Modern Limited.

The Company

Modern Limited is a family-owned and managed, department store situated in Breezyfield, a city in the North of England. The store was established some sixty years ago by the current owner’s father, who passed on the business to his three sons on his death. All three sons are still deeply involved in the running of the business, even though they are now in their sixties, and none of them have children to whom to pass on the business. The Store occupies 100,000 square metres of the main shopping district in the city centre. The management team of Modern Limited pride themselves on running a store which retains the standards of service and customer relationships usually associated with a bygone era.

The Store has four retailing departments (Furnishings, Kitchenware, Menswear and Toys) and a Restaurant. Each department is managed by a department manager and recently Alison was appointed to the post of departmental manager of the Toy Department. She is in her early thirties and is studying on a part-time basis at Sheffield Hallam University for a degree in Accounting and Management Control (she is currently in her final year).

Alex is the departmental manager of Menswear and he is also Alison’s great uncle. He used to be a Sergeant in the Police Force and will be celebrating his 65^th birthday shortly. Alison and Alex do not agree on many issues and often argue. Kitchenware is managed by Joshua and Furnishings is managed by Simon. Joshua and Simon joined the Store round the same year, beginning their careers in retailing as junior assistants and working their way up to their current management roles. Both are now in their middle fifties and pride themselves on knowing their regular customers by name.

Sam, who previously worked for Modern for a number of years as a chef, was promoted to manager of the Restaurant some time ago. Sam achieved some fame a number of years ago when he entered and won a potato-sculpting competition. His prize was an all-expense-paid weekend in Paris and was interviewed by Yorkshire television. This attracted favourable publicity for Modern Limited. However, Sam does have an explosive temper and has been known to ‘lash out’ at his two assistants, Tracy and Peter. He sets very high standards for the restaurant and will throw away cooked dishes which do not meet these standards. He spends the majority of his time in the kitchen and intensely dislikes ‘paperwork’, constantly complaining that it stifles his creativity. The ‘French Cuisine’ menu offered by the restaurant is extensive and creative, but it is generally felt within the company that the prices charged sometimes barely cover the food cost, although this cannot be substantiated because information is not collected.

Sam revises menu weekly, ordering food supplies from local suppliers on a daily basis. There is no stock control system in operation in the Restaurant. The kitchen equipment is quite old and has not been regularly maintained. For example, the dough mixer keeps breaking down and the safety catch on the steamer is missing.

Sam claims that, if he were given additional capital to refurbish and equip the kitchen, he would be able to generate even more business for the Restaurant. In addition, new European Union regulations concerning cook-chill facilities mean that Modern Limited will soon have to spend a considerable amount of money in upgrading the kitchen’s food keeping facilities.

The storage of stock presents problems for Modern Limited Merchandise and stock is delivered to one store-room for all departments other than the restaurant, where deliveries are made directly to the kitchen area. Deliveries are not checked or counted in any way and items are placed on any shelves which are free. As a result, staff often find it difficult to locate products and thus customers are often left waiting for long periods. All staff are allowed into the stock-room and, on odd occasions, customers have been known to wander in by mistake.

All records of the Store are maintained on manual systems.

Recent Events

In the past the store has operated profitably. However, the most recent financial statements revealed a small loss for the previous trading period. This came as quite a shock to the owners and is causing great concern.

Prior to this news, and in a move which seems to have been totally unrelated to it, the family members decide to appoint a Managing director in order to take some of the workload from their own shoulders. They appointed Vijay as the Store’s first Managing Director and when he takes up his appointment he will be the first ‘non-family’ member to be employed in a senior managerial role. He is well qualified for the job, having gained valuable retail experience with Sparks and Mentin plc, a leading department store chain with a first class management training programme and an excellent growth and profits record. His first post with Sparks and Mention plc was as a graduate trainee and he progressed to store manager of one of the company’s stores in the affluent South East of England.

As a result of the reported loss for the previous trading period, the family member called a meeting of the store’s employees to discuss the situation. This type of meeting was unprecedented in the history of the Store. Prior to the meeting, a suggestion box was set up and attendees were asked to put forward suggestions for improving the profitability of the Store.

