Questions
Five years ago, a company was considering the purchase of 65 new diesel trucks that were...

Five years ago, a company was considering the purchase of 65 new diesel trucks that were 14.73% more fuel-efficient than the ones the firm is now using. The company uses an average of 10 million gallons of diesel fuel per year at a price of $1.25 per gallon. If the company manages to save on fuel costs, it will save $1.875 million per year (1.5 million gallons at $1.25 per gallon). On this basis, fuel efficiency would save more money as the price of diesel fuel rises (at $1.35 per gallon, the firm would save $2.025 million in total if he buys the new trucks).

Consider two possible forecasts, each of which has an equal chance of being realized. Under assumption #1, diesel prices will stay relatively low; under assumption #2, diesel prices will rise considerably. The 65 new trucks will cost the firm $5 million. Depreciation will be 25.44% in year 1, 38.22% in year 2, and 36.45% in year 3. The firm is in a 39% income tax bracket and uses a 11% cost of capital for cash flow valuation purposes. Interest on debt is ignored. In addition, consider the following forecasts:

Forecast for assumption #1 (low fuel prices):

Price of Diesel Fuel per Gallon

Prob. (same for each year)

Year 1

Year 2

Year 3

0.1

$0.8

$0.89

$1.02

0.2

$1.01

$1.1

$1.11

0.3

$1.1

$1.21

$1.31

0.2

$1.29

$1.47

$1.45

0.2

$1.4

$1.54

$1.61

Forecast for assumption #2 (high fuel prices):

Price of Diesel Fuel per Gallon

Prob. (same for each year)

Year 1

Year 2

Year 3

0.1

$1.22

$1.53

$1.71

0.3

$1.33

$1.71

$2

0.4

$1.8

$2.32

$2.52

0.2

$2.2

$2.51

$2.81

Required: Calculate the percentage change on the basis that an increase would take place from the NPV under assumption #1 to the probability-weighted (expected) NPV.

Answer% Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places (for example: 28.31%).

Further Information (solution steps):

  • Step (1): Calculate the annual expected price of diesel per gallon under each assumption, based on the probabilities outlined in the inputs section.
  • Step (2): Using the annual expected fuel prices calculated in step (1), determine the increase in annual savings created by the proposed efficiency for each assumption.
  • Step (3): Find the increased cash flow after taxes (CFAT) for both forecasts, based on the annual increase in fuel savings determined in step (2) as the increase in earnings before depreciation and taxes (EBDT), and the starting point from which profit is calculated for each assumption. As part of this step, you must establish annual depreciation (remember: depreciation is a noncash charge).
  • Step (4): Considering the increased annual CFAT produced in step (3), calculate the NPV of the truck purchases for each assumption, based on the discount rate (cost of capital) indicated in the inputs section
  • Step (5): In view of the outcomes produced in step (4), estimate the combined NPV weighed by the probability of each assumption.
  • Step (6): Finally, calculate the percentage difference hypothesizing that an increase took place starting from the NPV for assumption #1 to the combined NPV worked out in step (5).

In: Finance

Operating Section of Statement of Cash Flows (Indirect Method) Assume following are the income statement and...

Operating Section of Statement of Cash Flows (Indirect Method)
Assume following are the income statement and balance sheet for Nike for the year ended May 31, 2012, and a forecasted income statement and balance sheet for 2013.

