Problem 3-23
Fiterman Inc. has the following summarized financial statements ($000):
| INCOME STATEMENT | |
| Revenue | $25,970 |
| Cost/Expense | 16,039 |
| EBIT | $ 9,931 |
| Interest (8%) | 1,210 |
| EBT | $ 8,721 |
| Tax (35%) | 3,052 |
| Net income | $ 5,669 |
| BALANCE SHEET | ||||
| Assets | Liabilities&Equity | |||
| Current Assets | $ 8,217 | Current Liabilities | $ 7,042 | |
| Fixed Assets | 30,636 | Debt | $17,167 | |
| Equity | 14,644 | |||
| Total Capital | $31,811 | |||
| Total Assets | $38,853 | Total Liab&Equity | $38,853 | |
Fiterman’s equity investors have typically demanded an expected return of at least 25% before they will buy the company’s stock. Evaluate Fiterman’s performance using both ROE and EVA® approaches. Do not round intermediate calculations. Round your answer for ROE to one decimal place, don't include the "%". Round your answer for EVA® to the nearest dollar, don't include the "$".
ROE %
EVA® $
In: Finance
1. Braswell & Associates has a DSO of 27 days, and its annual sales are $6,200,000. What is its accounts receivable balance? Assume it uses a 365-day year.
| a. |
$167,400,000 |
|
| b. |
$629 |
|
| c. |
$344,130 |
|
| d. |
$229,630 |
|
| e. |
$458,630 |
2.A firm has a profit margin of 2.5 percent and an equity multiplier of 2. Its sales are $120 million and it has total assets of $30 million. What is its return on equity (ROE)?
| a. |
1.25% |
|
| b. |
20.00% |
|
| c. |
32.00% |
|
| d. |
5.00% |
|
| e. |
10.00% |
3.
You are given the following information about a
company:
| Shareholders’ equity (from balance sheet) |
$1,588,000 |
| Price / earnings ratio |
6.7 |
| Common shares outstanding |
66,000 |
| Market / book ratio |
1.9 |
Calculate the price of a share of the company’s common stock.
| a. |
$161.21 |
|
| b. |
$84.85 |
|
| c. |
$19.34 |
|
| d. |
$45.72 |
|
| e. |
$6.82 |
In: Finance
You own a company providing dog-walking and dog-sitting services in the West Chester area. As part of your compensation strategy, you have decided to offer benefits. You have 27 employees, 20 of whom are full-time and 7 of whom are part-time. Your employees are a mix of college students, young professionals, and retirees looking to stay active. The average full-time salary for your employees is $75,000 a year (pre-tax).
Within your benefits package, you have the ability to offer the following benefits: health insurance, dental and vision insurance, life insurance, dependent care, retirement savings, and paid sick leave.
1. Who will be protected or benefited?
2. How much choice will employees have from an array of benefits?
3. How will benefits be financed?
4. Are your chosen benefits legally defensible?
In: Economics
To test whether the mean time needed to mix a batch of material is the same for machines produced by three manufacturers, the Jacobs Chemical Company obtained the following data on the time (in minutes) needed to mix the material.
|
Manufacturer |
||||
| 1 | 2 | 3 | ||
| 25 | 30 | 22 | ||
| 31 | 28 | 21 | ||
| 29 | 33 | 25 | ||
| 27 | 29 | 24 | ||
a. Use these data to test whether the
population mean times for mixing a batch of material differ for the
three manufacturers. Use alpha= .05 .
Compute the values below (to 2 decimals, if necessary).
| Sum of Squares, Treatment | |
| Sum of Squares, Error | |
| Mean Squares, Treatment | |
| Mean Squares, Error |
Calculate the value of the test statistic (to 2 decimals).
b. At the alpha=.05 level of significance, use Fisher's LSD procedure to test for the equality of the means for manufacturers and .
Calculate Fisher's LSD Value (to 2 decimals).
