Step 1 – Analyze Business Transactions (Accounting Cycle) Assume that you are the Financial Accountant of a newly started business from your chosen in August 2020: You are requested to assume the chosen business transactions during the month of August 2020 and analyze it by shown the impact of these transactions on the accounting equation!

What are some European accounting practices that differ from US accounting practices?

Gale & Co. has applied for a loan from the Trust Us Bank in order to invest in several potential opportunities. In order to evaluate the firm as a potential debtor, the bank would like to compare Gale & Co. to the industry. The following are some key financial ratios

                                                            2016                2017                Industry Norm(2017)

Current Ratio                                      4.3X                5.7X                            5.0X

Quick Ratio                                         2.1X                2.8X                            3.0X

Inventory Turnover                             1.0X                1.3X                            2.2X

Average Collection Period                 90days             78.3days                      90days

Debt Ratio                                           33%                 28%                             33%

Times Interest Earned                         5.0X                6.0X                            7.0X

Total Asset Turnover                          .46X                .54X                            .76X

Fixed Asset Turnover                          .92X                .99X                            1.0X   

Operating Profit Margin                     29.1%              25.6%                          20%

Net Profit Margin                                12.0%              14.6%                          16.3%

Return on Total Assets                       7.1%                7.5%                            9.0%

Basic Earning Power Ratio                 13.4%              13.7%                          15.0%

Return on Equity                                10.6%              10.4%                          13.4%

What are the firm’s financial strengths and weaknesses? Should the bank make the loan? Why or why not?

Describe some of the innate barriers and chemicals that exist that protect us from pathogens.

A subcommittee is being formed from the 113th US Senate. In this particular session, there were 45 Republicans and 55 Democrats*. Use this information to answer the following.

*Technically, there were 2 Independents or Independent Democrats, but caucused with the Democratic Party.
Remember the rounding convention for a decimal value with more than 3 zeroes is to round to the second non-zero digit.

Step 1 of 6:

If we choose a committee of 10 at random, what is the probability that they will all be Republicans?

Step 2 of 6:

If we choose a committee of 10 at random, what is the probability that the committee will contain all Democrats (for this question, do not separate out the Independent Senators)?

Step 3 of 6:

If we choose a committee of 10 at random, what is the probability that the committee will contain all Democrats (for this question, DO separate out the Independent Senators)?

Step 4 of 6:

If we choose a committee of 10 at random, what is the probability that the committee will contain exactly half Democrats (for this question, do not separate out the Independent Senators) and half Republicans?

Step 5 of 6:

Interpret your probability from the previous step.

Step 6 of 6:

Using your previous answers, which, if any of the committees discussed would NOT be unusual?

A. All Democrats with Independents
B. All Democrats without independents
C. All Republicans
D. Half Democrats, Half Republicans

From a resource-based view, explain why US exports are so competitive?

Baker & Co. has applied for a loan from the Trust Us Bank to invest in several potential opportunities. To evaluate the firm as a potential debtor, the bank would like to compare Baker & Co. to the industry. The following are the financial statements given to Trust Us Bank:

Balance Sheet     12/31/13    12/31/14

Cash     $305    270

Accounts receivable     275    290

Inventory     600    580

Current assets     1,180    1,140

Plant and equipment     1,700    1,940

Less: acc depr     (500)    (600)

Net plant and equipment     1,200    1,340

Total assets     $2,380    $2,480

Liabilities and Owners' Equity

Accounts payable     $150    $200

Notes payable      125    0

Current liabilities      275    200

Bonds      500    500

Owners' equity

Common stock     165    305

Paid-in-capital     775    775

Retained earnings      665    700

Total owners' equity     1,605    1,780

Total liabilities and owners' equity     $2,380    $2,480

Income Statement

Sales (100% credit)     $1,100    $1,330

Cost of goods sold      600    760

Gross profit     500    570

Operating expenses     20    30

Depreciation      160    200

Net operating income     320    340

Interest expense        64    57

Net income before taxes     256    283

Taxes      87    96

Net income     $169    $187

a. Use ratios to discuss 2 of each of the firm’s financial strengths and weaknesses? (3 pts.)

b. If you are a loan officer, explain why you would or wouldn’t grant the loan. (3 pts.)

How imports and exports due to hyperinflation in Venezuela differ from the standards in the US.

This problem is from 2008.

The US Open is an annual two week tennis event in Flushing NY in late August, early September.

In a year with no significant rain interruption, the US Open makes approximately $275 million in revenue and incurs expenses of approximately $225 million, for a profit of $50 million. Of the $275 million in revenue approximately $100 million is from ticket sales. As a non-profit organization, it incurs no tax.

The US Open can work around rain delays but if all play is suspended in either the afternoon or evening sessions, tickets are good for the same session in the following year, in which case the USTA foregoes revenue. The largest ticket prices are for the women’s and men’s finals so a rain-out on either of these days forgoes the most revenue.

The Open is interested in buying a contract to protect itself from foregone revenues from rain interruptions during the finals. Working with its insurance broker, it approaches the insurance market to see if it can buy a weather derivative or insurance policy.

The US Open estimates that between foregone ticket sales and lost margin on concessions and broadcasting rights, a rain out on either the men’s or women’s finals will mean $30 mil in lost profits.

