Problem 6-07

The following are monthly percentage price changes for four market indexes.

Compute the following.

1. Average monthly rate of return for each index. Round your answers to five decimal places.

   DJIA:

   S&P 500:

   Russell 2000:

   Nikkei:

2. Standard deviation for each index. Do not round intermediate calculations. Round your answers to four decimal places.

   DJIA:

   S&P 500:

   Russell 2000:

   Nikkei:

3. Covariance between the rates of return for the following indexes. Use a minus sign to enter negative values, if any. Do not round intermediate calculations. Round your answers to six decimal places.

   Covariance (DJIA, S&P 500):

   Covariance (S&P 500, Russell 2000):

   Covariance (S&P 500, Nikkei):

   Covariance (Russell 2000, Nikkei):

4. The correlation coefficients for the same four combinations. Use a minus sign to enter negative values, if any. Do not round intermediate calculations. Round your answers to four decimal places.

   Correlation (DJIA, S&P 500):

   Correlation (S&P 500, Russell 2000):

   Correlation (S&P 500, Nikkei):

   Correlation (Russell 2000, Nikkei):

5. Using the unrounded answers from parts (a), (b), and (d), calculate the expected return and standard deviation of a portfolio consisting of equal parts of (1) the S&P and the Russell 2000 and (2) the S&P and the Nikkei. Do not round intermediate calculations. Round your answers to five decimal places.

   Expected return (S&P 500 and Russell 2000):

   Standard deviation (S&P 500 and Russell 2000):

   Expected return (S&P 500 and Nikkei):

   Standard deviation (S&P 500 and Nikkei):

   Since S&P 500 and Russell 2000 have a strong -Select-negativepositive correlation, meaningful reduction in risk -Select-is not observedis observed if they are combined.

   Since S&P 500 and Nikkei have a strong -Select-negativepositive correlation, meaningful reduction in risk -Select-is not observedis observed if they are combined.

Address the following questions:1.Between journalizing and posting, which step changes the balance of an account? Explain.2.What are some key differences between each of three trial balances?

Analyzing & Recording Posting to the ledger (T-Accounts)Preparing a Unadjusted Trial Balance #1Adjustments for accruals and deferralsPreparing an Adjusted Trial Balance #2Prepare Financial StatementsClosing Temporary AccountPreparing a Post-Closing Trial Balance #3

Problem 16-12
Working Capital Cash Flow Cycle

Strickler Technology is considering changes in its working capital policies to improve its cash flow cycle. Strickler's sales last year were $2,825,000 (all on credit), and its net profit margin was 7%. Its inventory turnover was 5.5 times during the year, and its DSO was 43 days. Its annual cost of goods sold was $1,650,000. The firm had fixed assets totaling $495,000. Strickler's payables deferral period is 46 days. Assume 365 days in year for your calculations. Do not round intermediate calculations.

1. Calculate Strickler's cash conversion cycle. Round your answer to two decimal places.
         days
   
2. Assuming Strickler holds negligible amounts of cash and marketable securities, calculate its total assets turnover. Round your answer to two decimal places.
        x
   Calculate its ROA. Round your answer to two decimal places.
         %
   
3. Suppose Strickler's managers believe the annual inventory turnover can be raised to 8 times without affecting sale or profit margins. What would Strickler's cash conversion cycle have been if the inventory turnover had been 8 for the year? Round your answer to two decimal places.
         days
   What would Strickler's total assets turnover have been if the inventory turnover had been 8 for the year? Round your answer to two decimal places.
         x
   What would Strickler's ROA have been if the inventory turnover had been 8 for the year? Round your answer to two decimal places.
         %

Problem 16-12
Working Capital Cash Flow Cycle

Strickler Technology is considering changes in its working capital policies to improve its cash flow cycle. Strickler's sales last year were $3,140,000 (all on credit), and its net profit margin was 8%. Its inventory turnover was 7 times during the year, and its DSO was 36 days. Its annual cost of goods sold was $1,750,000. The firm had fixed assets totaling $515,000. Strickler's payables deferral period is 40 days. Assume 365 days in year for your calculations. Do not round intermediate calculations.