One suggestion for improving the profitability of the Store was the closure of the Toy Department, another suggestion was the closure of the restaurant and a third suggestion was an across the board price reduction of 5% in order to stimulate demand. In each case the source of the suggestion was not identified.

Unfortunately, when the family members asked for information to assist in evaluating these suggestions, this was hampered by the lack of management information produced within the company. Apparently, the recording systems were geared to maintain records for government regulatory bodies, such as Customs and Excise and the Inland Revenue, and to assist the company secretary in the production of the year-end financial statements.

Since Alison is studying for an accounting degree, she was asked to tackle the job of seeking out information which might be helpful. The information she produced is set out below. It identifies revenues and costs incurred during the previous trading period. The family members were so impressed with the information she produced that they asked her to consider taking on the additional role of management accounting in the company.

Alison has looked into the behaviour of these costs at different sales levels. Purchases of goods for resale in all departments varied proportionately with the level of sales. Additionally, due to the staffing policy of the company (see note on staffing policy below), so did the wages of non-management staff. Departmental expenses (for instance, wrapping paper for goods purchased, cleaning of staff uniforms) were also considered to vary with the level of sales, and there seemed to be a direct correlation between sales promotion costs in the departments and the increase in sales. Other costs totalling $400,000 (not included in the above schedule) were considered not to change with sales levels and some of these costs could not be directly related to individual departments.

Note on Staffing Policy

The company staffs all the Departments by using a core of full time staff to cover a minimum demand level and a flexible workforce of part time staff to work as and when required, with no guaranteed minimum or maximum number of hours for part-time staff.

Question:

(a)   (i) Identify the problems which Alison would need to address in her new role as Management Accountant at Modern Limited.

(ii)Explain the main factors which will influence the design and implementation of a Management Information System for Modern Ltd.

1. A fiscal policy to expand aggregate supply: Group of answer choices results in increased output and a lower price level. works faster than fiscal policy to increase aggregate demand. requires tough trade restrictions to be effective. focuses on short-run economic growth. 2. Automatic stabilizers include all of the following EXCEPT: Group of answer choices tax revenues. transfer payments. increased research and development. All of the answers are correct. 3.All of these would help the U.S. achieve fiscal sustainability in the near future EXCEPT: Group of answer choices cuts in Social Security and Medicare. the abolishment of automatic stabilizers. reforms in government accounting procedures. massive tax increases to fund future Medicare liabilities. 4.Which statement is TRUE? Group of answer choices Changes in tax rates affect aggregate demand but not aggregate supply. Changes in tax rates affect both aggregate demand and aggregate supply. An increase in tax rates increases individuals' incentive to invest. An increase in tax rates encourages individuals to work more. 5.If the marginal propensity to consume in an economy is 0.75, what will be the effect of a reduction in government spending by $100 on the equilibrium output? Group of answer choices The equilibrium output will reduce by $400. The equilibrium output will reduce by $250. The equilibrium output will increase by $400. The equilibrium output will increase by $250.

Brandtly Industries invests a large sum of money in R&D; as a result, it retains and reinvests all of its earnings. In other words, Brandtly does not pay any dividends, and it has no plans to pay dividends in the near future. A major pension fund is interested in purchasing Brandtly's stock. The pension fund manager has estimated Brandtly's free cash flows for the next 4 years as follows: $2 million, $7 million, $11 million, and $14 million. After the fourth year, free cash flow is projected to grow at a constant 7%. Brandtly's WACC is 16%, the market value of its debt and preferred stock totals $46 million; and it has 22 million shares of common stock outstanding. Write out your answers completely. For example, 13 million should be entered as 13,000,000.

What is the present value of the free cash flows projected during the next 4 years? Round your answer to the nearest cent. Do not round your intermediate calculations.

$

What is the firm's horizon, or continuing, value? Round your answer to the nearest cent. $ What is the firm's total value today? Round your answer to the nearest cent. Do not round your intermediate calculations.

$

What is an estimate of Brandtly's price per share? Round your answer to the nearest cent. Do not round your intermediate calculations.

