Question 4: Following are the values for US. Apparel Limited: Company’s Ratio Industry Average Days Sales Outstanding 45 days 52 days Credit Terms 50 days 60 days a. Analyze the DSO of the company internally. b. Analyze the DSO of the company externally. What advice will you give to the competitor firm (consider industry average value)?
In: Accounting
Gnomes R Us is considering a new project. The company has a debt-equity ratio of .78. The company’s cost of equity is 14.6 percent, and the aftertax cost of debt is 7.9 percent. The firm feels that the project is riskier than the company as a whole and that it should use an adjustment factor of +2 percent. What discount rate should the firm use for the project?
In: Finance
Suppose you plan to backpack around Europe after you graduate from the university in 4 years (t=4). You have estimated it will cost you $15,000 to pursue your dream. How much do you need to invest into a saving account today (t=0) to reach your goal in 4 years? Assume your saving account earns 6% per annum. Round your answer to three decimal places.
| a. |
$13,349.946 |
|
| b. |
$12,358.959 |
|
| c. |
$11,881.405 |
|
| d. |
$13,350.946 |
|
| e. |
$11,208.872 |
In: Finance
Mary Guilott recently graduated from Nichols State University and is anxious to begin investing her meager savings as a way of applying what she has learned in business school. Specifically, she is evaluating an investment in a portfolio comprised of two firms' common stock. She has collected the following information about the common stock of Firm A and Firm B:
Expected Return Standard Deviation
Firm A Common Stock .16 .17
Firm B Common Stock .17 .24
Correlation Coefficient .50
a. If Mary invests half her money in each of the two common stocks, what is the portfolio's expected rate of return and standard deviation in portfolio return?
b. Answer part a where the correlation between the two common stock investments is equal to zero.
c. Answer part a where the correlation between the two common stock investments is equal to +1.
d. Answer part a where the correlation between the two common stock investments is equal to −1.
e. Using your responses to questions a—d, describe the relationship between the correlation and the risk and return of the portfolio.
In: Finance
Your friend and colleague has been working for about a year since graduating from university. He has come to you for advice on his saving and spending habits. You have accumulated the following information on his savings and spending that has occurred over the past year:
|
Saving/Spending |
Amount $ |
|
Salary received over the last year, net of income tax |
45,000 |
|
Rent and utilities paid |
16,600 |
|
Car expenses paid |
4,800 |
|
Credit card debt at the start of the year |
1,000 |
|
Food, entertaining, recreation paid |
6,000 |
|
Credit card debt at the end of the year |
2,500 |
|
Line of credit at the start of the year |
2,500 |
|
Line of credit at the end of the year |
1,200 |
|
Purchase of car |
20,000 |
|
Car loan at the end of the year |
15,000 |
|
Cash account balance at the beginning of the year |
500 |
|
Cash received from disposal of motorcycle |
1,000 |
|
Cash received from disposal of computer |
100 |
|
Cash account balance at the end of the year |
1,000 |
|
Purchase of Investments |
5,500 |
|
Student loan at the beginning of the year |
15,000 |
|
Student loan at the end of the year |
10,000 |
|
Purchase of new computer |
1,500 |
|
Interest expense paid |
1,400 |
Instructions
Prepare a statement of cash flow for your friend from information provided above using the direct method.
Can you provide some advice to your friend on how he could improve his cash flow strategies, such as managing debt levels and terms of payment?
Please ensure that your response is written in full sentences and that you provide an explanation and/or a calculation to support your answers.
In: Accounting
|
You have recently graduated from university and have accepted a position with Sea-Jewels Inc., the manufacturer of a popular consumer product. During your first week on the job, the vicepresident has been favourably impressed with your work. She has been so impressed, in fact, that yesterday she called you into her office and asked you to attend the executive committee meeting this morning to lead a discussion on the variances reported for last period. Anxious to favourably impress the executive committee, you took the variances and supporting data home last night on a memory stick to study. |
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Unfortunately, when you tried to open the files this morning some of them had become corrupted. All you could retrieve is shown below:
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In: Accounting
Q- Suppose after you graduate from University, you find a job that pays you $65,000 a year. Further suppose that you take out a home equity loan of $260,000 for 30 years at an annual interest rate of 3.5 percent, with payments to be made monthly. What will your monthly payments be? If the interest rate increases from 3.5 percent to 5.0 percent, how much will your monthly payments increase? Instead of 30 years, you decide to pay your loan in 25 years, what will your monthly payments be if the interest rate remains at 3.5 percent or increases to 5.0 percent. Develop a chart comparing these monthly payments. Show your work.
In: Finance
Mary Guilott recently graduated from Nichols State University and is anxious to begin investing her meager savings as a way of applying what she has learned in business school.? Specifically, she is evaluating an investment in a portfolio comprised of two? firms' common stock. She has collected the following information about the common stock of Firm A and Firm? B:
Expected Return Standard
Deviation
Firm A's Common Stock 0.16 0.16
Firm B's Common Stock 0.18 0.24
Correlation Coefficient 0.40
a. If Mary invests half her money in each of the two common? stocks, what is the? portfolio's expected rate of return and standard deviation in portfolio? return?
b. Answer part a where the correlation between the two common stock investments is equal to zero.
c. Answer part a where the correlation between the two common stock investments is equal to +1.
d. Answer part a where the correlation between the two common stock investments is equal to -1.
e. Using your responses to questions a-d?, describe the relationship between the correlation and the risk and return of the portfolio.