1. Calculate Strickler's cash conversion cycle. Round your answer to two decimal places.
        days
   
2. Assuming Strickler holds negligible amounts of cash and marketable securities, calculate its total assets turnover. Round your answer to two decimal places.
        x
   Calculate its ROA. Round your answer to two decimal places.
        %
   
3. Suppose Strickler's managers believe the annual inventory turnover can be raised to 10 times without affecting sale or profit margins. What would Strickler's cash conversion cycle have been if the inventory turnover had been 10 for the year? Round your answer to two decimal places.
        days
   What would Strickler's total assets turnover have been if the inventory turnover had been 10 for the year? Round your answer to two decimal places.
         x
   What would Strickler's ROA have been if the inventory turnover had been 10 for the year? Round your answer to two decimal places.
        %

Problem 16-12
Working Capital Cash Flow Cycle

Strickler Technology is considering changes in its working capital policies to improve its cash flow cycle. Strickler's sales last year were $2,357,500 (all on credit), and its net profit margin was 7%. Its inventory turnover was 5.5 times during the year, and its DSO was 43 days. Its annual cost of goods sold was $1,375,000. The firm had fixed assets totaling $397,500. Strickler's payables deferral period is 46 days. Assume 365 days in year for your calculations. Do not round intermediate calculations.

1. Calculate Strickler's cash conversion cycle. Round your answer to two decimal places.
        days
   
2. Assuming Strickler holds negligible amounts of cash and marketable securities, calculate its total assets turnover. Round your answer to two decimal places.
        x
   Calculate its ROA. Round your answer to two decimal places.
        %
   
3. Suppose Strickler's managers believe the annual inventory turnover can be raised to 10 times without affecting sale or profit margins. What would Strickler's cash conversion cycle have been if the inventory turnover had been 10 for the year? Round your answer to two decimal places.
        days
   What would Strickler's total assets turnover have been if the inventory turnover had been 10 for the year? Round your answer to two decimal places.
         x
   What would Strickler's ROA have been if the inventory turnover had been 10 for the year? Round your answer to two decimal places.
        %

Problem 16-12
Working Capital Cash Flow Cycle

Strickler Technology is considering changes in its working capital policies to improve its cash flow cycle. Strickler's sales last year were $2,825,000 (all on credit), and its net profit margin was 7%. Its inventory turnover was 5.5 times during the year, and its DSO was 43 days. Its annual cost of goods sold was $1,650,000. The firm had fixed assets totaling $495,000. Strickler's payables deferral period is 46 days. Assume 365 days in year for your calculations. Do not round intermediate calculations.

1. Calculate Strickler's cash conversion cycle. Round your answer to two decimal places.
        days
   
2. Assuming Strickler holds negligible amounts of cash and marketable securities, calculate its total assets turnover. Round your answer to two decimal places.
        x
   Calculate its ROA. Round your answer to two decimal places.
        %
   
3. Suppose Strickler's managers believe the annual inventory turnover can be raised to 8 times without affecting sale or profit margins. What would Strickler's cash conversion cycle have been if the inventory turnover had been 8 for the year? Round your answer to two decimal places.
        days
   What would Strickler's total assets turnover have been if the inventory turnover had been 8 for the year? Round your answer to two decimal places.
         x
   What would Strickler's ROA have been if the inventory turnover had been 8 for the year? Round your answer to two decimal places.
        %

Accounts receivable changes without bad debts Tara’s Textiles currently has credit sales of $360 million per year and an average collection period of 60 days. Assume that the price of Tara’s products is $60 per unit and that the variable costs are $55 per unit. The firm is considering an accounts receivable change that will result in a 20% increase in sales and a 20% increase in the average col-lection period. No change in bad debts is expected. The firm’s equal-risk oppor-tunity cost on its investment in accounts receivable is 14%. (Note: Use a 365-day year.) a. Calculate the additional profit contribution from sales that the firm will realize if it makes the proposed change. b. What marginal investment in accounts receivable will result? c. Calculate the cost of the marginal investment in accounts receivable. d. Should the firm implement the proposed change? What other information would be helpful in your analysis?

he following changes took place last year in Pavolik Company’s balance sheet accounts:

Asset and Contra-Asset Accounts   Liabilities and Stockholders' Equity Accounts
Cash   $   10   D   Accounts payable   $   40   I
Accounts receivable   $   135   I   Accrued liabilities   $   4   D
Inventory   $   70   D   Income taxes payable   $   13   I
Prepaid expenses   $   14   I   Bonds payable   $   140   I
Long-term investments   $   11   D   Common stock   $   65   D
Property, plant, and equipment   $   175   I   Retained earnings   $   54   I
Accumulated depreciation   $   55   I              
D = Decrease; I = Increase.

