In: Accounting
Mr. Preprah is the chairman of PALOO company and has become concerned about the accumulation of cash in hand and in the deposit accounts shown in the company's statement of financial position. The company is in the manufacturing sector, supplying engines to the auto markets in the Ghana and Africa. For the last 30 years the company has grown predominantly by acquisition and has not invested significantly in research and development on its own account. The acquisitions have given the company the technology that it has required and have all tended to be small, relative to the company's total market capitalisation.
The company has a healthy current asset ratio of 1.3,
although its working capital cycle has an average of 24 unfunded
days. The company has not systematically embraced new manufacturing
technologies nor has it sought to reduce costs as a way of
rebuilding profitability. Managerial and structural problems within
divisions have led to a number of substantial projects overrunning
and losses being incurred as a result. It has also proven difficult
to ensure the accountability of managers promoting projects – many
of which have not subsequently earned the cash flows originally
promised. At the corporate level, much of the company's accounting
is on a contracts basis and over the years it has tended to be
cautious in its revenue recognition practices. This has meant that
earnings growth
has lagged behind cash flow.
Over the last year the company has come under strong competitive pressure on the dominant defence side of its business which, coupled with the slow-down in spending in this area across the major African economies, has slowed the rate of growth of its earnings. The company's gearing ratio is very low at 12% of total market capitalisation and borrowing has invariably been obtained in the European fixed interest market and used to support capital investment in its Africa production facility. In the current year, investment plans are at the lowest they have been in real terms since the company was founded in the 1930s.
In discussion, the chairman comments upon the poor
nature of the company's buildings and its poor levels of pay which
could, in his view, be improved to reflect standards across the
industry. Directors' pay, he reminds you, is some 15% below
industry benchmarks and there is very little equity participation
by the board of directors. He also points out that the company's
environmental performance has not been good. Last year the company
was fined for an untreated discharge into a local river. There are,
he says, many useful things the company could do with the money to
help improve the long-term health of the business. However, he does
admit some pessimism that
business opportunities will ever again be the same as in previous
years and he would like a free and frank discussion at the next
board meeting about the options for the company. The company has a
very open culture where ideas are encouraged and freely
debated.
Mr. Preprah asks if you, as the newly appointed Finance Director, would lead the discussion at the next board.
(a) In preparation for a board paper entitled 'Agenda for Change', write brief notes which identify the strategic financial issues the company faces and the alternatives it might pursue.
(b) Identify and discuss any ethical issues you
believe are in the above case and how the various alternatives you
have identified in (a) may lead to their resolution.
In: Accounting
Assume that you are one of six thousand people who live on the small island of Tap. This island is small and can only produce a maximum of six thousand bags of corn a year (ignore technological advances in corn production that are occurring elsewhere in the world). The six thousand bags of corn produced are just enough for the residents since each resident only earns enough to buy one bag of corn a year (a pity since the Tapese really love corn!). The currency on Tap is the US dollar. Now suppose that the government of Tap injects more US dollars into the economy, and the result is that person now ends up having twice the amount of US dollars as he or she did before. Make a logical prediction about prices of corn in the economy, and explain what principle of economics is illustrated in this scenario. Develop a response that includes examples and evidence to support your ideas, and which clearly communicates the required message to your audience. Organize your response in a clear and logical manner as appropriate for the genre of writing. Use well-structured sentences, audience-appropriate language, and correct conventions of standard American English.
In: Economics
1. Do you agree with the Organic view of government or the Mechanistic view of government? Explain your reason.
2. There is a political discussion about building a wall in the southern border of the US. What is the opportunity cost of building a wall? What is the opportunity cost of not building a wall?
3. Some people want the US government provide more services to general public like building roads, schools, and providing health care while other people disagree. What do you think? is the size of the US government too large, too small, or just about right? (use both total expenditure and total revenue as measures of the size of the government).
4. What do you think about the size of national debt? It ca be reduce either by increase taxes, decreasing government expenditure such as social services and defense, or by a combination of increase in taxes and decrease in government expenditure. What policy do you recommend to lower the size of national debt?
