Solano Company has sales of $720,000, cost of goods sold of
$480,000, other operating expenses of $45,000, average invested
assets of $2,150,000, and a hurdle rate of 10 percent.
1. Determine Solano’s return on investment (ROI), investment turnover, profit margin, and residual income. (Do not round your intermediate calculations. Enter your ROI and Profit Margin percentage answer to the nearest 2 decimal places, (i.e., 0.1234 should be entered as 12.34%). Round your Investment Turnover answer to 4 decimal places.)
|
2. Several possible changes that Solano could
face in the upcoming year follow. Determine each scenario’s impact
on Solano’s ROI and residual income. (Note: Treat each scenario
independently.) (Enter your ROI percentage answers to 2
decimal places, (i.e., 0.1234 should be entered as
12.34%.))
a. Company sales and cost of
goods sold increase by 40 percent.
|
b. Operating expenses decrease by
$9,000.
|
c. Operating expenses increase
by 20 percent.
d. Average invested assets increase by
$410,000.
|
In: Accounting
Preparing a consolidated income statement - with noncontrolling interest, but no AAP or intercompany profits
A parent company purchased an 80% interest in its subsidiary several years ago with no AAP (i.e., purchased at book value). Each reports the following income statement for the current year.
| Parent | Subsidiary | |
|---|---|---|
| Income statement: | ||
| Sales | $7,500,000 | $1,125,000 |
| Cost of goods sold | (5,250,000) | (675,000) |
| Gross profit | 2,250,000 | 450,000 |
| Income (loss) from subsidiary | 126,000 | 0 |
| Operating expenses | (1,425,000) | (292,500) |
| Net income | $951,000 | $157,500 |
a. Compute the Income (loss) from subsidiary of $126,000 reported by the parent company.
| AnswerNet incomeNet income attributable to noncontrolling interestsNet income attributable to parentNet income of subsidiaryParent's ownership percentage | Answer | |
| AnswerNet incomeNet income attributable to noncontrolling interestsNet income attributable to parentNet income of subsidiaryParent's ownership percentage | Answer | % |
| Income (loss) from subsidiary | Answer |
b. Prepare the consolidated income statement for the current year.
Do not use negative signs with your answers.
| Consolidated Income Statement | |
|---|---|
| Sales | Answer |
| Cost of goods sold | Answer |
| Gross profit | Answer |
| Income (loss) from subsidiary | Answer |
| Operating expenses | Answer |
| AnswerNet incomeNet income attributable to noncontrolling interestsNet income attributable to parentNet income of subsidiary | Answer |
| AnswerNet incomeNet income attributable to noncontrolling interestsNet income attributable to parentNet income of subsidiary | Answer |
| AnswerNet incomeNet income attributable to noncontrolling interestsNet income attributable to parentNet income of subsidiary | Answer |
PreviousSave AnswersNext
In: Accounting
Barbour Corporation, located in Buffalo, New York, is a retailer of hightech products and is known for its excellent quality and innovation. Recently the firm conducted a relevant cost analysis of one of its product that has only two products, T-1 and T-2. The sales for T-2 are decreasing and the purchase costs are increasing. The firm might drop T-2 and sell only T-1.
Barbour allocates fixed costs to products on the basis of sales revenue. When the president of Barbour saw the income statement, he agreed that T-2 should be dropped. If this is done, sales of T-1 are expected to increase by 10% next year; the firm’s cost structure will remain the same.
| T1 | T2 | |
|---|---|---|
| SALES | $295,000 | $336,000 |
| VARIABLE COGS | 89,000 | 168,000 |
| CONTRIBUTION MARGIN | 206,000 | 168,000 |
| EXPENSES: | ||
| FIXED CORPORATE COSTS | 79,000 | 94,000 |
| VARIABLE SELLING / ADMIN | 29,000 | 69,000 |
| FIXED SELLING / ADMIN | 31,000 | 40,000 |
| TOTAL EXPENSES: | 139,000 |
203,000 |
| OPERATING INCOME/LOSS | 67,000 | (35,000) |
|
1. Find the expected change in annual operating income by dropping T-2 and selling only T-1. 2. By what percentage would sales from T-1 have to increase in order to make up the financial loss form dropping T-2? Round to 2 decimal places. 3. What is the required percentage increase in sales from T-1 to compensate for lost margin from T-2, if total fixed costs can be reduced to $57,000? Round to 2 decimal places. |
In: Accounting
Section A1: All staff members receive an annual bonus of $200 plus an additional percentage of their Annual Income. Each staff member has been allocated their own percentage bonus rate (column C). In D6:D16 calculate each staff members Bonus
Section A2: Using the % Superannuation given to all staff. Calculate the annual Super amount paid to each staff member using the value in 9.5%. Copy the formula down to the last cell (to get full marks, a named range or an absolute cell reference must be used).
