Management Issues for Non-Depository Institutions
The EverSure Insurance Company has the following financial statements.
2018 2017
Net Premiums Written 48,612 47,398
-------------------------------------------------------------------------------
Income Statement ($ mils.)
Premiums Earned 42,624 48,321
Loss Expenses 30,746 34,364
Operating Expenses 17,720 17,693
Total Policy Expenses 48,466 52,057
Net Underwriting Gain/Loss (5,842) (3,736)
Net Investment Income 15,700 19,995
Operating Income before taxes 9,858 16,259
Dividends to Policyholders 6,517 10,361
Income Tax 1,294 1,670
Net Income $2,047 $ 4,228
Ave Investment Yield 4.94% 5.89%
(mils.) 2018 2017
Total Assets $381,972 $406,529
Liabilities
Total Liabilities $349,069 $369,700
Total Equity 32,903 36,829
Total Liabs. & Equity $381,972 $406,529
a. Calculate and evaluate the Net Underwriting Margin (NUM); Loss Ratio Expense Ratio; Combined Ratio; and Overall Profitability Ratio for each year using the information in the income statement above. Also calculate the firm’s OPM, OROA, ROA, ROE, and equity multiplier (EM).
Recall NUM = (Premiums Earned – Total Policy Expenses) / Total Assets
NUM 2018__________ NUM 2017 ______________
Recall: expense ratio = (operating expenses/net premiums written) and loss ratio = (loss expenses/premium earned), and combined ratio = (loss ratio + expense ratio), and overall profitability ratio = {[100% - Combined Ratio%] + (Investment Yield% }for the firm each year) Also calculate asset turnover (revenues/total assets), net profit margin [net income/revenues], operating ROA (operating income/total assets), return on assets (net income/total assets) and return on equity (net income/equity accounts), and equity multiplier (total assets / equity).
2018 2017
Expense ratio
Loss ratio
Combined ratio
Average Investment Yield
Overall Profitability
Dupont Analysis:
Asset Turnover
Net Profit Margin
OROA
ROA
ROE
Equity Multiplier (EM)
b. Analyze the trends in all of the ratios, and the other financial information provided. What do each of these specifically reveal for trends over time including trends as well on the firm’s balance sheet? What areas of strength & weakness are revealed? What advice for improvement would you give?
In: Accounting
a) Tom Goodly Ltd guarantees the bank overdraft of Pete Smith Ltd during 2018. Tom Goodly Ltd’s reporting period ends on 30 June each year. At the time of
providing the guarantee, Pete Smith Ltd was in a sound financial position. During late 2019, due to the outbreak of the COVID-19 pandemic, international
trading conditions deteriorated to such an extent that Pete Smith Ltd incurred substantial losses. Finally, on 25 July 2020, Pete Smith Ltd was forced to file for
protection from its creditors.
Required:
Explain how Tom Goodly Ltd would report the guarantee provided to Pete Smith Ltd in its financial statements ending
i) 30 June 2019
ii) 30 June 2020 3
b) As at 30 June 2018, T&P Ltd’s equity accounts are as follow: 400 000 ‘A’ ordinary shares, issued at $2.50 each, fully paid $ 1 000 000
75 000 6% cumulative preference shares, issued at $3 and paid to $2 150 000
Accumulated losses (12 750)
As the company had incurred a loss for the year ended 30 June 2018, no dividends were declared for that year. The following transactions and events occurred during the year ended 30 June 2020.
2019 July 25 The directors made the final call of $1 on the preference shares. Aug 31 All call monies were received except those owing on 5000 preference shares.
Sept 7 The directors resolved to forfeit 5000 preference shares for non-payment of the call. The constitution of the company directs that forfeited amounts are not to be refunded to shareholders. The shares will not be reissued.
Nov 1 The company issued a prospectus offering 40 000 ‘B’ ordinary shares payable in two instalments: $3 on application and $2 on 30 November 2022. The offer closed on 30 November.
Nov 30 Applications for 50 000 ‘B’ ordinary shares were received.
Dec 1 The directors resolved to allot the ‘B’ ordinary shares pro rata with all
applicants receiving 80% of the shares applied for. Excess application
monies were allowed to be held. The shares were duly allotted.
Dec 5 Share issue costs of $8600 were paid.
Required:
Prepare general journal entries to record the above transactions.