Income Statement
($ millions) 2012 actual 2013 Est.
Revenues $ 18,627.0 $ 21,253.0
Cost of sales 10,239.6 11,689.0
Gross margin 8,387.4 9,564.0
Selling and administrative expense 5,953.7 6,801.0
Operating profit 2,433.7 2,763.0
Interest income, net 77.1 77.1
Other (expense) income, net (7.9) (7.9)
Income before income taxes 2,502.9 2,832.2
Income taxes 619.5 684.0
Net income $ 1,883.4 $ 2,148.2
Balance Sheet
($ millions) 2012 actual 2013 Est.
Assets
Cash and equivalents $ 2,162.9 $ 3,355.4
Short-term investments 642.2 642.2
Accounts receivable, net 2,759.3 3,188.0
Inventories 2,438.4 2,740.0
Deferred income taxes 227.2 259.0
Prepaid expenses and other current assets 609.3 680.0
Total current assets 8,839.3 10,864.6
Property, plant and equipment* 4,103.0 4,613.0
Accumulated depreciation (2,211.9) (2,556.9)
Property, plant and equipment, net 1,891.1 2,056.1
Goodwill and other current assets 1,191.9 1,152.9
Deferred income taxes and other assets 520.4 594.0
Total Assets $ 12,442.7 $ 14,667.6
Liabilities and Equity
Current portion of long-term debt $ 6.3 $ 31.3
Notes payable 177.7 107.7
Accounts payable 1,287.6 1,488.0
Accrued liabilities 1,761.9 2,027.0
Income taxes payable 88.0 140.0
Total current liabilities 3,321.5 3,794.0
Long-term debt 441.1 408.8
Deferred income taxes and other liabilities 854.5 976.0
Total liabilities 4,617.1 5,178.8
Redeemable preferred stock 0.3 0.3
Common stock 2.8 2.8
Capital in excess of stated value 2,497.8 2,497.8
Accumulated other comprehensive income 251.4 251.4
Retained earnings 5,073.3 6,736.5
Stockholders' equity 7,825.6 9,488.8
Total liabilities and equity $ 12,442.7 $ 14,667.6

* Gross property, plant and equipment and accumulated depreciation are inserted in the balance sheet; both are taken from footnotes to the financial statements.

Prepare the net cash flows from operating activities section of a forecasted statement of cash flows for 2013 using the indirect method. Treat current and noncurrent deferred tax assets and liabilities as operating. Operating expenses (such as Cost of sales and Selling and administrative expense) for 2013 include estimated depreciation expense of $309 million and amortization expense of $39 million. Estimated 2013 retained earnings includes dividends of $467 million.

Enter answers using one decimal place as shown in the above financial statements.

Use negative signs with answers to show a decrease in cash.

Nike, Inc.
STATEMENT OF CASH FLOWS ($ MILLIONS)
Forecasted FOR YEAR ENDED May 31, 2013
Net income $Answer
Add (Deduct) Items to Convert Net Income to Cash Basis
Depreciation Answer
Amortization Answer
Accounts receivable Answer
Inventories Answer
Deferred Income taxes Answer
Prepaid expenses and other current assets Answer
Deferred income taxes and other assets Answer
Accounts payable Answer
Accrued liabilities Answer
Income taxes payable Answer
Deferred income taxes and other liabilities Answer
Net cash flow from operating activities $Answer

In: Accounting

Question 1 (1 point) Airline companies recognize that empty seats represent lost revenues that can never...

Question 1 (1 point)

Airline companies recognize that empty seats represent lost revenues that can never be recovered. To avoid losing revenues, the companies often book more passengers than there are available seats. Then, when a flight experiences fewer no-shows than expected, some passengers are 'bumped' from their flights (are denied boarding). Incentives are provided to encourage passengers to give up their reserved seat voluntarily, but occasionally some passengers are involuntarily bumped from the flight. Obviously, these incidents can reflect poorly on customer satisfaction. Suppose Southwest Airlines would like to estimate the true proportion of involuntarily bumped passengers across all domestic flights in the industry. In a pilot sample of 863 domestic passengers, 259 were involuntarily bumped. What is the estimate of the population proportion and what is the standard error of this estimate?

Question 1 options:

1)

 The true population proportion is needed to calculate this.

2)

 Estimate of proportion: 0.3, Standard error: 0.0156.

3)

 Estimate of proportion: 0.7, Standard error: 0.0005.

4)

 Estimate of proportion: 0.7, Standard error: 0.0156.