Section A3: In 'total package' calculate the total package for each staff member (Annual Salary, Bonus and Super). Adjust the spreadsheet so that the “#####” problem is addressed.
Section A4: Find total labour cost
Section A5: Inserest a row under the total labour cost and find the average total package
Section A6: use a formula to calculate the highest Total Package paid to an individual staff member (i.e. the biggest total package)
PLEASE PROVIDE AN EXPLAINATIONS during each step
Table is provided below.
| Employee Number | Annual | Bonus Rate | Bonus Amount | Annual Super | Total Package |
| 10026 | $ 49,283.00 | 1% | |||
| 10027 | $ 33,968.00 | 2% | |||
| 10030 | $ 32,158.00 | 2% | |||
| 10032 | $ 45,435.00 | 0% | |||
| 10033 | $ 51,722.00 | 0% | |||
| 10034 | $ 42,040.00 | 2% | |||
| 10035 | $ 44,161.00 | 1% | |||
| 10036 | $ 41,368.00 | 3% | |||
| 10037 | $ 57,029.00 | 2% | |||
| 10038 | $ 33,193.00 | 1% | |||
| 10039 | $ 37,410.00 | 0% | |||
| Total | |||||
| Super% | 9.50% | Highest |
In: Accounting
Use the Target Corporation’s Form 10-K to answer the following questions related to Target’s 2015 fiscal year (year ended January 30, 2016). Target’s Form 10-K is available on the company’s website ir through the SEC’s EDGAR database. Appendix A provides instructions for using the EDGAR database.
Required
Information
The guide provides you with information that will make you better in case analysis, information synthesis, evaluation, and presentation. This will enhance your understanding of the issues discussed in the case and enable you to answer questions fully and in an informed manner that is logical and systematic.
Also included in the folder is a paper from the Harvard Business School titled: An Introduction to Cases. This paper provides an in depth look at the use of case method to enhance your learning experience. You are encouraged to read the two papers before beginning case analysis for this course or any other course.
For case studies, the write-up must at least answer the following questions:
What are the main problems or issues of the case?
What alternatives have been attempted to resolve the problems or issues?
What recommendations can be made to resolve the case?
Relevance of the issues raised in the case to real life business problems and applications
Other questions raised by the instructor
( 750- 1000 words)
In: Accounting
Last year Miami Rivet had $5 million in operating income (EBIT). Its depreciation expense was $1 million, its interest expense was $1 million, and its corporate tax rate was 25%. At year-end, it had $14 million in operating current assets, $3 million in accounts payable, $1 million in accruals, $2 million in notes payable, and $15 million in net plant and equipment. Assume Miami Rivet has no excess cash. Miami Rivet uses only debt and common equity to fund its operations. (In other words, Miami Rivet has no preferred stock on its balance sheet.) Miami Rivet had no other current liabilities. Assume that Miami Rivet only noncash item was depreciation. Miami Rivet has 500,000 common shares outstanding, and the common stock amount on the balance sheet is $5 million. The company has not issued or repurchased common stock during the year. Last year’s balance in retained earnings was $11.2 million, and the firm paid out dividends of $1.8 million during the year. If the firm’s stock price at year-end is $52, what is the firm’s market value added (MVA)? If the firm’s after-tax percentage cost of capital is 9%, what is the firm’s Long-term debt at year-end? If the firm’s after-tax percentage cost of capital is 9%, what is the firm’s EVA at year-end?
I only need question about EVA Answered please!!! THank you!!!
In: Finance
The Wiley Oakley Co. has just gone public. Under a firm
commitment agreement, the company received $20.95 for each of the
6.58 million shares sold. The initial offering price was $22.80 per
share, and the stock rose to $29.31 per share in the first few
minutes of trading. The company paid $908,000 in legal and other
direct costs and $183,000 in indirect costs.
What is the net amount raised? (Do not round intermediate
calculations. Enter your answer in dollars, not millions of
dollars, e.g., 1,234,567. Round your answer to the nearest whole
number, e.g., 32.)
Net amount raised
$
What are the total direct costs? (Do not round intermediate
calculations. Enter your answer in dollars, not millions of
dollars, e.g., 1,234,567. Round your answer to the nearest whole
number, e.g., 32.)
Direct costs
$
What are the total indirect costs? (Do not round
intermediate calculations. Enter your answer in dollars, not
millions of dollars, e.g., 1,234,567. Round your answer to the
nearest whole number, e.g., 32.)
