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Answer:
b) net income less preferred dividends by average common stockholders’ equity
Explanation:
Common stock dividends in a company is paid to stockholders after preferred dividends have been removed.
Preference shares are issued to investors with an agreement that they will recieve dividends before other shareholders.
So when calculating return on common stockholder's equity we will first deduct dividend paid to preference share holders.
The income coming to common share holders is now divided by average common stockholders equity to get the return on common stock equity.
Return on equity is usually used as a measure of how efficiently management uses company's assets to generate profits.
Answer:
The incremental manufacturing cost that the company will incur if it increases production from 10,500 to 10,501 units is closest to $11.40
Explanation:
It is important to note that the question requires The incremental manufacturing cost that the company will incur if it increases production from 10,500 to 10,501 units
From Production of 10500 units to 10501 units, there is an increment of 1 unit.
<u>Lets find the incremental cost of 1 unit.</u>
1.To do this we only consider variable manufacturing costs only.
2.Since increase is within the relevant range, the fixed manufacturing overheads do not change.
3.Also Ignore all non- manufacturing overhead as they do not form part of manufacturing costs.
Extra 1 Unit
Direct materials $6.70
Direct labor $3.50
Variable manufacturing overhead $1.20
Total Cost $11.40
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Answer:
Cash flow from financing activities-$380 million
Cash flow from operating activities($18*2) ($36 million)
Explanation:
The amount received from the issue of bonds would appear in the cash flows under the financing activities as cash inflow since the bondholders mad cash available to Agee Technology Inc, in form of loan repayable in future.
The coupon interest for the year (both for June 30 and December 31) would appear as cash outflow under the operating activities section of the statement of cash flow.
Coupon payment for June=$400 million*9%*6/12=$18
Coupon payment for December=$400 million*9%*6/12=$18
The coupon payment for December is included since the payment is made on 31st December,there should not be any time lag between payment and recording the necessary entries.