5)

 Estimate of proportion: 0.3, Standard error: 0.0005.

Question 2 (1 point)

Approximately 43.73% of all businesses are owned by women. If you take a sample of 180 businesses in Michigan, what is the probability that less than 45.32% of them would be owned by women?

Question 2 options:

1)

 0.6664

2)

 0.3336

3)

 9.8370

4)

 0.5000

5)

 >0.999

Question 3 (1 point)

Fill in the blank. In a drive thru performance study, the average service time for McDonald's is 217.32 seconds with a standard deviation of 8.5 seconds. A random sample of 62 times is taken. There is a 26% chance that the average drive-thru service time is greater than ________ seconds.

Question 3 options:

1)

 There is not enough information to determine this.

2)

 211.85

3)

 222.79

4)

 218.01

5)

 216.63

Question 4 (1 point)

Experimenters injected a growth hormone gene into thousands of carp eggs. Of the 289 carp that grew from these eggs, 23 incorporated the gene into their DNA (Science News, May 20, 1989). With a confidence of 90%, what is the margin of error for the proportion of all carp that would incorporate the gene into their DNA?

Question 4 options:

1)

 0.0261

2)

 0.0015

3)

 0.0204

4)

 0.0159

5)

 0.0004

Question 5 (1 point)

You are interested in getting an investment portfolio started with any extra money you make from your part time job while also going to school. While flipping through the latest edition of Money magazine, you read an article that of a survey of magazine subscribers, 179 were randomly selected and analyzed. A 99% confidence interval was constructed for the proportion of all subscribers who made money in the previous year in their investments, which was ( 0.7216 , 0.8762 ). What is the correct interpretation of this confidence interval?

Question 5 options:

1)

 We are 99% confident that of the 179 respondents, between 0.7216 and 0.8762 of them made more than they lost.

2)

 We are certain that 99% of subscribers made between 0.7216 and 0.8762.

3)

 We cannot determine the proper interpretation of this interval.

4)

 We are 99% confident that the proportion of all Money magazine subscribers sampled that made money in the previous year from their investments is between 0.7216 and 0.8762.

5)

 We are 99% confident that the proportion of all Money magazine subscribers that made money in the previous year from their investments is between 0.7216 and 0.8762.

In: Statistics and Probability

Kerry Manufacturing Company is a German subsidiary of a U.S. company. Kerry records its operations and...

