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- - Chapter 9 Saved Help Save & Exit Submit Willie Nelson's Boots uses the conventional retail method to estimate ending inventory. Cost data for the most recent quarter is shown below: Retail $ 64,000 $ 81,000 172,000 Cost Beginning inventory Net purchases Net markups Net markdowns Net sales 251, 000 40, 000 53,000 238, 000 The conventional cost-to-retail percentage (rounded) is: Multiple Cholce 711% 6 of 15 Next 6 { Prey10:38 3 all 100%| Question 4 The income statement for Forklift Electrical Ltd for two years are shown below: Forklift Electrical Ltd Income Statement Comparison Current year Prior Year (amounts in thousands) $ 33,750 21,938 $ 11,812 $ 24,750 16,830 $ 7,920 Sales Cost of goods sold Gross profit Wages $ 8,775 $ 6,188 Utilities 675 250 Repairs Selling Total expenses 169 325 506 200 $ 10,125 $ 6,963 Total assets (investment base) $ 4,500 $ 1,500 Required: a) d) Assuming an 8% cost of capital, calculate the residual income for each year. e) Would the management of Forklift Electrical Ltd have been more likely to accept the investment opportunity if the residual income had been used as a performance measure instead of ROI? Explain your answer. | Unsaved changes Save B IU A II !!!The following table contains annual returns on stocks and Treasury bonds for 20 years. Mkt-RF 30-day T-bills 10-year T-bonds Large Stocks 14.4891 -11.71 2000 -17.6 2001 -15.2 2002 -22.76 2003 30.75 2004 10.72 2005 3.09 2006 10.6 2007 1.04 5.89 3.78 1.63 1.02 1.20 2.96 4.79 4.67 2008 -38.34 1.47 2009 28.26 0.10 2010 17.37 0.12 4.0302 14.6641 1.2778 5.1862 3.103 2.2713 9.6431 17.6664 -5.8278 7.4457 -11.42 -21.13 31.77 11.92 6.05 15.39 5.71 -36.87 28.36 17.49
- Use the table to calculate the amount of money that must be invested now at 16% annually, compounded quarterly, to obtain $1,400 in three years. Click the icon to view the $1 present value table. How much money must be invested at 16% annually, compounded quarterly, to obtain S1,400 in three years? 2$ (Round to the nearest cent as needed.)17 eBook References A portfolio analyst has been asked to allocate investment funds among three different stocks. The relevant data for the stocks is shown in the following table. If the goal is to minimize risk while maintaining a return of at least 18%, find the proper allocation of the funds to each stock. Stock A B C Return (R) 25% 19% 8% Multiple Choice What is the risk (standard deviation) of the optimal portfolio? 9.1% 12.2% 11,4% Risk (Standard Deviation to S) 21% 16% 14% 18.0% Pair of Stocks A to B A to C B to C Joint Risk (Covariance) 0.05 0.075 -0.05 lo st nd w late its: ice= 3) Stanc valu ice == nce(A have cact ri the m bensiChe Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one of two new products for a five- year period. His annual pay raises are determined by his division's return on investment (ROI), which has exceeded 19% each of the last three years. He has computed the cost and revenue estimates for each product as follows: ProductA Product B Initial investment: Cost of equipment (zero salvage value) Annual revenues and costs: Sales revenues Variable expenses $ 190,000 $ 400,000 $ 270,000 $ 128,000 $ 38,000 $ 72,000 $ 370,000 $ 178,000 $ 80,000 $ 52,000 Depreciation expense Fixed out-of-pocket operating costs The company's discount rate is 17%. Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor using tables. Required: 1. Calculate the payback period for each product. 2. Calculate the net present value for each product. 3. Calculate the internal rate of return for each product. 4. Calculate the profitability…