In: Accounting
QUESTION FIVE [20]
The following information has been extracted from the financial statements of YDI Limited: Extract of Statement of Comprehensive Income for the year ended 31 December 2019 2018 R R Sales 2 000 000 1 600 000 Cost of sales 940 000 800 000 Operating profit 600 000 520 000 Profit before tax 520 000 450 000 Profit after tax 364 000 315 000 Extract of Statement of Financial Position as at 31 December Assets 2019 2018 R R Non-current assets 2 000 000 1 400 000 Inventories 600 000 800 000 Accounts receivable 400 000 400 000 Cash and cash equivalents 2 000 2 000 3 002 000 2 602 000 17 R R Equity and liabilities Shareholders’ equity 2 000 000 1 500 000 Long-term loan 700 000 800 000 Accounts payable 182 000 142 000 Bank overdraft 120 000 160 000 3 002 000 2 602 000 Note: 1. All purchases and sales of inventories are on credit. 2. Dividends paid during the year amounted to R218 400. 3. The issued share capital consisted of 500 000 ordinary shares. Required: 5.1 Calculate the following ratios for the year ended December 2019. Where applicable, round off answers to two decimal places. 5.1.1 Operating margin (2) 5.1.2 Debtors collection period (2) 5.1.3 Acid test ratio (2) 5.1.4 Return on equity (2) 5.1.5 Debt to equity (2) 5.1.6 Earnings retention ratio (2) 5.1.7 Earnings per share (2) POSTGRADUATE DIPLOMA IN MANAGEMENT – ACADEMIC AND ASSESSMENT CALENDAR REGENT BUSINESS SCHOOL (RBS) July 2020 18 5.2 Suggest two (2) ways in which YDI Limited can improve on its collections from debtors. (2) 5.3 Comment on the current ratio which dropped from 3.98:1 in 2018 to 3.32:1 in 2019. (2) 5.4 Recommend two (2) ways in which YDI Limited can improve its profitability.
In: Finance
One of the main purposes of minimum wage legislation is to protect non-unionized workers in jobs requiring minimal skill levels. A minimum wage creates a "floor" above which employees or their unions may negotiate with the management for higher pay rates. In1970, Ontario's minimum wage was set at $1.50 per hour. On January 1, 2018, the minimum wage rate in Ontario increased to $14 dollars per hour and was promised to rise to $15 dollars per hour thereafter. It is estimated that 10% of the provinces workforce is paid the minimum wage rate.
In early 2018, media outlets reported protestsThat occurred at various Tim Horton's outlets in OntarioOver action by franchise owners to deal with rising labor costs. Union officials noted Employee accounts of losing paidBreaks and having to buy their own uniforms after the new minimum wage rates went into effect. The Ontario Federation of Labour (OFL) Called for a National Day of Action in January 2018, saying that it was mobilizing concerned members of the labour movement, including the "Fight for $15," the Canadian Labour Congress and labour federations across Canada, to protest such actions in response to minimum wage increases.
Protest against actions taken by Tim Horton's and many of its franchisees were held in over 20 Ontario communities with the support of the Ontario Public Service Employees Union, Labour councils and other action-based worker agencies. Similar protest occurred in British Columbia, Nova Scotia and Saskatchewan.
Over 20 representatives from various labor councils gathered at a Tim Horton's location in Windsor, Ontario to protest. An OFL representative stated that she and other union representatives were there to show the workers that the labour movement and the community where there to support them and make sure they were treated with respect. Another union leader said if there was a union steward present in such a situation, steps would have been taken to resolve employee concerns. Many of the workers felt afraid to raise their concerns with management due to a fear of being fired.
There was no report of how many union organizers might have been at these rallies trying to gain support among the employees to join a union.
As an HR leader at Tim Horton's corporate office, what steps would you suggest to senior management to successfully handle this situation and hopefully avoid the employees joining a union?
In: Operations Management
McBurger, Inc., wants to redesign its kitchens to improve productivity and quality. Three designs, called designs K1, K2, and K3, are under consideration. No matter which design is used, daily production of sandwiches at a typical McBurger restaurant is for
500
sandwiches. A sandwich costs
$1.30
to produce. Non-defective sandwiches sell, on the average, for
$2.50
per sandwich. Defective sandwiches cannot be sold and are scrapped.
The goal is to choose a design that maximizes the expected profit at a typical restaurant over a 300-day period. Designs K1, K2, and K3 cost
$100,000,
$130,000,
and
$180,000,
respectively.