In: Finance
|
You have recently graduated from university and have accepted a position with Sea-Jewels Inc., the manufacturer of a popular consumer product. During your first week on the job, the vicepresident has been favourably impressed with your work. She has been so impressed, in fact, that yesterday she called you into her office and asked you to attend the executive committee meeting this morning to lead a discussion on the variances reported for last period. Anxious to favourably impress the executive committee, you took the variances and supporting data home last night on a memory stick to study. |
|
Unfortunately, when you tried to open the files this morning some of them had become corrupted. All you could retrieve is shown below: |
| Standard Cost Card | ||
| Direct materials, 9 kilograms at $3 per kilogram | $ 27.00 | |
| Direct labour, 1.9 direct labour-hours at $13 per direct labour-hour | 24.70 | |
| Variable manufacturing overhead, 1.9 direct labour-hours at $5 per direct labour-hour | 9.50 | |
| Fixed manufacturing overhead, 1.9 direct labour-hours at $10 per direct labour-hour | 19.00 | |
| Standard cost per unit | $ 80.20 | |
| Variances Reported | ||||||||||||
| Total Standard Cost* |
Price or Rate |
Spending or Budget |
Quantity or Efficiency | Volume | ||||||||
| Direct materials | $205,200 | $7,090 F | $7,500 U | |||||||||
| Direct labour | $187,720 | $11,355 U | $9,100 U | |||||||||
| Variable manufacturing overhead | $72,200 | $560 F | $?† U | |||||||||
| Fixed manufacturing overhead | $144,400 | $320 F | $9,500 U | |||||||||
| *Applied to work in process during the period. | |||||
| †Data corrupted. | |||||
|
You recall that manufacturing overhead cost is applied to production on the basis of direct labour-hours and that all of the materials purchased during the period were used in production. Since the company uses JIT to control work flows, work in process inventories are insignificant and can be ignored. |
|
It is now 8:30 A.M. The executive committee meeting starts in just one hour; you realize that to avoid looking grossly incompetent, you must somehow generate the necessary “backup” data for the variances before the meeting begins. Without backup data, it will be impossible to lead the discussion or answer any questions. |
| Required: |
| 1. | How many units were produced last period? |
| 2. | How many kilograms of direct material were purchased and used in production? |
| 3. | What was the actual cost per kilogram of material? (Round your answer to 2 decimal places.) |
| 4. | How many actual direct labour-hours were worked during the period? |
| 5. | What was the actual rate paid per direct labour-hour? (Round your answer to 2 decimal places.) |
| 6. | How much actual variable manufacturing overhead cost was incurred during the period? |
| 7. | What is the total fixed manufacturing overhead cost in the company’s flexible budget? |
| 8. | What were the denominator direct labour-hours for last period? |
In: Accounting
|
You have recently graduated from university and have accepted a position with Sea-Jewels Inc., the manufacturer of a popular consumer product. During your first week on the job, the vicepresident has been favourably impressed with your work. She has been so impressed, in fact, that yesterday she called you into her office and asked you to attend the executive committee meeting this morning to lead a discussion on the variances reported for last period. Anxious to favourably impress the executive committee, you took the variances and supporting data home last night on a memory stick to study. Unfortunately, when you tried to open the files this morning some of them had become corrupted. All you could retrieve is shown below: |
| Standard Cost Card | ||
| Direct materials, 10 kilograms at $2 per kilogram | $ 20.00 | |
| Direct labour, 1.5 direct labour-hours at $14 per direct labour-hour | 21.00 | |
| Variable manufacturing overhead, 1.5 direct labour-hours at $6 per direct labour-hour | 9.00 | |
| Fixed manufacturing overhead, 1.5 direct labour-hours at $10 per direct labour-hour | 15.00 | |
| Standard cost per unit | $ 65.00 | |
| Variances Reported | ||||||||||||
| Total Standard Cost* |
Price or Rate |
Spending or Budget |
Quantity or Efficiency | Volume | ||||||||
| Direct materials | $144,000 | $7,555 F | $7,100 U | |||||||||
| Direct labour | $151,200 | $8,625 U | $9,800 U | |||||||||
| Variable manufacturing overhead | $64,800 | $520 F | $?† U | |||||||||
| Fixed manufacturing overhead | $108,000 | $280 F | $7,000 U | |||||||||
| *Applied to work in process during the period. | |||||
| †Data corrupted. | |||||
|
You recall that manufacturing overhead cost is applied to production on the basis of direct labour-hours and that all of the materials purchased during the period were used in production. Since the company uses JIT to control work flows, work in process inventories are insignificant and can be ignored. |
|
It is now 8:30 A.M. The executive committee meeting starts in just one hour; you realize that to avoid looking grossly incompetent, you must somehow generate the necessary “backup” data for the variances before the meeting begins. Without backup data, it will be impossible to lead the discussion or answer any questions. |
| Required: |
|
1- How many units were produced last period ?
|
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In: Accounting