Kerry Manufacturing Company is a German subsidiary of a U.S. company. Kerry records its operations
and prepares financial statements in euros. However, its functional currency is the British pound.
Kerry was organized and acquired by the U.S. company on June 1, 20X4. The cumulative translation
adjustment as of December 31, 20X6, was $79,860. The value of the subsidiary's retained earnings expressed
in British pounds and U.S. dollars as of December 31, 20X7, was 365,000 pounds and $618,000, respectively.
On March 1, 20X7, Kerry declared a dividend of 120,000 euros. The trial balance of Kerry in euros as of
December 31, 20X7, is as follows:
Debit Credit
Cash 240,000
Accounts Receivable (net) 2,760,000
Inventory (at cost) 3,720,000
Marketable Securities (at cost) 2,040,000
Prepaid Insurance 210,000
Depreciable Assets 8,730,000
Accumulated Depreciation 1,417,000
Cost of Goods Sold 17,697,000
Selling, General, and
     Administrative Expense 4,762,000
Sales Revenue 26,430,000
Investment Income 180,000
Accounts Payable 2,120,000
Unearned Sales Revenue 960,000
Loans and Mortgage Payable 5,872,000
Common Stock 1,500,000
Paid-in Capital in Excess of Par 210,000
Retained Earnings                    1,470,000
     Total 40,159,000 40,159,000
The marketable securities were acquired on November 1, 20X6, and the prepaid insurance was acquired on
December 1, 20X7. The cost of goods sold and the ending inventory are calculated by the weighted-average
method.
The following items are measured in pound at the December 31, 20x7.
Euros Pounds
Accumulated depreciation
Depreciable Assets 8,730,000 2,671,380
Cost of Goods Sold 17,697,000 5,262,294
Selling, General, Admin. Expense 4,762,000 1,415,886
Accumulated Depreciation 1,417,000 773,915
Sales Revenue 26,430,000 7,866,030
On November 1, 20X6, Kerry received a customer prepayment valued at 3,000,000 euros. On February 1, 3000000
20X7, 2,040,000 euros of the prepayment was earned. The balance remains unearned as of December 31, 2040000
20X7. 960000
Relevant exchange rates are as follows:
Pounds/Euro $/Pound
June 1, 20X4 0.31 $1.60
March 1, 20X6 0.3 $1.64
November 1, 20X6 0.305 $1.65
December 31, 20X6 0.31 $1.68
February 1, 20X7 0.302 $1.67
March 1, 20X7 0.3 $1.66
December 1, 20X7 0.29 $1.64
December 31, 20X7 0.288 $1.64
20X7 average 0.297 $1.66
Required:
Prepare a remeasured and translated trial balance of the Kerry Manufacturing
Company as of December 31, 20X7.
ANS:
Kerry Manufacturing Company
Trial Balance Translation
December 31, 20X7
Relevant Relevant
Exchange Exchange
Balance in Rate Balance in Rate Balance in
Account Euros (Pds/Euros) Pounds ($/Pds) Dollars
Cash 240,000
Accounts Receivable (net) 2,760,000
Inventory (at cost) 3,720,000
Marketable Securities (at cost) 2,040,000
Prepaid Insurance 210,000
Depreciable Assets 8,730,000
Cost of Goods Sold 17,697,000
Selling, General, Admin. Expense 4,762,000
Exchange Loss                   
Total Debits 40,159,000 12,183,001 20,117,316
Accumulated Depreciation 1,417,000
Sales Revenue 26,430,000
Investment Income 180,000
Accounts Payable 2,120,000
Unearned Sales Revenue 960,000
Loans and Mortgage Payable 5,872,000
Common Stock 1,500,000
Paid-in Capital in Excess of Par 210,000
Retained Earnings 1,470,000
Cumulative Translation
   Adjustment                    0 -19,392
Total Credits 40,159,000 12,183,001 20,117,316

In: Accounting

Modern Kitchens specializes on sell prefabricated kitchens. The company has stores in all major capital cities...

Modern Kitchens specializes on sell prefabricated kitchens. The company has stores in all major capital cities throughout Australia. It’s been established since 2001 and has seen tremendous growth but more recently has seen several overseas competitors enter the Australian market resulting in an increase in competition. This increased competition has placed significant pressure on containing costs and drawn management’s attention to a review of working capital practices. Detailed below are relevant figures and ratios to assist you in evaluating Modern Kitchen’s working capital management.
Working Capital Ratios 2016 2017 2018 2019
Accounts Receivable Days 14.0 days 18.1 days 23.1 days 31.9 days
Inventory Days 16.0 days 19.1 days 21.9 days 25.0 days
Accounts Payable Days 14.1 days 21. days 29.0 days 37.0 days
Note: Ratios are based on assuming end year figures are the average throughout the majority of the year
Extracts from Financial Statements
Cash on hand 0.20 mill 0.15 mill .01 mill (.003 mill)
Sales – all on credit 8.1 mill 6.9 mill 8.0 mill 9.0 mill
Accounts Receivable Balance 0.3069 mill 0.3453 mill 0.5044 mill 0.7894 mill
Inventory 0.1754 mill 0.2186 mill 0.2712 mill 0.3219 mill
Cost of Goods Sold 4.0 mill 4.2 mill 4.5 mill 4.7 mill
Accounts Payable 0.1534 mill 0.2417 mill 0.3574 mill 0.4762mill
Budgeted Figures
Cash on hand 0.3 mill 0.3 mill 0.31 mill 0.32 mill
Accounts Receivable Balance 0.30 mill 0.31 mill 0.37 mill 0.38 mill
Inventory Balance 0.16 mill 0.17 mill 0.20 mill 0.21 mill
Accounts Payable 0.16 mill 0.17 mill .19 mill 0.20 mill
Accounts Receivable Terms 14 days 14 days 14 days 14 days
Accounts Payable Terms 30 days 30 days 30 days 30 days
Industry Averages
Accounts Receivable Days 14 days 14 days 15 days 16 days
Inventory Days 15 days 16 days 16 days 15 days
Accounts Payable Days 30 days 28 days 25 days 20 days
REQUIRED:
Calculate (show full workings to your answer):
(i)  the dollar value of actual net working capital each year from 2016 to 2019 for Modern Kitchens.
(ii) the duration of the operating cash cycle each year from 2016 to 2019 for Modern Kitchens.
(iii) interpret the meaning of each of the figures calculated above (40-word limit)
(a) Review Modern Kitchens’s working capital management performance utilizing calculations in (a) above and information provided such as trends / benchmark figures / industry averages and budgets (300-word limit).