Long-term investments that cost the company $11 were sold during the year for $21 and land that cost $20 was sold for $14. In addition, the company declared and paid $30 in cash dividends during the year. Besides the sale of land, no other sales or retirements of plant and equipment took place during the year. Pavolik did not retire any bonds during the year or issue any new common stock.

The company’s income statement for the year follows:

Sales               $   690
Cost of goods sold                  400
Gross margin                  290
Selling and administrative expenses                  184
Net operating income                  106
Nonoperating items:                    
Loss on sale of land   $   (6   )           
Gain on sale of investments      10            4
Income before taxes                  110
Income taxes                  33
Net income               $   77

The company’s beginning cash balance was $105 and its ending balance was $95.

Required:

Use the direct method to convert the company's income statement to a cash basis. (Adjustment amounts that are to be deducted should be indicated with a minus sign.)

Problem 6-25 Prepare and Interpret Income Statements; Changes in Both Sales and Production; Lean Production [LO6-1, LO6-2, LO6-3] Starfax, Inc., manufactures a small part that is widely used in various electronic products such as home computers. Results for the first three years of operations were as follows (absorption costing basis): Year 1 Year 2 Year 3 Sales $ 1,000,000 $ 800,000 $ 1,000,000 Cost of goods sold 740,000 520,000 785,000 Gross margin 260,000 280,000 215,000 Selling and administrative expenses 230,000 200,000 230,000 Net operating income (loss) $ 30,000 $ 60,000 $ (15,000 ) In the latter part of Year 2, a competitor went out of business and in the process dumped a large number of units on the market. As a result, Starfax’s sales dropped by 20% during Year 2 even though production increased during the year. Management had expected sales to remain constant at 50,000 units; the increased production was designed to provide the company with a buffer of protection against unexpected spurts in demand. By the start of Year 3, management could see that it had excess inventory and that spurts in demand were unlikely. To reduce the excessive inventories, Starfax cut back production during Year 3, as shown below: Year 1 Year 2 Year 3 Production in units 50,000 60,000 40,000 Sales in units 50,000 40,000 50,000 Additional information about the company follows: The company’s plant is highly automated. Variable manufacturing expenses (direct materials, direct labor, and variable manufacturing overhead) total only $4.00 per unit, and fixed manufacturing overhead expenses total $540,000 per year. A new fixed manufacturing overhead rate is computed each year based that year's actual fixed manufacturing overhead costs divided by the actual number of units produced. Variable selling and administrative expenses were $3 per unit sold in each year. Fixed selling and administrative expenses totaled $80,000 per year. The company uses a FIFO inventory flow assumption. (FIFO means first-in first-out. In other words, it assumes that the oldest units in inventory are sold first.) Starfax’s management can’t understand why profits doubled during Year 2 when sales dropped by 20% and why a loss was incurred during Year 3 when sales recovered to previous levels. Required: 1. Prepare a contribution format variable costing income statement for each year. 2. Refer to the absorption costing income statements above. a. Compute the unit product cost in each year under absorption costing. Show how much of this cost is variable and how much is fixed. b. Reconcile the variable costing and absorption costing net operating income figures for each year. 5b. If Lean Production had been used during Year 2 and Year 3, what would the company’s net operating income (or loss) have been in each year under absorption costing?

Match them please

Changes its signature with each copy made during replication

completely rewrites itself each time it is replicated, sometimes changing its behavior

exploits browser and plugin vulnerabilities to download and install malware without the user's knowledge, with the user having been specifically targeted

a website with multiple transparent or opaque layers, tricking the user into clicking on a different button than they intended

a seemingly useful program that contains hidden harmful code