$

The Roche Radius, defined to the orbital distance at which a satellite tidally torn apart by the parent body, is named after Edward Roche, who first derived it in 1848. Recall that his radius is given by:

d = r*( 2 * M/m )^(1/3)  

Where r is the radius of the satellite, m is the mass of the satellite, and M is the mass of the parent body.

(a) Recast this equation in terms of the density of the satellite (p_m), the density of the parent body (p_M), and the radius of the parent body (R). (Hint: you may assume that each body is well approximated by a sphere.)

(b) Let's consider the Saturn system, and apply this equation. Saturn's moon Pan orbits the planet at a distance 1.34 x 10⁵ km; inside of a gap in the rings! Calculate the ratio of Pan's orbital radius to its calculated Roche Radius (p_Pan = 0.42 g/cm² , p_Saturn = 0.687 g/cm² , R_Saturn = 58,000 km). Comment on whether this moon is safe from tidal disruption, or not.

(c) Using what you know about the Roche Radius, and the above example, calculate the radius of the moon required to create the rings of Saturn as seen today (assuming that it was just one moon, with the density of pan and near the present-day orbit of Pan). The total mass in Saturn's rings is approximately 3 x 10¹⁹ kg. (Hint for calculating Saturn's mass: 0.687 g/cm² = 687 kg/m² )

A 65-year-old woman presents with a 10-year history of osteoarthritis,
primarily affecting her hips and knees and new complaints
of neuropathic pain due to type 2 diabetes that may have been
poorly controlled in the past. She has frequent complaints of joint
pain after walking or other activities and experiences stiffness in
the morning when she awakens or after sitting during bridge games.
Recently, she has had difficulty walking and has had several near
falls. She states that her feet feel heavy, numb, and tingling. The
pain feels like pins and needles. She displays no apparent distress,
but this is common in chronic pain. Because the pain is affecting
her active lifestyle, therapy is indicated to improve functional status.
Options for chronic nonmalignant pain include nonsteroidal
anti-inflammatory drugs (NSAIDs), opioids (preferably long-acting
forms), corticosteroids, and local anesthetics. Because the onset of
neuropathic pain is recent, appropriate therapy with antidepressants,
anticonvulsants, or lidocaine may be appropriate. After initiation
of an individualized regimen, the patient should be assessed for
adequacy of pain relief and the presence of side effects.

1) Summarize the Problem or Concern

2) Provide a brief Patho discussion on your primary diagnosis/problem/concern

3) Provide a Pharmacological Plan to treat your patient

4) Provide patient educational information specific to your pharmacological plan

Case-study: Proposed New Airport Runway for the Axe Stream Heights International Airport

Author: Ewan MacFarlane

Scenario (2b): In the past two months, members of the local community protest group, PEEPS, have continued to collect case-reports of illnesses attributed to close residential proximity to the airport. They now claim they have ‘uncovered’ a ‘cluster’ of 13 cases of cancer which they say are caused by exposure to pollutants and/or noise from the airport. Dr McGrimace and Ms Lightbody have reviewed these cases but can’t agree whether or not these cases actually are ‘disease cluster’ and/or if living near the airport is the cause. PEEPS has turned to you for advice.

Questions for discussion:

2b.2 ‘Disease cluster’ communication

Q: 1 Public communication and stakeholder involvement is particularly important when following-up a ‘disease cluster’ – how would you involve the public and stakeholders in this ‘cluster investigation’?

Q: 2 What principles of risk communication are relevant here and how would you ‘operationalise’ them in a situation like this?

Q: 3What can be the consequences of poor stakeholder/public communication in a situation like this?What are some real examples of ‘botched’ public/stakeholder communication in past cluster investigations and/or other environmental health crises? What went wrong and why? What was done to remedy the situation and did it work?

