Fundamentals of Financial Management, Concise Edition (MindTap Course List)
9th Edition
ISBN: 9781305635937
Author: Eugene F. Brigham, Joel F. Houston
Publisher: Cengage Learning
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Question
Chapter 3, Problem 6Q
a.
Summary Introduction
To explain: The financial position of average household improved during given time period or not.
b. The expected
Balance Sheet: Balance sheet is a part of financial statements that lists company’s assets, liabilities and shareholders’ fund. It is prepared at the end of accounting period and informs about company’s financial position on that day.
b.
Summary Introduction
To explain: The expected balance sheet of current time for average household.
Balance Sheet: Balance sheet is a part of financial statements that lists company’s assets, liabilities and shareholders’ fund. It is prepared at the end of accounting period and informs about company’s financial position on that day.
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A personal balance sheet is the financial picture of how much "wealth" you have accumulated as of a certain date. It specifically lists your assets (i.e., what you own) and your liabilities (i.e., what you owe). Your current net worth is the difference between the assets and the liabilities.
net worth = assets − liabilities
Tom and Carol Jackson have asked for your help in preparing a personal balance sheet. They have listed the following assets and liabilities: current value of home, $149,000; audio/video equipment, $1,340; automobiles, $17,700; personal property, $4,350; computer, $3,700; mutual funds, $26,700; 401(k) retirement plan, $53,680; jewelry, $4,800; certificates of deposit, $19,300; stock investments, $24,280; furniture and other household goods, $8,600; balance on Walmart and Sears charge accounts, $4,868; automobile loan balance, $8,840; home mortgage balance, $106,170; Visa and MasterCard balances, $4,213; savings account balance, $3,700; Carol's night school tuition…
explain how you apply accounting in your personal life in reference to the following:
1. Give 3 examples of what you would consider to be assets.
2. Give 2 examples of what you would consider to be liabilities.
3. Assign values (they don't need to be actual values) to each of the above and show how you would determine your net worth.
4. What statement would you report all of the above accounts and amounts on?
5. Explain what would cause your net worth to change over the next month?
What do common size statements show? In my textbook, it states that is shows changes in the relative importance of each financial statement. What does that mean?
Chapter 3 Solutions
Fundamentals of Financial Management, Concise Edition (MindTap Course List)
Ch. 3 - Prob. 1QCh. 3 - Who are some of the basic users of financial...Ch. 3 - If a typical firm reports 20 million of retained...Ch. 3 - Explain the following statement: Although the...Ch. 3 - Prob. 5QCh. 3 - Prob. 6QCh. 3 - Prob. 7QCh. 3 - Prob. 8QCh. 3 - How are managements actions incorporated in EVA...Ch. 3 - Explain the following statement: Our tax rates are...
Ch. 3 - Prob. 11QCh. 3 - How does the deductibility of interest and...Ch. 3 - BALANCE SHEET The assets of Dallas Associates...Ch. 3 - INCOME STATEMENT Byron Books Inc recently reported...Ch. 3 - INCOME STATEMENT Patterson Brothers recently...Ch. 3 - STATEMENT OF STOCKHOLDERS EQUITY In its most...Ch. 3 - MVA Harper Industries has 900 million of common...Ch. 3 - Prob. 6PCh. 3 - EVA Barton Industries has operating income for the...Ch. 3 - PERSONAL TAXES Susan and Stan Britton are a...Ch. 3 - BALANCE SHEET Which of the following actions are...Ch. 3 - STATEMENT OF STOCKHOLDERS EQUITY Electronics World...Ch. 3 - EVA For 2016, Gourmet Kitchen Products reported 22...Ch. 3 - Prob. 12PCh. 3 - Prob. 13PCh. 3 - FREE CASH FLOW Arlington Corporations financial...Ch. 3 - INCOME STATEMENT Edmonds Industries is...Ch. 3 - FINANCIAL STATEMENTS The Davidson Corporation's...Ch. 3 - Prob. 17PCh. 3 - Prob. 18PCh. 3 - FINANCIAL STATEMENTS, CASH FLOW, AND TAXES Laiho...Ch. 3 - Prob. 20ICCh. 3 - Prob. 1DQCh. 3 - Prob. 2DQCh. 3 - Prob. 3DQCh. 3 - Prob. 4DQCh. 3 - Prob. 5DQ
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- Consider again the example introduced in Section 4.5 of a credit card company that has a database of information provided by its customers when the customers apply for credit cards. An analyst has created a multiple regression model for which the dependent variable in the model is credit card charges accrued by a customer in the data set over the past year (y), and the independent variables are the customers annual household income (x1), number of members of the household (x2), and number of years of posthigh school education (x3). Figure 4.23 provides Excel output for a multiple regression model estimated using a data set the company created. a. Estimate the corresponding simple linear regression with the customers annual household income as the independent variable and credit card charges accrued by a customer over the past year as the dependent variable. Interpret the estimated relationship between the customers annual household income and credit card charges accrued over the past year. How much variation in credit card charges accrued by a customer over the past year does this simple linear regression model explain? b. Estimate the corresponding simple linear regression with the number of members in the customers household as the independent variable and credit card charges accrued by a customer over the past year as the dependent variable. Interpret the estimated relationship between the number of members in the customers household and credit card charges accrued over the past year. How much variation in credit card charges accrued by a customer over the past year does this simple linear regression model explain? c. Estimate the corresponding simple linear regression with the customers number of years of posthigh school education as the independent variable and credit card charges accrued by a customer over the past year as the dependent variable. Interpret the estimated relationship between the customers number of years of posthigh school education and credit card charges accrued over the past year. How much variation in credit card charges accrued by a customer over the past year does this simple linear regression model explain? d. Recall the multiple regression in Figure 4.23 with credit card charges accrued by a customer over the past year as the dependent variable and customers annual household income (x1), number of members of the household (x2), and number of years of posthigh school education (x3) as the independent variables. Do the estimated slopes differ substantially from the corresponding slopes that were estimated using simple linear regression in parts a, b, and c? What does this tell you about multicollinearity in the multiple regression model in Figure 4.23? e. Add the coefficients of determination for the simple linear regression in parts a, b, and c, and compare the result to the coefficient of determination for the multiple regression model in Figure 4.23. What does this tell you about multicollinearity in the multiple regression model in Figure 4.23? f. Add age, a dummy variable for gender, and a dummy variable for whether a customer has exceeded his or her credit limit in the past 12 months as independent variables to the multiple regression model in Figure 4.23. Code the dummy variable for gender as 1 if the customers gender is female and 0 if male, and code the dummy variable for whether a customer has exceeded his or her credit limit in the past 12 months as 1 if the customer has exceeded his or her credit limit in the past 12 months and 0 otherwise. Do these variables substantially improve the fit of your model?arrow_forwardDuckies, Etc. is a bath toy manufacturer reviewing their current Balance Sheet. 1. What are the total current assets? 2. What are the total long term assets? 3. What are total assets? 4. What is the balance for Accounts Payable? 5. What is the balance for Total Liabilities? 6. What is the balance for Total Liabilities and Shareholder Equity? 7. What is the balance for Capital Surplus?arrow_forwardplease help me answeer the following givenarrow_forward
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