Under design K1, there is a .80 chance that 90 out of each 100 sandwiches are non-defective and a .20 chance that 70 out of each 100 sandwiches are non-defective. Under design K2, there is a .85 chance that 90 out of each 100 sandwiches are non-defective and a .15 chance that 75 out of each 100 sandwiches are non-defective. Under design K3, there is a .90 chance that 95 out of each 100 sandwiches are non-defective and a .10 chance that 80 out of each 100 sandwiches are non-defective.
The expected profit level of design K1 is
$nothing.
(Enter
your response as a real number rounded to two decimal
places.)
The expected profit level of design K2 is
$nothing.
(Enter
your response as a real number rounded to two decimal
places.)
The expected profit level of design K3 is
$nothing.
(Enter
your response as a real number rounded to two decimal
places.)
What is the expected profit level of the design that achieves the maximum expected 300-day profit level?
Design
▼
K1
K2
K3
achieves the maximum expected 300-day profit level, with a profit of
$nothing.
(Enter
your response as a real number rounded to two decimal
places.)
In: Operations Management
Consider the following article below.
A)According to the article, is Australian economic growth increasing or decreasing compared to previous years? Provide some evidence from the article supporting your view. 6 marks
b)
what kind of fiscal and monetary policy should government authorities implement? Explain why and give specific examples of each policy that might be implemented. What effect would these policies have on aggregate demand (AD)?(6marks)
c) The last paragraph of the article states that economic growth in the future is expected to decrease unemployment and increase wages. Explain the effect these changes in unemployment and wages would have on the AD and SAS curves, and on the short run macroeconomic equilibrium.(6 marks)
Country facing a lost decade of growth, ANZ warns
By Shane Wright (Sydney Morning Herald, 21 January 2020)
Australia is facing a lost decade of economic growth, ANZ has warned, that will see living standards slip and wages grow modestly while putting pressure on the Morrison government's plan for a string of budget surpluses.
…
ANZ head of Australian economics David Plank said growth through the current decade would average 2.6 per cent, with that tipped to fall to between 2 and 2.5 per cent across the 2020s. He said that level of growth, lower than both estimated by the Reserve Bank and the federal Treasury, would be driven by tepid non-mining business investment, weak productivity and household consumption held back by high debt and modest wage increases.
…
Australian households, despite record levels of wealth due to high house prices, were carrying record levels of debt that would crimp their spending plans.
…
In its December budget update, Treasury forecast economic growth to lift to 2.75 per cent through 2020-21 and then climb to 3 per cent for the next two years. That level of growth is expected to help drive down unemployment and push up wages.
In: Economics
Simulation versus online learning: Effects on knowledge acquisition, knowledge retention, and perceived effectiveness.
Bredenkamp, Nancy D
University of Northern Colorado, 2013; Ph.D. (153 p) doctoral dissertation – research
The healthcare environment continues to experience rapid changes
requiring nursing professionals to update knowledge and technical
skills to provide safe patient care. The result is a need for
healthcare facilities to find unique, evidence-based teaching
methods to support learning. The purpose of this study was to
identify differences in knowledge acquisition, knowledge retention,
and perceived effectiveness of two teaching
strategies. Nurses participating in the study were randomized to
either a high fidelity simulation experience or an
online learning module to complete continuing
education about a hypoglycemic protocol. After
taking a pre-test, participants completed a learning session and
then took the first post-test. Approximately four weeks later, a
second post-test was completed that included questions about the
application of the protocol in clinical practice. Descriptive and
inferential statistics were used to analyze the data.
There were no significant differences between the learning strategy
groups related to demographic variables, mean test scores,
knowledge acquisition, knowledge retention, or perceived
effectiveness of the learning strategy. Both
groups showed a significant amount of knowledge gain (p = 0.00) and
both groups lost knowledge after the learning sessions with the
online group, demonstrating a statistically
significant loss (p = 0.027). Qualitative analysis of responses to
open-ended questions identified three themes: hands-on learning is
helpful (simulation group), online learning is
effective (online group), and
education is applied in practice (both
groups).
1. What are the independent variable(s) in this study?
2. What are the dependent variables in this study?
3. What type of research approach was used in the study?
Is it quantitative and qualitative, Why?
4. Is the study prospective or retrospective in nature? Why?
5. Is the study experimental or non-experimental in design? Why? What type of research is this study?
In: Nursing
You have just been hired by IBM in their capital budgeting division. Your first assignment is to determine the free cash flows and NPV of a proposed new type of tablet.