1. Other factors equal, changing the estimated population deviation rate from 2% to 4% would cause the required sample size to?

a. become indeterminate

b. increase

c. remain the same

d. decrease

2. Attributes sampling would be an appropriate method to use on which one of the following procedures in an audit program?

a. Review sales transactions for large and unreasonable amounts.

b. Observe whether the duties of the accounts receivable clerk are separate from handling cash.

c. Examine a sample of duplicate sales invoices for credit approval by the credit manager.

d. Review the aged schedule of accounts receivable to determine if receivables from officers are included

3. Proper separation of duties is useful to prevent various types of misstatements. Which of the following is not an essential?

a. personnel doing internal comparisons should be independent of those entering the original data.

b. separate the credit-granting function from the sales function

c. person having access to cash should not have access to checks from customers

d. anyone responsible for inputting sales and cash receipts transactions information into the computer should be denied access to cash

4. Which is consistent with billing customers before year-end for goods shipped near year-end?

a. AR/CR is high

b. REV/COS is high

c. REV/AR is high

d. none of the above

Research Problem 2. Five years ago Bridget decided to purchase a limited partnership interest in a fast-food restaurant conveniently located near the campus of Southeast State University. The general partnerof the restaurant venture promised her that the investment would prove to be a winner. During theprocess of capitalizing the business, $2 million was borrowed from Northside Bank; however, each of thepartners was required to pledge personal assets as collateral to sa±sfy the bank loan in the event thatthe restaurant defaulted. Bridget pledged shares of publicly traded stock (worth $200,000, basis of$75,000) to sa±sfy the bank’s requirement.The restaurant did a good business un±l just recently, when ²agrant health code viola±ons werediscovered and widely publicized by the media. As a result, business has declined to a point where therestaurant’s con±nued existence is doub³ul. In addi±on, the $2 million loan is now due for payment.Because the restaurant cannot pay, the bank has called for the collateral provided by the partners to beused to sa±sfy the debt. Bridget sells the pledged stock for $200,000 and forwards the proceeds to thebank. Bridget believes that her share of the restaurant’s current and suspended passive losses can o´setthe $125,000 gain from the stock sale. As a result, aµer ne¶ng the passive losses against the gain, noneof the gain is subject to tax. How do you react to Bridget’s posi±on?

Each part should be no more than 1 page in length.

Part I

The rules of accounting provide management with “some” latitude in determining when revenue is earned. Assume that a company normally required acceptance by its customers prior to recording revenue as earned, delivers a product to a customer near the end of the quarter. The company believes that customer acceptance is assured, but cannot obtain it prior to the quarter-end. Recording the revenue would assure “making its numbers” for the quarter. Although formal acceptance is not obtained, the salesperson records the sale, fully intending to obtain written acceptance as soon as possible.

1. What are the revenue recognition requirements in this case?

2. What are the ethical issues relating to this sale?

3. Assume you are on the board of directors of this company. What safeguards can you put in place to provide assurance that the company’s revenue recognition policy is followed?

Part II

Research and review what a financial statement derivative is. Identify an example and how company’s use to leverage the business activities.

Part III

A company’s return on net operating assets (RNOA = NOPAT/Average NOA) is commonly used to evaluate financial performance. If managers cannot increase NOPAT, they can still increase this return by reducing the amount of net operating assets (NOA). In bullet form, list specific ways that managers could reduce the following assets:

1. Receivables

2. Inventories

3. Plant, property equipment

CORPORATE VALUATION

Brandtly Industries invests a large sum of money in R&D; as a result, it retains and reinvests all of its earnings. In other words, Brandtly does not pay any dividends, and it has no plans to pay dividends in the near future. A major pension fund is interested in purchasing Brandtly's stock. The pension fund manager has estimated Brandtly's free cash flows for the next 4 years as follows: $2 million, $5 million, $10 million, and $15 million. After the fourth year, free cash flow is projected to grow at a constant 4%. Brandtly's WACC is 13%, the market value of its debt and preferred stock totals $40 million; and it has 20 million shares of common stock outstanding.

Write out your answers completely. For example, 13 million should be entered as 13,000,000.

What is the present value of the free cash flows projected during the next 4 years? Round your answer to the nearest cent. Do not round your intermediate calculations.

$

What is the firm's horizon, or continuing, value? Round your answer to the nearest cent.

$

What is the firm's total value today? Round your answer to the nearest cent. Do not round your intermediate calculations.

$

What is an estimate of Brandtly's price per share? Round your answer to the nearest cent. Do not round your intermediate calculations.

$