

Now

Debt equity prior to payment is

= $16,000,000 ÷ $26,000,000

= 0.62

And,

Debt equity after payment is

= $13,000,000 ÷ $26,000,000

= 0.50

So here as we can see that the debt equity would be improved from 0.62 to 0.50

Therefore the correct option is a.

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A cement manufacturer has supplied the following data:
Shalnov [3]

Answer:

$2.3 per unit

Explanation:

Calculation for company's unit contribution margin

First step is to calculate the Contribution margin using this formula

Contribution margin = Sales revenue - Variable manufacturing expenses - Variable selling and administrative expenses

Let plug in the formula

Contribution margin = $1,010,500 - $416,000 - $54,000

Contribution margin = $540,500

Now let calculate the Contribution margin per unit using this formula

Contribution margin per unit = Contribution margin / Cement tons

Contribution margin per unit = $540,500 / 235,000

Contribution margin per unit =$2.3 per unit.

Therefore company's unit contribution margin is $2.3 per unit

8 0
3 years ago
The following standards for variable manufacturing overhead have been established for a company that makes only one product: Sta
kumpel [21]

Answer:

$17,688 unfavorable

Explanation:

The computation of the variable efficiency variance is shown below:

Variable efficiency variance = (Actual hours - standard hours) × standard rate

= (2,700 hours - 200 units × 6.8 hours)  × $13.20

= (2,700 hours - 1,360 hours)  × $13.20

= 1,340 hours  × $13.20

= $17,688 unfavorable

Since the actual hours is more than the standard hours so it would leads to unfavorable variance

6 0
3 years ago
Why the culture of a country might influence the costs of doing business in that country?
jonny [76]

Answer:

Culture of a country can adversely affect the business

Explanation:

The culture of a country affects the costs of doing business in that country in the following ways -

a) In some countries, companies prefer to not work during the afternoon and hence they loose a large segment of business

b) Some countries entertain corruption practices and hence business do not flourish in such countries.

c) The pattern of working of government officials in a country affect the way in which an outsider entrepreneur is affected. The bad practices lower the ease of doing business and hence the business is lost

3 0
2 years ago
A company's flexible budget for the range of 35,000 units to 45,000 units of production showed variable overhead costs of $2 per
Ipatiy [6.2K]

Answer:

$3200 favorable

Explanation:

We have given range of number of production = 40000 units

So average of number of units =\frac{35000+45000}{2}=40000

Variable cost = $2 per unit

So total variable cost = 40000×$2 = $80000

Fixed overhead = $72000

Budgeted overhead for actual production = Variable overhead +Fixed overhead  = $80000+$72000 = $152000

Actual total overhead cost = $148,800

Total overhead controllable cost variance = Budgeted overhead - Actual overhead

= $152,000 - $148,800 = $3,200 favorable.

6 0
3 years ago
Imagine a hypothetical economy with a population of 100 people, 80 of which over sixteen. Forty eight of these people who are wo
Ainat [17]

Answer:

a) unemployment rate = 15

b) unemployment rate = 2.5

Explanation:

unemployed people are those who are willing and available to work and have actively been seeking a job in the past four weeks. This accurately describes the 12 people who are willing, able and looking for work but cannot find jobs. To calculate the unemployment rate in percentage, the following formula is used:

unemployment\ rate = \frac{number\ of\ unemployed}{labour\ force} \times 100\\

Where:

a) Number of unemployed = 12

Labour force = 80 (number of people over 16 years of age)

\therefore unemployment\ rate = \frac{12}{80} \times 100 = 0.15 \times 100 = 15\\

b) if 10 of the unemployed people get discouraged and give up looking for work, the number of unemployed becomes 2 persons, (12 - 10 = 2).

\therefore unemployment\ rate = \frac{2}{80} \times 100 = \frac{200}{80} =  2.5

6 0
2 years ago
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