(b)  Once you have analyzed their performance, provide some strategies and recommendations to assist in improving any weaknesses in working capital management referring to the management of components of working capital including cash, inventory, accounts receivable and accounts payable. As part of your recommendations identify the associated potential benefits and costs of each recommendation. (400-word limit)

In: Finance

Modern Kitchens specializes on sell prefabricated kitchens. The company has stores in all major capital cities...

Modern Kitchens specializes on sell prefabricated kitchens. The company has stores in all major capital cities throughout Australia. It’s been established since 2001 and has seen tremendous growth but more recently has seen several overseas competitors enter the Australian market resulting in an increase in competition. This increased competition has placed significant pressure on containing costs and drawn management’s attention to a review of working capital practices. Detailed below are relevant figures and ratios to assist you in evaluating Modern Kitchen’s working capital management.
Working Capital Ratios 2016 2017 2018 2019
Accounts Receivable Days 14.0 days 18.1 days 23.1 days 31.9 days
Inventory Days 16.0 days 19.1 days 21.9 days 25.0 days
Accounts Payable Days 14.1 days 21. days 29.0 days 37.0 days
Note: Ratios are based on assuming end year figures are the average throughout the majority of the year
Extracts from Financial Statements
Cash on hand 0.20 mill 0.15 mill .01 mill (.003 mill)
Sales – all on credit 8.1 mill 6.9 mill 8.0 mill 9.0 mill
Accounts Receivable Balance 0.3069 mill 0.3453 mill 0.5044 mill 0.7894 mill
Inventory 0.1754 mill 0.2186 mill 0.2712 mill 0.3219 mill
Cost of Goods Sold 4.0 mill 4.2 mill 4.5 mill 4.7 mill
Accounts Payable 0.1534 mill 0.2417 mill 0.3574 mill 0.4762mill
Budgeted Figures
Cash on hand 0.3 mill 0.3 mill 0.31 mill 0.32 mill
Accounts Receivable Balance 0.30 mill 0.31 mill 0.37 mill 0.38 mill
Inventory Balance 0.16 mill 0.17 mill 0.20 mill 0.21 mill
Accounts Payable 0.16 mill 0.17 mill .19 mill 0.20 mill
Accounts Receivable Terms 14 days 14 days 14 days 14 days
Accounts Payable Terms 30 days 30 days 30 days 30 days
Industry Averages
Accounts Receivable Days 14 days 14 days 15 days 16 days
Inventory Days 15 days 16 days 16 days 15 days
Accounts Payable Days 30 days 28 days 25 days 20 days
REQUIRED:
Calculate (show full workings to your answer):
(i)  the dollar value of actual net working capital each year from 2016 to 2019 for Modern Kitchens.
(ii) the duration of the operating cash cycle each year from 2016 to 2019 for Modern Kitchens.
(iii) interpret the meaning of each of the figures calculated above (40-word limit)
(a) Review Modern Kitchens’s working capital management performance utilizing calculations in (a) above and information provided such as trends / benchmark figures / industry averages and budgets (300-word limit).

