Your boss has asked you to take a closer look at your company's credit policies. You have been given the following information: Accounts receivable balance $420,000 Average daily sales $10,500 Weighted average cost of capital 8% Your firm's DSO is
Q: Total return on the stock?
A:
Q: can you please solve this
A: Step 1: Definition of Tax LiabilityTax liability refers to the total amount of tax owed by an…
Q: Quick answer of this accounting questions
A: Step 1: Definition of Debt-Equity RatioThe Debt-Equity Ratio is a financial metric that compares a…
Q: Tuna Furniture manufacturing wooden tables
A: Step 1: Budgeting is a process of estimation of future requirements of material,cash,labour etc.…
Q: Can you help me with accounting questions
A: Step 1: Definition of Adjusted Gross Income (AGI)Adjusted Gross Income (AGI) is a taxpayer's total…
Q: Do fast answer of this accounting questions
A: Step 1:FIFO:-FIFO is the method of valuation of inventory in which inventory purchased first will be…
Q: The following are budget data for Dalton
A: Given Data:Production in February = 20,500 unitsProduction in March = 18,400 unitsRaw materials…
Q: ??
A: Step 1: Definition of Adjusted Gross IncomeThe income derived after subtracting "for adjusted gross…
Q: Waht is the firm' s ROA ? General accounting question
A: Step 1: Define Return on Assets (ROA)Return on Assets (ROA) is a financial metric that measures a…
Q: Solve this General accounting problem
A: Neptune Technologies has a profit margin of 8% on sales of $30,000,000Calculation of Net IncomeNet…
Q: What amount will the product xyz units be reported on the balance sheet ?
A: Step 1: Define Lower of Cost or Market (LCM) MethodThe Lower of Cost or Market (LCM) Method is an…
Q: Get correct and accurate answer these financial accounting question
A: Step 1: Definition of LiabilitiesLiabilities refer to the financial obligations a company owes to…
Q: Need help with this accounting questions
A: Step 1: Definition of Cost of Merchandise PurchasedThe cost of merchandise purchased during the year…
Q: Her AGI is:
A: Step 1: Definition of Adjustments to Gross IncomeAn individual's adjusted gross income or, AGI is…
Q: HELP
A:
Q: Please answer and explanation general accounting question
A: Step 1: Define Equivalent Units of Production for Direct MaterialsEquivalent Units of Production…
Q: account questions answer plz
A: Step 1:Activity based costing is a method of overhead allocation based on respective…
Q: Question: Kukur Inc.'s net income for the most recent year was $15,985. The tax rate was 35 percent.…
A: we use the formula:Cash Coverage Ratio = (EBIT + Depreciation) / Interest ExpenseStep 1: Identify…
Q: question 1. Toodles Inc. had sales of $1,840,000. Cost of goods sold, administrative and selling…
A: Question 1: Toodles Inc. Income Statement and Operating Cash Flow (OCF)**Given:- Sales = $1,840,000-…
Q: Kindly help me with this question general accounting
A: Step 1: Define Overhead Allocation Based on Machine HoursOverhead allocation assigns indirect…
Q: i want to this question answer of this General accounting question
A: Step 1: Definition of Common Fixed ExpensesCommon Fixed Expenses are costs that are shared among…
Q: Please help me
A: SOLUTION OF : Contribution Margin CalculationStep 1: Understanding the Degree of Operating Leverage…
Q: The division's turnover is closest to:
A: Step 1: Definition of Asset Turnover RatioThe Asset Turnover Ratio measures a company's efficiency…
Q: Opereting income?
A: Step 1Operating leverage formula (Contribution margin / earning before interest and tax)…
Q: Problem 2 Cariveh Co. sells automotive supplies from 25 different locations in one country. Each…
A: Same as explanation
Q: What is the direct labor rate variance? General accounting question
A: Step 1: Definition of Direct Labor Rate VarianceThe Direct Labor Rate Variance measures the…
Q: what is the total net gain or loss on this transaction?