In: Statistics and Probability
eBook
Calculator
Inventory Costing Methods
Oppenheimer Inc. reported the following information for the month of May:
| Inventory, May 1 | 65 units @ $26 | |
| Purchase: | ||
| May 7 | 45 units @ $28 | |
| May 18 | 67 units @ $29 | |
| May 27 | 48 units @ $31 |
During May, Oppenheimer sold 141 units. The company uses a periodic inventory system.
Required:
What is the value of ending inventory and cost of goods sold for May under the following assumptions.
| Assumption | Cost of Goods Sold | Ending Inventory |
| 1. Of the 141 units sold, 55 cost $26, 31 cost $28, 50 cost $29, and 5 cost $31. | $ | $ |
| 2. FIFO | $ | $ |
| 3. LIFO | $ | $ |
| 4. Weighted average method (Round average unit
cost to the nearest cent, and round all other calculations and your final answers to the nearest dollar.) |
$ | $ |
In: Accounting
| | Year 0 | Year 1 | Year 2 | Year 3 |
| Revenues | | 363,688.342 | 363,688.342 | 363,688.342 |
| - Cost of Goods Sold | | -150,000 | -150,000 | -150,000 |
| - Depreciation | -80,000 | -80,000 | -80,000 | |
| = EBIT | | 133,688.342 | 133,688.342 | 133,688.342 |
| - Taxes (35%) | -46,790.9196 | -46,790.9196 | -46,790.9196 | |
| = Unlevered net income | | 86,897.4221 | 86,897.4221 | 86,897.4221 |
| + Depreciation | | 80,000 | 80,000 | 80,000 |
| - Additions to Net Working Capital | | -20,000 | -20,000 | -20,000 |
| - Capital Expenditures | -300,000 | |||
| = Free Cash Flow | | 146,897.422 | 146,897.422 | 146,897.422 |
Visby Rides, a livery car company, is considering buying some new
luxury cars. After extensive research, they come up with the above
estimates of free cash flow from this project. By how much could
the discount rate rise before the net present value (NPV) of this
project is zero, given that it is currently 10%?
12
17
22
27
In: Finance
In: Statistics and Probability
The following data are available for one of the products sold by Dahlia Company, which uses a perpetual inventory system: Mar. 1 Beginning inventory, 500 units at $4.00 each 7 Purchased 2,000 units at $5.00 each 12 Sold 2,300 units 17 Purchased 1,800 units at $6.00 each 27 Sold 1,900 units 1. Calculate cost of goods sold for March and the dollar amount of ending inventory on March 31 assuming FIFO is used. 2. Calculate cost of goods sold for March and the dollar amount of ending inventory on March 31 assuming LIFO is used. 3. Calculate cost of goods sold for March and the dollar amount of ending inventory on March 31 assuming average cost is used. (Round average cost per unit to two decimal places. Round other amounts to the nearest dollar.)
In: Accounting
VanderMeer Inc. reported the following information for the month of February:
| Inventory, February 1 | 57 units @ $20 | |
| Purchase: | ||
| February 7 | 48 units @ $22 | |
| February 18 | 67 units @ $24 | |
| February 27 | 38 units @ $26 |
During February, VanderMeer sold 136 units. The company uses a periodic inventory system.
Required:
What is the value of ending inventory and cost of goods sold for February under the following assumptions.
| Assumption | Cost of Goods Sold | Ending Inventory |
| 1. Of the 136 units sold, 48 cost $20, 34 cost $22, 50 cost $24, and 4 cost $26. | $ | $ |
| 2. FIFO | $ | $ |
| 3. LIFO | $ | $ |
| 4. Weighted average method (Round average unit
cost to the nearest cent, and round all other calculations and your final answers to the nearest dollar.) |
$ | $ |
In: Accounting
Early in 2021, the Excalibur Company began developing a new software package to be marketed. The project was completed in December 2021 at a cost of $102 million. Of this amount, $68 million was spent before technological feasibility was established. Excalibur expects a useful life of five years for the new product with total revenues of $170 million. During 2022, revenue of $51 million was recognized.
Required:
1. Prepare a journal entry to record the 2021
development costs.
2. Calculate the required amortization for
2022.
3. Determine the amount to report for the computer
software costs in the December 31, 2022, balance sheet.
In: Accounting