(b)  Once you have analyzed their performance, provide some strategies and recommendations to assist in improving any weaknesses in working capital management referring to the management of components of working capital including cash, inventory, accounts receivable and accounts payable. As part of your recommendations identify the associated potential benefits and costs of each recommendation. (400-word limit)

In: Finance

INSTRUCTIONS: I HAVE ALREADY ANSWERED QUESTION 1 AND 2. I NEED ASSISTANCE WITH QUESTIONS 3 AND...

INSTRUCTIONS: I HAVE ALREADY ANSWERED QUESTION 1 AND 2. I NEED ASSISTANCE WITH QUESTIONS 3 AND 4. I HAVE FILLED OUT THE PERCENTAGE CHANGE FOR QUESTION 3, AND NEED HELP ON CALCULATING THE OPERATING, INVESTING, AND FINANCIAL SECTIONS. AS WELL AS, THE EQUATIONS FOR QUESTION 4. IF YOU CAN ANSWER QUESTIONS 3 & 4 I WILL AWARD CREDIT.

Question 1: Common size for income statement

Income Statement (Common Size) :

                                                                 Consolidated Income Statement

2011

%

2010

%

Revenue

$19,176.1

$18,627.0

100

   Cost of sales

( 10,571.7)

10571.7 / 19176.1 x 100 = 55.13%

( 10,239.6 )

54.97

Gross Profit

     8,604.4

8604.4 / 19176.10 = 44.87%

    8,387.4

45.03

Selling and administrative expenses

(   6,149.6)

6149.6 / 19176.1 = 32.07%

( 5,953.7)

0.00

Restructuring charges

(      195.0)

195 / 19176.1 = 1.017%

      0.0

31.96

Goodwill impairment

(      199.3)

199.3 / 19176.1 = 1.04%

      0.0

0.00

Intangible and other asset impairment

(     202.0)

202 / 19176.1 = 1.053%

      0.0

0.00

Other income (expenses)

          88.5

88.5 / 19176.1 = 0.46%

    ( 7.9 )

0.04

Operating Income

$ 1,947.0

1,947 / 19176.1 = 10.15%

$ 2,425.8

13.02

Interest and other income

         49.7

49.7 / 19176.1 = 0.26%

     115.8

0.62

Interest expense

(      40.2)

40.2 / 19176.1 = 0.21%

   ( 38.7)

0.21

Income before income taxes

$ 1,956.5

1,956.5 / 19176.1 = 10.20%

$ 2,502.9

13.44

Provision for income taxes

(     469.8)

469.8 / 19176.1 = 2.45%

   ( 619.8)

3.33

Net Income

$ 1,486.7

1486.7 / 19176.1 = 7.75%

$ 1,883.4

10.11

Gross margin Ratio: measures the gross profit margin on total net sales made by the company. Gross profit sales- cost of goods sold. The ratio measures the efficiency of the company’s operations. When everything is normal the gross margin ratio should reaming unchanged irrespective of the level of production of sales. An increase or decrease in the ratio could be due to the increase/decrease in selling price per unit or decrease/increase in direct variable cost per unit. The ratio for the company has reduced to 44.87% in 2011 from 45.03 in 2010 due to which the net income is lower in current year in spite of increase in revenue.

Operating income has reduced to 10.15 in 2015 from 13.02% in 2010 due to new expenditure on account of restricting charges and impairment expenses. This has also led to the decrease in net income percentage to 7.755% in 2011 from 10.11% in 2010.