The project has an expected life of 5 years
Development of the new system will initially require an initial capital expenditure equal to 10% of IBM’s gross property, plant, and equipment in 2018 (balance sheet). The project will then require an additional capital expenditure investment equal to 10% of the initial investment in the first year of project, a 5% increase after the second year, and a 1% increase after the third, fourth, and fifth years.
First-year revenues for the new product are expected to be 3% of IBM’s total revenue for 2018 (income statement). The new product’s revenues are expected to grow at 15% for the second year, 10% for the third, and 5% annually for the final two years of the expected life of the project.
Assume that initial capital expenditure incurred in year 0 will be depreciated using a straight line method over a five-year life.
Calculate average gross profit margin for 2015-2018 and use it to calculate project’s costs.
Calculate IBM’s average NWC/Sales for 2015-2018 and use it to calculate net working capital required in years 1 through 5 of the project.
Calculate average tax expense for 2015-2018 (tax expense/pretax income) and apply it to calculate free cash flows.
Balance sheet:
| 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | |
| Cash | ||||
| Cash And Cash Equivalents | 11,379,000,000 | 11,972,000,000 | 7,826,000,000 | 7,686,000,000 |
| Short Term Investments | 618,000,000 | 608,000,000 | 701,000,000 | 508,000,000 |
| Net Receivables | 29,820,000,000 | 30,649,000,000 | 28,188,000,000 | 27,353,000,000 |
| Inventory | 1,682,000,000 | 1,583,000,000 | 1,553,000,000 | 1,551,000,000 |
| Other Current Assets | 1,000,000 | -1,000,000 | -1,000,000 | 0 |
| Total Current Assets | 49,146,000,000 | 49,735,000,000 | 43,888,000,000 | 42,504,000,000 |
| Gross property, plant and equipment | 32,461,000,000 | 32,331,000,000 | 30,134,000,000 | 29,341,000,000 |
| Accumulated Depreciation | -21,668,000,000 | -21,215,000,000 | -19,303,000,000 | -18,616,000,000 |
| Net property, plant and equipment | 10,793,000,000 | 11,116,000,000 | 10,831,000,000 | 10,725,000,000 |
| Equity and other investments | 226,000,000 | 122,000,000 | 104,000,000 | 475,000,000 |
| Goodwill | 36,265,000,000 | 36,788,000,000 | 36,199,000,000 | 32,021,000,000 |
| Intangible Assets | 3,088,000,000 | 3,741,000,000 | 4,689,000,000 | 3,486,000,000 |
| Other long-term assets | 296,000,000 | 572,000,000 | 729,000,000 | 571,000,000 |
| Total non-current assets | 74,237,000,000 | 75,620,000,000 | 73,584,000,000 | 67,987,000,000 |
| Total Assets | 123,382,000,000 | 125,356,000,000 | 117,470,000,000 | 110,495,000,000 |
| Total Revenue | 10,207,000,000 | 6,986,000,000 | 7,513,000,000 | 6,461,000,000 |
| Accounts Payable | 6,558,000,000 | 6,451,000,000 | 6,209,000,000 | 6,028,000,000 |
| Taxes payable | ||||
| Accrued liabilities | 3,941,000,000 | 4,510,000,000 | 4,705,000,000 | 4,353,000,000 |
| Deferred revenues | 11,165,000,000 | 11,552,000,000 | 11,035,000,000 | 11,021,000,000 |
| Other Current Liabilities | 7,251,000,000 | 1,000,000 | 1,000,000 | -1,000,000 |
| Total Current Liabilities | 38,227,000,000 | 37,363,000,000 | 36,275,000,000 | 34,269,000,000 |
| Long Term Debt | 35,605,000,000 | 39,837,000,000 | 34,655,000,000 | 33,428,000,000 |
| Deferred taxes liabilities | 3,696,000,000 | 545,000,000 | 424,000,000 | 253,000,000 |
| Deferred revenues | 3,445,000,000 | 3,746,000,000 | 3,600,000,000 | 3,771,000,000 |
| Other long-term liabilities | 1,719,000,000 | 1,721,000,000 | 1,778,000,000 | 2,063,000,000 |
| Total non-current liabilities | 68,226,000,000 | 70,268,000,000 | 62,803,000,000 | 61,802,000,000 |
| Total Liabilities | 106,453,000,000 | 107,631,000,000 | 99,078,000,000 | 96,071,000,000 |
| Common Stock | 55,151,000,000 | 54,566,000,000 | 53,935,000,000 | 53,262,000,000 |
| Retained Earnings | 159,206,000,000 | 153,126,000,000 | 152,759,000,000 | 146,124,000,000 |