A: Given Data:Contract Size: $1,000,000Buy Price (Long Position Entry): 96.22Sell Price (Exit…
Q: SwiftTech Inc.'s stock is currently selling for $95.20 pershare at year-end. This year, the company…
A: The dividend yield is calculated by using this formula GIVEN DATA :Stock Price per Share =…
Q: please solve this problem accounting
A: Step 1: Definition of Price-Earnings (P/E) RatioThe Price-Earnings (P/E) Ratio is a financial metric…
Q: Given answer with calculation
A: To estimate GreenAgri Ltd.'s share price based on the industry average Price-to-Earnings (P/E)…
Q: I want to correct answer general accounting question
A: Step 1: Definition of High-Low MethodThe high-low method is used to estimate the fixed cost and…
Q: hello tutor help this answer accounting
A: Step 1: Definition of Gross ProfitGross Profit is the difference between net sales revenue and cost…
Q: Please solve this questions
A:
Q: What is the amount of shareholders equity?
A: Step 1: Definition of Shareholders' EquityShareholders' Equity represents the residual interest in a…
Q: General accounting
A: Step 1: Definition of Actual Return on Pension AssetsThe actual return on pension assets measures…
Q: Hi expert please give me answer general accounting question
A: Step 1: Definition of Gross MarginGross Margin represents the difference between Net Sales Revenue…
Q: Calculate predetermined overhead rate
A: Step 1: Definition of Predetermined Overhead RateA Predetermined Overhead Rate (POHR) is a rate used…
Q: what is the variable cost per minute?
A: Step 1: Definition of the High-Low MethodThe High-Low Method is a cost estimation technique used to…
Q: the cost of the land recorded by garrett on the purchase date is
A: Step 1: Definition of Cost of LandBased on the type of asset and its condition, the cost of an…
Q: What was the markup percentage?
A: Let's solve this step by step:Cost price per bicycle = $900Selling price per bicycle = $1,200Profit…
Q: No WRONG ANSWER
A: Concept of Gross PayGross pay refers to the total earnings an employee receives before any…
Q: What is the correct option? General accounting question
A: Step 1: Define Direct Materials Quantity VarianceThe Direct Materials Quantity Variance (DMQV)…
Q: Make an Excel spreadsheet to compute gross wages due each employee under federal wage-hour law. See…
A: Understanding the Wage Calculation ProcessFederal wage-hour law requires that employees be paid a…
Q: ?!
A: To calculate the Return on Equity (ROE), we use the DuPont Identity formula:ROE = Profit Margin ×…
Q: Financial information for Crow Enterprises is presented below: Operating Expenses: $45,000 . Sales…
A:
Q: During 2018, Dalton Enterprises earned revenues of $95,000, had expenses of $72,000, purchased…
A: Concept of Net IncomeNet Income, also known as net profit, represents the total earnings of a…
Q: Taylor Manufacturing uses a predetermined factory
A: Step 1: Introduction to factory overheadFactory overheads are defined as indirect costs that are not…
Q: Please solve for the items highlighted in yellow and red check mark at the bottom of page.
A: Part 1: Traditional Method - Compute Overhead CostsStep 1: Determine Total Direct Labor Hours…
Q: I don't need ai answer general accounting question
A: Step 1: Definition of Days' Sales in ReceivablesDays' sales in receivables measure the average…
Q: Determine the following requirements for these financial accounting question
A: Step 1: Definition of Manufacturing MarginManufacturing Margin refers to the difference between a…
Your fim's DSO is
Step by step
Solved in 2 steps
- You are considering two possible companies for investment purposes. The following data is available for each company. Additional Information: Company A: Bad debt estimation percentage using the income statement method is 6%, and the balance sheet method is 10%. The $230,000 in Other Expenses includes all company expenses except Bad Debt Expense. Company B: Bad debt estimation percentage using the income statement method is 6.5%, and the balance sheet method is 8%. The $140,000 in Other Expenses includes all company expenses except Bad Debt Expense. A. Compute the number of days sales in receivables ratio for each company for 2019 and interpret the results (round answers to nearest whole number). B. If Company A changed from the income statement method to the balance sheet method for recognizing bad debt estimation, how would that change net income in 2019? Explain (show calculations). C. If Company B changed from the balance sheet method to the income statement method for recognizing bad debt estimation, how would that change net income in 2019? Explain (show calculations). D. What benefits do each company gain by changing their method of bad debt estimation? E. Which company would you invest in and why? Provide supporting details.Forecasted Statements and Ratios Upton Computers makes bulk purchases of small computers, stocks them in conveniently located warehouses, ships them to its chain of retail stores, and has a staff to advise customers and help them set up their new computers. Uptons balance sheet as of December 31, 2018, is shown here (millions of dollars): Sales for 2018 were 350 