Question 2: Comparative Analysis for balance sheet:

2011

2010

Difference

% changed

ASSETS:

Current Assets

Cash and equivalents

$ 2,291.1

$ 2,133.9

157.2

7

Short-term investments

   1,164.2

      642.2

522

81

Account receivable

   2,883.9

   2,795.3

-88.6

-3

Inventory

   2,357.0

   2,438.4

81.4

3

Prepaid expenses and other assets

      765.6

      602.3

163.3

27

Deferred income taxes, net

     272.4

      227.2

45.2

20

Total Current Assets

$ 9,734.0

$ 8,839.3

0

Property and equipment, gross

   4,255.7

   4,103.0

152.7

4

Accumulated depreciation

(2,221.9)

(2,298.0)

76.1

-3

Property and equipment, net

$ 1,957.7

$ 1,891.1

66.6

4

Identifiable intangible assets

      467.4

      743.1

-275.7

-37

Good will

      193.5

      448.8

255.3

57

Deferred income taxes and other assets

      897.0

      520.4

376.6

72

Total Assets

$13,249.6

$12,442.7

806.9

6

Liabilities and Stockholders’ Equity

Current Liability :

Current portion of long-term debt

$        32.0

$          6.3

25.7

408

Note Payable

        342.9

         177.7

165.2

93

Account Payable

     1,031.9

      1,287.6

-255.7

-20

Accrued liabilities

     1,783.9

      1,761.9

22

1

Income taxes payable

          86.3

           88.0

-1.7

-2

Total Current Liabilities

$   3,277.0

$    3,321.5

0

Long term debt

        437.2

         441.1

-3.9

-1

Deferred taxes and other long-term liabilities

        842.0

         854.5

-12.5

-1

Total Liabilities

$ 4,556.2

$ 4,617.1

0

Redeemable preferred stock

$         0.3

$         0.3

0

0

Common Shareholders’ Equity

Common stock

           2.8

           2.8

0

0

Capital in excess of stated value

$ 2,781.4

$ 2,497.8

-283.6

11

Retained earnings

    5,451.4

   5,073.3

378.1

7

Accumulated other comprehensive income

       367.5

      251.4

116.1

46

Total Common Shareholders’ Equity

$ 8,693.1

$ 7,825.3

867.8

11

Total Liabilities and Shareholders’ Equity

$13,249.6

$12,442.7

806.9

6

Question 3 : Please create a statement of cash flow with indirect method

Statement of Cash Flow with Indirect method

2011

2010

Difference

Operating

Investing

Financing

ASSETS:

Current Assets

Cash and equivalents

$ 2,291.1

$ 2,133.9

157.2

Short-term investments

   1,164.2

      642.2

522

Account receivable

   2,883.9

   2,795.3

-88.6

Inventory

   2,357.0

   2,438.4

81.4

Prepaid expenses and other assets

      765.6

      602.3

163.3

Deferred income taxes, net

     272.4

      227.2

45.2

Total Current Assets

$ 9,734.0

$ 8,839.3

Property and equipment, gross

   4,255.7

   4,103.0

152.7

Accumulated depreciation

(2,221.9)

(2,298.0)

76.1

Property and equipment, net

$ 1,957.7

$ 1,891.1

66.6

Identifiable intangible assets

      467.4

      743.1

-275.7

Good will

      193.5

      448.8

255.3

Deferred income taxes and other assets

      897.0

      520.4

376.6

Total Assets

$13,249.6

$12,442.7

806.9

Liabilities and Stockholders’ Equity

Current Liability :