- The most recent financial statements for Live Co. are shown here: Income Statement Sales Costs Taxable income Taxes (35%) Net income $13,000 Current assets Fixed -assets. $5,200 Total 1,820 $3,380 7,800 Balance Sheet $28,032 Debt 19,616 Equity $47,648 Total $27,628 20,020 $47,648 Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 32 percent dividend payout ratio. No external equity financing is possible. Required: What is the sustainable growth rate? (Do not round your intermediate calculations.)The most recent financial statements for Live Co. are shown here: Income Statement Sales Costs Taxable $15,000 income 9,000 Current assets Fixed -assets $6,000 Total Taxes (33%) 1,980 Net income $4,020 Balance Sheet $32,345 Debt 22,633 Equity $31,878 23,100 $54,978 Total $54,978 Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 30 percent dividend payout ratio. No external equity financing is possible. Required: What is the sustainable growth rate? (Do not round your intermediate calculations.)Income Statement 2009 2010 2011 2012 2013 Revenue 393.3 366.3 428.6 513.7 599.2 Cost of Goods Sold (186.6) (175.8) (205.3) (248.6) (292.6) Gross Profit 206.7 190.5 223.3 265.1 306.6 Sales and Marketing (67.2) (65.8) (82.5) (102.9) (122.5) Administration (59.3) (59.1) (60.2) (67.6) (77.8) Depreciation & Amortization (27.5) (26.7) (36.2) (39.6) (39.2) EBIT 52.7 38.9 44.4 55 67.1 Interest Income (Expense) (34.7) (31.1) (32.9) (38.5) (37.6) Pretax Income 18 7.8 11.5 16.5 29.5 Income Tax (6.3) (2.7) (4.0) (5.8) (10.3) Net Income 11.7 5.1 7.5 10.7 19.2 Shares Outstanding (Millions) 55.5 55.5 55.5 55.5 55.5 Earnings per Share $0.21 $0.09 $0.14 $0.19 $0.35 Balance Sheet 2009 2010 2011 2012 2013 Assets Cash 47.4 66.7 92.8 79.1 89.3 Accounts Receivable…
- For Year Ended December 31 Year 8 Year 7 Year 6 From income statement Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 333 $ 291 $ 496 Bad debt expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 81 65 Operating revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,719 3,534 3,074 December 31 Year 8 Year 7 From balance sheet Accounts receivable, net of allowance for doubtful accounts (Year 8, $212; Year 7, $183) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $951 $972 Bad debt expense on accounts receivable is substantial in relation to earnings. Assume a corporate tax rate of 40%. Information on accounts receivable written off and recoveries of accounts receivable previously written off was not available from the annual reports. Required a. What effect…Income Statement 2009 2010 2011 2012 2013 Revenue 393.3 366.3 428.6 513.7 599.2 Cost of Goods Sold (186.6) (175.8) (205.3) (248.6) (292.6) Gross Profit 206.7 190.5 223.3 265.1 306.6 Sales and Marketing (67.2) (65.8) (82.5) (102.9) (122.5) Administration (59.3) (59.1) (60.2) (67.6) (77.8) Depreciation & Amortization (27.5) (26.7) (36.2) (39.6) (39.2) EBIT 52.7 38.9 44.4 55 67.1 Interest Income (Expense) (34.7) (31.1) (32.9) (38.5) (37.6) Pretax Income 18 7.8 11.5 16.5 29.5 Income Tax (6.3) (2.7) (4.0) (5.8) (10.3) Net Income 11.7 5.1 7.5 10.7 19.2 Shares Outstanding (Millions) 55.5 55.5 55.5 55.5 55.5 Earnings per Share $0.21 $0.09 $0.14 $0.19 $0.35 Balance Sheet 2009 2010 2011 2012 2013 Assets Cash 47.4 66.7 92.8 79.1 89.3 Accounts Receivable 87.1 69.6 67.9 76.9 85.2 Inventory 34.7 32.5 28.1 32.8 33.5 Total Current Assets 169.2 168.8 188.8 188.8 208 Net Property, Plant & Equip. 248.8 238.7 312.4 341.9 351.2 Goodwill & Intangibles 358.3 358.3 358.3 358.3 358.3 Total Assets 776.3 765.8…Clothing Company has two service departments-purchasing and maintenance, and two production departments-fabrication and assembly. The distribution of each service department's efforts to the other departments is shown below: FROM Purchasing Maintenance Purchasing Purchasing Maintenance Fabrication. Assembly TO ex Maintenance: 55% 0% Fabrication 30% 50% The direct operating costs of the departments (including both variable and fixed costs) were as follows: $ 126,000 48,000 102,000 78,000 Assembly 15% 15% The total cost accumulated in the fabrication department using the direct method is (calculate all ratios and percentages to 4 decimal places, for example 33,3333%, and round all dollar amounts to the nearest whole dollar):