| Accumulated other comprehensive income | -29,490,000,000 | -26,592,000,000 | -29,398,000,000 | -29,607,000,000 |
| Total stockholders' equity | 16,796,000,000 | 17,594,000,000 | 18,246,000,000 | 14,262,000,000 |
| Total liabilities and stockholders' equity | 123,382,000,000 | 125,356,000,000 | 117,470,000,000 | 110,495,000,000 |
Income Statements:
| 12/31/18 | 12/31/17 | 12/31/16 | 12/31/15 | |
| Total Revenue | 79,590,000,000 | 79,139,000,000 | 79,920,000,000 | 81,742,000,000 |
| Cost of Goods Sold | 42,655,000,000 | 42,913,000,000 | 41,625,000,000 | 41,057,000,000 |
| Gross Profit | 36,935,000,000 | 36,226,000,000 | 38,295,000,000 | 40,685,000,000 |
| Research Development | 5,379,000,000 | 5,787,000,000 | 5,751,000,000 | 5,247,000,000 |
| Selling General and Administrative | 18,863,000,000 | 19,555,000,000 | 20,479,000,000 | 19,894,000,000 |
| Operating Income or Loss/EBITDA/EBIT | 12,693,000,000 | 10,884,000,000 | 12,065,000,000 | 15,544,000,000 |
| Interest Expense | 723,000,000 | 615,000,000 | 630,000,000 | 468,000,000 |
| Total Other Income/Expenses Net | -1,482,000,000 | 17,000,000 | -339,000,000 | 421,000,000 |
| Income Before Tax | 10,488,000,000 | 10,286,000,000 | 11,096,000,000 | 15,497,000,000 |
| Income Tax Expense | 2,619,000,000 | 5,642,000,000 | 449,000,000 | 2,581,000,000 |
| Net Income | 7,869,000,000 | 4,644,000,000 | 10,647,000,000 | 12,916,000,000 |
In: Finance
Using financial function to answer the following problems
1) Calculate the present value of an annuity that pays $2,000 each two months for 4 years. The interest is 10% per year and each payment is made at the start of the period.
2) Calculate the interest rate required to save $20,000, over 2 years, with a starting value of $1000, and monthly savings of $800. The payments are to be made at the start of each month.
3) Calculate the number of months required to pay off in full, a loan of $50,000 at a rate of $1,000 per month. Interest is charged at a rate of 4% per year, and the payment to the loan is to be
made at the end of each month.
4) Calculate the monthly payments required to increase an investment from $2000 to $5,000 over
a period of 2 years. Interest is paid at a rate of 3.5% per year and the payment into the
investment is to be made at the beginning of each quarter.
5) A loan of $50,000 which is to be paid off in full after 5
years. Interest is charged at a rate of 5% per year and the monthly
payment to the loan is to be made at the end of each month.
- What is the monthly payment.
- What is the amount paid in the sixth month only from the
loan.
- What is the interest paid in the sixth month only from the loan. 2
-What is the amount paid during the first six months from the loan. -What is the interest paid during the first six months from the loan.
6) We bought a machine factory at a cost of NIS 20,000 at the end of the second quarter of 2019 and the life span of 6 years and have a scrap value at the end of life NIS 3,500. Calculate the depreciation of this machine within one year after purchase.
7) A machine price of NIS 500,000 and its value in the last useful life (12 years) is estimated at 150,000 NIS. This machine was purchased in the fifth month of 2018. Calculate the depreciation of this machine at the end of its first year (ie the end of 2018 year).
8) The price of a machine is $14000 and the default life is 7
years and the scrap value( salvage) is $2300. Calculate the
depreciation of this machine after three years by using sum of
years digits depreciation.
I need the answer in excel file :)
In: Accounting
Which of the following statement is NOT correct?
|
During IPOs, underwriters purchase shares from issuing firms and resell them |
||
|
Both open-end and close-end fund shares can be traded |
||
|
None of the above |
||
|
There is a decrease in number of IPOs after 2000 |
||
|
Purchases of new issues of stock take place in the primary market |
In: Finance