million, and net income for the year was 10.5 million, so the firms profit margin was 3.0%. Upton paid dividends of 4.2 million to common stockholders, so its payout ratio was 40%. Its tax rate was 40%, and it operated at full capacity. Assume that all assets/sales ratios, (spontaneous liabilities)/sales ratios, the profit margin, and the payout ratio remain constant in 2019. a. If sales are projected to increase by 70 million, or 20%, during 2019, use the AFN equation to determine Uptons projected external capital requirements. b. Using the AFN equation, determine Uptons self-supporting growth rate. That is, what is the maximum growth rate the firm can achieve without having to employ nonspontaneous external funds? c. Use the forecasted financial statement method to forecast Uptons balance sheet for December 31, 2019. Assume that all additional external capital is raised as a line of credit at the end of the year and is reflected (because the debt is added at the end of the year, there will be no additional interest expense due to the new debt). Assume Uptons profit margin and dividend payout ratio will be the same in 2019 as they were in 2018. What is the amount of the line of credit reported on the 2019 forecasted balance sheets? (Hint: You dont need to forecast the income statements because the line of credit is taken out on the last day of the year and you are given the projected sales, profit margin, and dividend payout ratio; these figures allow you to calculate the 2019 addition to retained earnings for the balance sheet without actually constructing a full income statement.)Upton Computers makes bulk purchases of small computers, stocks them in conveniently located warehouses, ships them to its chain of retail stores, and has a staff to advise customers and help them set up their new computers. Uptons balance sheet as of December 31, 2019, is shown here (millions of dollars): Sales for 2019 were 350 million, and net income for the year was 10.5 million, so the firms profit margin was 3.0%. Upton paid dividends of 4.2 million to common stockholders, so its payout ratio was 40%. Its tax rate was 25%, and it operated at full capacity. Assume that all assets/sales ratios, (spontaneous liabilities)/sales ratios, the profit margin, and the payout ratio remain constant in 2020. a. If sales are projected to increase by 70 million, or 20%, during 2020, use the AFN equation to determine Uptons projected external capital requirements. b. Using the AFN equation, determine Uptons self-supporting growth rate. That is, what is the maximum growth rate the firm can achieve without having to employ nonspontaneous external funds? c. Use the forecasted financial statement method to forecast Uptons balance sheet for December 31, 2020. Assume that all additional external capital is raised as a line of credit at the end of the year. (Because the debt is added at the end of the year, there will be no additional interest expense due to the new debt.) Assume Uptons profit margin and dividend payout ratio will be the same in 2020 as they were in 2019. What is the amount of the line of credit reported on the 2020 forecasted balance sheets? (Hint: You dont need to forecast the income statements because the line of credit is taken out on the last day of the year and you are given the projected sales, profit margin, and dividend payout ratio; these figures allow you to calculate the 2020 addition to retained earnings for the balance sheet without actually constructing a full income statement.)
- American Express Company is a major financial services company noted for its American Express card. Some of the performance measures used by the company on its balanced scorecard follow: Average card member spending Number of Internet features Cards in force Number of merchant signings Earnings growth Number of new card launches Hours of credit consultant training Return on equity Investment in information technology Revenue growth Number of card choices For each measure, identify whether the measure best fits the learning and growth, internal processes, customer, or financial performance perspective of the balanced scorecard.Financial information for BDS Enterprises for the year-ended December 31, 20xx, was gathered from an accounting intern, who has asked for your guidance on how to prepare an income statement format that will be distributed to management. Subtotals and totals are included in the information, but you will need to calculate the values. A. In the correct format, prepare the income statement using the following information: B. Calculate the profit margin, return on investment, and residual income. Assume an investment base of $100,000 and 6% cost of capital. C. Prepare a short response to accompany the income statement that explains why uncontrollable costs are included in the income statement.From the Google Finance site, use the DuPont analysis to determine the total assets turnover ratio for each of the peer companies. (Hint ROA = Profit margin Total assets turnover.) Once youve calculated each peers total assets turnover ratio, then you can use the DuPont analysis to calculate each peers equity multiplier.
