Based on the fact that Kim's flowers borrowed the money and used it to buy a new delivery vehicle, this business activity should be categorized as both a financing activity and an investing activity.
<h3>What should they classify this business activity as?</h3>
Because Kim's Flowers got the money as a loan, it would be recorded as an inflow for financial activities.
They then used it to purchase a delivery vehicle which is an investment and a capital asset so this will count as an investment activity.
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Answer:
a. neither the nominal nor the real interest rate rise.
Explanation:
Under Fisher's theory, if the nominal interest rate increases at a higher rate than the inflation rate, then the real interest rate rises. If the inflation rate increases more than the nominal interest rate, then the real interest rate decreases.
Generally, an increase in the money supply decreases the nominal interest rate and increases the inflation rate. That results in both lower nominal interest rates and lower real interest rates.
Answer:
a. Gross profit rate = Gross profit / sales
= <u> $710,000 * 100</u>
$1,230,000
= 57.72%
b. <u>Supreme Operating Income </u>
Gross Profit $710,000
Operating expenses <u>(440,000)</u>
Operating Profit <u> 270,000</u>
<u />
c. Return on Asset = Return/ Average Asset
= <u>$390,000 * 100 </u>
$4,000,000
= 9.75%
d. Return on equity = Return / Average equity
= <u>$390,000 * 100 </u>
$2,400,000
= 16.25%
e. Price-earnings ratio = Market price per share / earnings per share
= $88/ $4
= 22
Explanation:
Computation of Gross profit
$'000
Net Sales 1,230
Cost of goods sold <u>(520)</u>
Gross Profit 710
1 what will be produced?
2 how will it be produced?
3 how will the output society produces be distributed?
Answer:
a) safety stock = z-score x √lead time x standard deviation of demand
z-score for 99.9% = 3.29053
√lead time = √7 = 2.6458
standard deviation of demand = 3
safety stock = 3.29053 x 2.6458 x 3 = 26.12 ≈ 26 soaps
reorder point = lead time demand + safety stock = (7 x 16) + 26 = 138 soaps
EOQ = √[(2 x S x D) / H]
S = order cost = $10
D = annual demand = 16 x 365 = 5,840
H = $0.05
EOQ = √[(2 x $10 x 5,840) / $0.05] = 1,528.40 ≈ 1,528 soaps
b) total order costs per year = (5,840 / 1,528) x $10 = $38.22
total holding costs = (1,528 / 2) x $0.05 = $38.20
total annual ordering and holding costs = $76.42