Indirect costs
$
What are the total costs? (Do not round intermediate
calculations. Enter your answer in dollars, not millions of
dollars, e.g., 1,234,567. Round your answer to the nearest whole
number, e.g., 32.)
Total costs
$
What was the flotation cost as a percentage of funds raised?
(Do not round intermediate calculations. Enter your answer
as a percent rounded to 2 decimal places, e.g.,
32.16.)
Flotation cost percentage
%
In: Finance
The Wiley Oakley Co. has just gone public. Under a firm
commitment agreement, the company received $21.05 for each of the
6.59 million shares sold. The initial offering price was $22.90 per
share, and the stock rose to $29.41 per share in the first few
minutes of trading. The company paid $909,000 in legal and other
direct costs and $184,000 in indirect costs.
What is the net amount raised? (Do not round intermediate
calculations. Enter your answer in dollars, not millions of
dollars, e.g., 1,234,567. Round your answer to the nearest whole
number, e.g., 32.)
Net amount raised
$
What are the total direct costs? (Do not round intermediate
calculations. Enter your answer in dollars, not millions of
dollars, e.g., 1,234,567. Round your answer to the nearest whole
number, e.g., 32.)
Direct costs
$
What are the total indirect costs? (Do not round
intermediate calculations. Enter your answer in dollars, not
millions of dollars, e.g., 1,234,567. Round your answer to the
nearest whole number, e.g., 32.)
Indirect costs
$
What are the total costs? (Do not round intermediate
calculations. Enter your answer in dollars, not millions of
dollars, e.g., 1,234,567. Round your answer to the nearest whole
number, e.g., 32.)
Total costs
$
What was the flotation cost as a percentage of funds raised?
(Do not round intermediate calculations. Enter your answer
as a percent rounded to 2 decimal places, e.g.,
32.16.)
Flotation cost percentage
%
In: Finance
8.4 An airline is choosing between two engine systems for its planes. Each has the same useful life and the same repair record and maintenance costs.
? System A costs US$2 million and uses 30,000 gallons per 1,000 hours of operation at the average load of passenger service.
? System B costs US$3 million and uses 20,000 gallons per 1,000 hours of operation at the same level of passenger service.
In addition, the following information is relevant to both engine systems:
? Both systems have four-year lives before any major overhaul is required. At the end of the fourth year, each system has a salvage value equal to 10% of its initial investment.
? The fuel consumption of both systems is expected to increase at a rate of 5% per year because of degrading engine efficiency.
? The price of jet fuel on 31 March 2017 was US$15 per gallon. The airline will use this price to evaluate the two systems.
? The airline will assume 2,000 hours of operation per year and use a MARR of 10%.
Use the annual worth (AW) method to compare the two engine systems. Which one should the airline choose? Explain your answers in the following steps:
a) Calculate the annual equivalent cost of fuel (AWA(10%)fuel) for System A.
b) Calculate the total annual equivalent cost (AWA(10%)) of System A.
c) Calculate the annual equivalent cost of fuel (AWB(10%)fuel) for System B.
d) Calculate the total annual equivalent cost (AWB(10%)) of System B.
e) State your conclusion.
f) If the airline expects the price of jet fuel to rise significantly in the near future, will it make the same choice? Explain your answer briefly without any calculation.
In: Economics
8.4 An airline is choosing between two engine systems for its planes. Each has the same useful life and the same repair record and maintenance costs.
System A costs US$2 million and uses 30,000 gallons per 1,000 hours of operation at the average load of passenger service.
System B costs US$3 million and uses 20,000 gallons per 1,000 hours of operation at the same level of passenger service.
In addition, the following information is relevant to both engine systems:
Both systems have four-year lives before any major overhaul is required. At the end of the fourth year, each system has a salvage value equal to 10% of its initial investment.
The fuel consumption of both systems is expected to increase at a rate of 5% per year because of degrading engine efficiency.
The price of jet fuel on 31 March 2017 was US$15 per gallon. The airline will use this price to evaluate the two systems.
The airline will assume 2,000 hours of operation per year and use a MARR of 10%.
Use the annual worth (AW) method to compare the two engine systems. Which one should the airline choose? Explain your answers in the following steps:
a) Calculate the annual equivalent cost of fuel (AWA(10%)fuel) for System A.
b) Calculate the total annual equivalent cost (AWA(10%)) of System A.
c) Calculate the annual equivalent cost of fuel (AWB(10%)fuel) for System B.
d) Calculate the total annual equivalent cost (AWB(10%)) of System B.
e) State your conclusion.
f) If the airline expects the price of jet fuel to rise significantly in the near future, will it make the same choice? Explain your answer briefly without any calculation.
In: Finance