- Working Capital and Current Ratio The balance sheet of Kapinski Inc. includes the following items: Required Determine the current ratio and working capital. Kapinski appears to have a positive current ratio and a large net working capital. Why would it have trouble paying bills as they come due? Suggest three things that Kapinski can do to help pay its bills on time.You begin a new job at Cabrera Medical Supplies. The company is considering a new accounting system, with an initial investment of about half a million dollars for new software and hardware. You are excited for the opportunity to apply your managerial accounting skills regarding screening and preference methods to decide on the best system for the company. Your boss is a little old-school, and when you mention some of the things you learned in managerial accounting, he says. Discounted cash flow methods are not the only way to approach this. I have more of a gut reaction approach that blows most managers out of the water when they become absorbed by discounted cash flow methods (DCF). How would you react and what would you discuss with your boss?CALCULATING 3Ms COST OF CAPITAL In this chapter, we described how to estimate a companys WACC, which is the weighted average of its costs of debt, preferred stock, and common equity. Most of the data we need to do this can be found from various data sources on the Internet. Here we walk through the steps used to calculate Minnesota Mining Manufacturings (MMM) WACC. 3. Next, we need to calculate MMMs cost of debt. We can use different approaches to estimate it. One approach is to take the companys interest expense and divide it by total debt (which is the sum of short-term debt and long-term debt). This approach only works if the historical cost of debt equals the yield to maturity in todays market (i.e., if MMMs outstanding bonds are trading at close to par). This approach may produce misleading estimates in years in which MMM issues a significant amount of new debt. For example, if a company issues a great deal of debt at the end of the year, the full amount of debt will appear on the year-end balance sheet, yet we still may not see a sharp increase in annual interest expense because the debt was outstanding for only a small portion of the entire year. When this situation occurs, the estimated cost of debt will likely understate the true cost of debt. Another approach is to try to find this number in the notes to the companys annual report by accessing the companys home page and its Investor Relations section. Alternatively, you can go to other external sources, such as bondsonline.com, for corporate bond spreads, which can be used to find estimates of the cost of debt. Remember that you need the after-tax cost of debt to calculate a firms WACC, so you will need MMMs tax rate (which has averaged around 30% in recent years). What is your estimate of MMMs after-tax cost of debt?
- Tightening Credit Terms Kim Mitchell, the new credit manager of the Vinson Corporation, was alarmed to find that Vinson sells on credit terms of net 90 days while industry-wide credit terms have recently been lowered to net 30 days. On annual credit sales of 2.5 million, Vinson currently averages 95 days of sales in accounts receivable. Mitchell estimates that tightening the credit terms to 30 days would reduce annual sales to 2,375,000, but accounts receivable would drop to 35 days of sales and the savings on investment in them should more than overcome any loss in profit. Vinsons variable cost ratio is 85%, and taxes are 40%. If the interest rate on funds invested in receivables is 18%, should the change in credit terms be made?Relaxing Collection Efforts The Boyd Corporation has annual credit sales of 1.6 million. Current expenses for the collection department are 35,000, bad-debt losses are 1.5%, and the days sales outstanding is 30 days. The firm is considering easing its collection efforts such that collection expenses will be reduced to 22,000 per year. The change is expected to increase bad-debt losses to 2.5% and to increase the days sales outstanding to 45 days. In addition, sales are expected to increase to 1,625,000 per year. Should the firm relax collection efforts if the opportunity cost of funds is 16%, the variable cost ratio is 75%, and taxes are 40%?MANAGING YOUR WRITING The business where you work is considering issuing bonds to finance a major expansion. Your boss has just come from a lengthy meeting regarding the bonds, including the interest rate the bonds should carry. This has irritated your boss, who feels that the interest rate to use is obviousthe lowest one possible. This would yield the lowest interest expense to borrow the money. It seems stupid to pay big fees to financial advisors and lawyers when the question is so simple. Write a report to your boss explaining how the issue price of the bonds (the net amount borrowed) is affected by the stated interest rate on the bonds. Include an explanation of how interest costs consist of more than just periodic interest payments.