The insurance broker is able to secure an insurance policy that will indemnify the US Open if rainfall occurs during the men’s or women’s finals. The policy treats each event separately, meaning there is coverage and a corresponding premium charged for postponement of either final. The insurer is willing to provide a policy covering each separate event that will indemnify the US Open with a limit of $30 million and a policy premium of $10 million for each. As with all insurance policies, the US Open can collect the insurance payments only once it demonstrates the losses.

The weather desks at three major reinsurance holding companies with broker/dealers supply the probabilities associated with significant rainfall (> ¼ inch) on days 13 and 14 of this calendar year, which is 20% for either day, and conditional on rain on the 13th day, the chance of rain on the 14th day is 30%.

Write out all possible rain/dry possibilities for the 13th and 14th days, with their associated probabilities.

Without insurance, what are the profits if there are rain postponements to either or both finals?

Without insurance, what are the expected profits?

With insurance, what are profits if there are rain postponements?

With insurance what are profits if there is no rain?

What are the expected profits if insurance is purchased?

Should the US Open explore including additional days into the policy?

Over a ten year period, assuming baseline revenue and costs are approximately the same amounts as today, what would the US Open expect to earn (i) in the absence of an insurance policy and (ii) with the insurance policy?

The weather desk is also willing to write two weather derivative contracts, one for day 13 and one for day 14, each with a payout of $30 million and a cost of $12 million. The derivative pays the US Open regardless of whether play is suspended or not. It pays based on measured rainfall within 24 hour period exceeding ¼ of an inch.

What is the best strategy for the US Open to manage its exposure to rain?

Explain.

Without insurance, what are the profits if there are rain postponements to either or both finals?

Without insurance, what are Expected profits?

With insurance, what are profits if there are rain postponements?

With insurance what are profits if there is no rain?

Should the US Open explore including additional days into the policy?

Over a ten year period, assuming baseline revenue and costs are approximately the same amounts as today, what would the US Open expect to earn (i) in the absence of an insurance policy and (ii) with the insurance policy?

What is the best strategy for the US Open to manage its exposure to rain?

This problem is from 2008.

The US Open is an annual two week tennis event in Flushing NY in late August, early September.

In a year with no significant rain interruption, the US Open makes approximately $275 million in revenue and incurs expenses of approximately $225 million, for a profit of $50 million. Of the $275 million in revenue approximately $100 million is from ticket sales. As a non-profit organization, it incurs no tax.

The US Open can work around rain delays but if all play is suspended in either the afternoon or evening sessions, tickets are good for the same session in the following year, in which case the USTA foregoes revenue. The largest ticket prices are for the women’s and men’s finals so a rain-out on either of these days forgoes the most revenue.

The Open is interested in buying a contract to protect itself from foregone revenues from rain interruptions during the finals. Working with its insurance broker, it approaches the insurance market to see if it can buy a weather derivative or insurance policy.

The US Open estimates that between foregone ticket sales and lost margin on concessions and broadcasting rights, a rain out on either the men’s or women’s finals will mean $30 mil in lost profits.

The insurance broker is able to secure an insurance policy that will indemnify the US Open if rainfall occurs during the men’s or women’s finals. The policy treats each event separately, meaning there is coverage and a corresponding premium charged for postponement of either final. The insurer is willing to provide a policy covering each separate event that will indemnify the US Open with a limit of $30 million and a policy premium of $10 million for each. As with all insurance policies, the US Open can collect the insurance payments only once it demonstrates the losses.

The weather desks at three major reinsurance holding companies with broker/dealers supply the probabilities associated with significant rainfall (> ¼ inch) on days 13 and 14 of this calendar year, which is 20% for either day, and conditional on rain on the 13^th day, the chance of rain on the 14^th day is 30%.

1. Write out all possible rain/dry possibilities for the 13^th and 14^th days, with their associated probabilities.
2. Without insurance, what are the profits if there are rain postponements to either or both finals?
3. Without insurance, what are the expected profits?
4. With insurance, what are profits if there are rain postponements?
5. With insurance what are profits if there is no rain?
6. What are the expected profits if insurance is purchased?
7. Should the US Open explore including additional days into the policy?
8. Over a ten year period, assuming baseline revenue and costs are approximately the same amounts as today, what would the US Open expect to earn (i) in the absence of an insurance policy and (ii) with the insurance policy?

The weather desk is also willing to write two weather derivative contracts, one for day 13 and one for day 14, each with a payout of $30 million and a cost of $12 million. The derivative pays the US Open regardless of whether play is suspended or not. It pays based on measured rainfall within 24 hour period exceeding ¼ of an inch.

1. What is the best strategy for the US Open to manage its exposure to rain?

Explain.

1. Without insurance, what are the profits if there are rain postponements to either or both finals?
2. Without insurance, what are Expected profits?

3. With insurance, what are profits if there are rain postponements?
4. With insurance what are profits if there is no rain?

5. Should the US Open explore including additional days into the policy?

6. Over a ten year period, assuming baseline revenue and costs are approximately the same amounts as today, what would the US Open expect to earn (i) in the absence of an insurance policy and (ii) with the insurance policy?
7. What is the best strategy for the US Open to manage its exposure to rain?

please make sure the second part is answer.  

How does managed competition, as conceived in the US, differ from that applied in the United Kingdom?

(300 words) No written responses.