Question
In: Accounting
You are starting a wine company in Kamloops. You need financing from a bank to make...
You are starting a wine company in Kamloops. You need financing from a bank to make the company possible. You are sitting with the loan officer at ABC Bank, Ms. Money Bags. Money asks you a question. “How will the bank know the new company will be a success? That is, what internal financial reporting (managerial accounting) documents / procedures / techniques / policies will your company implement to estimate and monitor your success?”
How can you make the bank feel better that they will be repaid?
Required:
Respond to Money Bags question. Reflect on all the things we covered in this course. A strong answer will:
- Identify what managerial accounting document / procedure / technique / policy you would use in the business, and
- How this document / procedure / technique / policy will help manage your business
- I’m looking for 5 strong points
(Hint: I’m not looking for paragraph answers. A couple sentences for each document / procedure / technique / policy you would use in the business is more than enough. Be concise with your answers. I’m looking for you to answer “what” you would use and “why” or “how” it would help monitor your small business.)
Solutions
ekkarill92 answered 2 years agoRelated Solutions
You are running a bank and a customer wants to borrow $2m from the bank starting...
You are running a bank and a customer wants to borrow $2m from
the bank starting in 207 days and ending in 321 days. You charge
interest on an ACT/360 basis and will set the rate at 0.61% above
fair. Interest rates are:
Days
Cont. Comp. Rates
207
3.28
321
3.93
What rate do you charge? Give your rate to 2 decimal places and
enter 3.05% as 3.05.
You are considering starting a company that manufactures racing bicycles. You are planning on financing your...
You are considering starting a company that manufactures racing
bicycles. You are planning on financing your firm 40% equity and
60% debt. You estimate that your upfront costs will be $5M, and
that you will earn an EBIT of $1M per year for the next 12 years.
Lightning Bolt Bikes makes racing bicycles similar to the ones that
you wish to manufacture. They have a CAPM equity beta of 1.9 and a
debt to equity ratio of 0.7. The tax...
You are considering starting a company that manufactures motorcycles. You are planning on financing your firm...
You are considering starting a company that manufactures
motorcycles. You are planning on financing your firm 40% equity and
60% debt. You estimate that your upfront costs will be $5M, and
that you will earn an EBIT of $1M per year for the next 12 years.
Ian's Finest motorcycles make motorcycles similar to the ones that
you wish to manufacture. They have a CAPM equity beta of 1.9 and a
debt to equity ratio of 0.7. The tax rate for...
You are considering starting a company that manufactures racing bicycles. You are planning on financing your...
You are considering starting a company that manufactures racing
bicycles. You are planning on financing your firm 40% equity and
60% debt. You estimate that your upfront costs will be $5M, and
that you will earn an EBIT of $1M per year for the next 12
years.
Lightning Bolt Bikes makes racing bicycles similar to the ones
that you wish to manufacture. They have a CAPM equity beta of 1.9
and a debt to equity ratio of 0.7. The tax...
You are considering starting a company that manufactures motorcycles. You are planning on financing your firm...
You are considering starting a company that manufactures
motorcycles. You are planning on financing your firm 40% equity and
60% debt. You estimate that your upfront costs will be $5M, and
that you will earn an EBIT of $1M per year for the next 12
years.
Ian's Finest motorcycles make motorcycles similar to the ones
that you wish to manufacture. They have a CAPM equity beta of 1.9
and a debt to equity ratio of 0.7. The tax rate for...
You are considering starting a company that manufactures racing bicycles. You are planning on financing your...
You are considering starting a company that manufactures racing
bicycles. You are planning on financing your firm 40% equity and
60% debt. You estimate that your upfront costs will be $5M, and
that you will earn an EBIT of $1M per year for the next 12 years.
Lightning Bolt Bikes makes racing bicycles similar to the ones that
you wish to manufacture. They have a CAPM equity beta of 1.9 and a
debt to equity ratio of 0.7. The tax...
You are considering starting a company that manufactures racing bicycles. You are planning on financing your...
You are considering starting a company that manufactures racing
bicycles. You are planning on financing your firm 40% equity and
60% debt. You estimate that your upfront costs will be $5M, and
that you will earn an EBIT of $1M per year for the next 12
years.
Lightning Bolt Bikes makes racing bicycles similar to the ones
that you wish to manufacture. They have a CAPM equity beta of 1.9
and a debt to equity ratio of 0.7. The tax...
can you make a balance sheet for 3 years from starting a business ?
can
you make a balance sheet for 3 years from starting a business
?
You are starting a company and need £1,000 to buy capital. You can take the funds...
You are starting a company and need £1,000 to buy capital. You
can take the funds from your savings, in which case the firm is
100% equity financed. Alternatively, you can use £200 of your own
money and borrow the remainder. If you borrow, the interest rate on
the loan will be 5%. In good years, the company will earn £100 and
in bad years it will earn £50. Good and bad years occur with equal
frequency. After you make...
You are borrowing $6m from the bank starting in 281 days and ending in 327 days....
You are borrowing $6m from the bank starting in 281 days and
ending in 327 days. You have agreed to pay 2.50% interest on an
ACT/360 basis. If interest rates are:
Days
Rates
281
2.18
327
2.94
what is the present value of this transaction? (Round your
answer to the nearest 0.01)
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