5. What is public sector economics? Explain. Who introduced public sector economics for the first time and won a Noble Prize in economics for his contribution.
In: Economics
Find the historical exchange rate of US dollar to CHF (Switzerland) and explain if the currency has appreciated or depreciated in relation to the US dollar. List some examples as to why this might have happened. For instance, an international event (one event is fine). Approach this from the event side, explore what happened to the exchange rate as an outcome of this particular event.
In: Economics
In: Finance
In: Finance
A SAMPLE OF 16 EMPLOYEES WAS DRAWN FOR THE ANALYSIS OF THE AVERAGE BONUS EARNED LAST YEAR. ASSUME THAT THE INDIVIDUAL BONUS IS NORMALLY DISTRIBUTED WITH UNKNOWN PARAMETERS. SAMPLE SUMMARIES ARE: (SAMPLE MEAN) = $5,400 AND (SAMPLE STANDARD DEVIATION) = $1,280.
(A) AT THE 5% SIGNIFICANCE LEVEL, DO WE HAVE SUFFICIENT EVIDENCE THAT THE POPULATION AVERAGE BONUS WAS BELOW $6,000?
CIRCLE APPROPRIATE ANSWER: YES! NO!
(B) SHOW THE TEST STATISTIC VALUE, THE CRITICAL VALUE(S) NEEDED FOR YOUR DECISION AND FORMULATE THE REJECTION RULE.
TEST STATISTIC VALUE =
CRITICAL VALUE(S):
REJECTION RULE STATES...
(C) AT THE SAME 5% SIGNIFICANCE LEVEL, DO WE HAVE SUFFICIENT EVIDENCE THAT THE POPULATION AVERAGE BONUS EXCEEDED $4,900?
CIRCLE APPROPRIATE ANSWER: YES! NO!
(D) SHOW THE CRITICAL VALUE(S) NEEDED FOR YOUR DECISION AND FORMULATE THE REJECTION RULE.
TEST STATISTIC VALUE =
CRITICAL VALUE(S):
REJECTION RULE STATES...
In: Statistics and Probability
Determine the amount of the Earned Income Credit in each of the following cases. Assume that the person or persons are eligible to take the credit. Calculate the credit using the formulas.
A single person with earned income of $7,554 and no qualifying children.
A single person with earned income of $22,500 and two qualifying children.
A married couple filing jointly with earned income of $34,190 and one qualifying child.
In: Accounting
1. A company had the following purchases during its first year of operations:
| Purchases | |
| January: | 11 units at $121 |
| February: | 21 units at $131 |
| May: | 16 units at $141 |
| September: | 13 units at $151 |
| November: | 11 units at $161 |
On December 31, there were 31 units remaining in ending inventory.
These 31 units consisted of 3 from January, 5 from February, 7 from
May, 5 from September, and 11 from November. Using the specific
identification method, what is the cost of the ending
inventory?
2. During the first week of January, an employee works 44 hours. For this company, workers earn 150% of their regular rate for hours in excess of 40 per week. Her pay rate is $14 per hour, and her wages are subject to no deductions other than FICA Social Security, FICA Medicare, and federal income taxes. The tax rate for Social Security is 6.2% of the first $118,500 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee’s pay. The employee has $93 in federal income taxes withheld. What is the amount of this employee’s net pay for the first week of January?
3. Ryan Company deposits all cash receipts on the day they are received and makes all cash payments by check. Ryan's June bank statement shows $30,361 on deposit in the bank. Ryan's comparison of the bank statement to its cash account revealed the following:
| Deposit in transit | 3,850 |
| Outstanding checks | 1,485 |
Additionally, a $57 check written and recorded by the company
correctly was recorded by the bank as a $75 deduction.
The adjusted cash balance per the bank records should be:
4. An employee earns $5,950 per month working for an employer. The FICA tax rate for Social Security is 6.2% of the first $118,500 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. The employee has $200 in federal income taxes withheld. The employee has voluntary deductions for health insurance of $168 and contributes $84 to a retirement plan each month. What is the amount of net pay for the employee for the month of January? (Round your intermediate calculations to two decimal places.)
In: Accounting