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Black_prince [1.1K]
4 years ago
9

Carol’s Clothiers, LLP, sells women’s business clothing designed by the world’s top designers. The company also sells clothing f

rom its own line which is priced just below the designer clothing, but is nonetheless of very high quality. Carol’s has, throughout its history, been attentive to the financial needs of the company and the seasonal fluctuations in income and expenses, and has planned accordingly. Except for the initial start-up expenses which were paid by the partner’s loaning funds to the company, Carol’s has always paid its bills from the income generated by sales. During the second year in operation, the company repaid the loans made by the partners. Since the initial loans made by partners have been repaid, what kind of financing does Carol’s Clothiers, LLP used as its primary source of funds?
Business
1 answer:
worty [1.4K]4 years ago
7 0

Answer:

Retained earnings.

Explanation:

This usually occurs when a company finances it operations from the profit accrued from sales of products or services.

From the profit Carol's Clothiers made by selling their products which is termed retained earnings, would serve as its primary source of funds to grow their business.

Also as an LLP (limited liability partnership) a partnership in which some or all partners may have limited liabilities, they could use their retained earnings to reward shareholders in the form of dividend payments or a buyback of shares.

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3 years ago
A bussiness performs a cost benefit analysis when it
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Consider the possible advantages and drawbacks of a decision.

Explanation:

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Cost-benefit analysis is also known as the break even analysis, it is an important tool in predicting the volume of activity, the costs to be incurred, the sales to be made, and the profit to be earned is. It is used to determine how changes in differing levels of activities such as costs and volume affect a company's operating income and net income.

Generally, to use the cost-benefit analysis, financial experts usually make some assumptions and these are;

1. Sales price per unit product is kept constant.

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3. All the units produced are sold i.e there is no change in inventory quantities during the period.

5. The costs accrued are as a result of change in business activities.

6. A company selling more than a product should simply sell in the same mix i.e the sales mix is constant.

Hence, a business performs a cost benefit analysis when it consider the possible advantages and drawbacks of a decision i.e whether or not it would bring value to the company or create a significant level of impact on the business.

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3 years ago
A bond with 25 years to maturity, 7% coupon, quoted on a 6.25% basis is callable in 10 years at 103, 15 years at 102, and 20 yea
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This bond is considered as premium bond. Therefore, in case of premium bonds, Yield to call will be lower than the yield to maturity. Here, the question is which call date should be utilized. According to the rule of thumb, it states that always use the term that is nearest to the whole call date.

Hence, on the customer's confirmation, the dollar price quoted must be based on 10 years to call.

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