Current portion of long-term debt

$       32.0

$          6.3

25.7

Note Payable

        342.9

       177.7

165.2

Account Payable

     1,031.9

    1,287.6

-255.7

Accrued liabilities

     1,783.9

    1,761.9

22

Income taxes payable

          86.3

        88.0

-1.7

Total Current Liabilities

$   3,277.0

$ 3,321.5

Long term debt

        437.2

       441.1

-3.9

Deferred taxes and other long-term liabilities

        842.0

       854.5

-12.5

Total Liabilities

$ 4,556.2

$ 4,617.1

Redeemable preferred stock

$         0.3

$         0.3

0

Common Shareholders’ Equity

Common stock

           2.8

           2.8

0

Capital in excess of stated value

$ 2,781.4

$ 2,497.8

-283.6

Retained earnings

    5,451.4

   5,073.3

378.1

Accumulated other comprehensive income

       367.5

      251.4

116.1

Total Common Shareholders’ Equity

$ 8,693.1

$ 7,825.3

867.8

Total Liabilities and Shareholders’ Equity

$13,249.6

$12,442.7

806.9

Answer:

Net income for 2011 is $ 1,486.7 since the Intangible and other asset impairment was negative it decreased the Net Income from $1,486.7 to $1,284.70

CASH FLOW FROM OPERATING ACTIVITIES:
Net Income 2011 $ 1,486.7
+ Depreciation, Amortization or Depletion (202.00)
+Accounts Receivable -88.6

+Inventory Decrease 81.4

Prepaid Expense increase 163.3

Accounts Payable Decrease -255.7

Income Tax payable decrease 1.7

CASH FLOW FROM INVESTING ACTIVITIES:
+ sell Long-term assets for cash
- buy (construct) Long-term assets for cash
= Cash Flow from Investing Activities

CASH FLOW FROM FINANCING ACTIVITIES:
+ Stock issued for cash
+ Cash borrowed with loans and bonds
- Treasury stock repurchased for cash
- Cash used to repay loans and bonds
- Cash dividends paid
=Cash Flow from Financing Activities

Total Cash Flow (Operating, Investing, Financing)
+ Beginning Cash
= Ending Cash

Question 4:

Ration Analysis:

Return on Asset

Debt to assets ratio

Profit margin

Account receivable turnover & accounting receivable turnover

Inventory turnover & days of inventory turnover

In: Finance

1. In this problem, assume that the distribution of differences is approximately normal. Note: For degrees...

1. In this problem, assume that the distribution of differences is approximately normal. Note: For degrees of freedom d.f. not in the Student's t table, use the closest d.f. that is smaller. In some situations, this choice of d.f. may increase the P-value by a small amount and therefore produce a slightly more "conservative" answer.

Suppose that at five weather stations on Trail Ridge Road in Rocky Mountain National Park, the peak wind gusts (in miles per hour) for January and April are recorded below.

Wilderness District 1 2 3 4 5
January 139 120 126 64 78
April 101 110 108 88 61

Does this information indicate that the peak wind gusts are higher in January than in April? Use α = 0.01. Solve the problem using the critical region method of testing. (Let d = January − April. Round your answers to three decimal places.)

test statistic =
critical value =


Interpret your conclusion in the context of the application.

Reject the null hypothesis, there is sufficient evidence to claim average peak wind gusts are higher in January.

Fail to reject the null hypothesis, there is sufficient evidence to claim average peak wind gusts are higher in January.    

Fail to reject the null hypothesis, there is insufficient evidence to claim average peak wind gusts are higher in January.

Reject the null hypothesis, there is insufficient evidence to claim average peak wind gusts are higher in January.


Compare your conclusion with the conclusion obtained by using the P-value method. Are they the same?

We reject the null hypothesis using the critical region method, but fail to reject using the P-value method.

We reject the null hypothesis using the P-value method, but fail to reject using the critical region method.    

The conclusions obtained by using both methods are the same.

2.

Gentle Ben is a Morgan horse at a Colorado dude ranch. Over the past 8 weeks, a veterinarian took the following glucose readings from this horse (in mg/100 ml).

91 86 81 107 99 108 86 88

The sample mean is x ≈ 93.3. Let x be a random variable representing glucose readings taken from Gentle Ben. We may assume that x has a normal distribution, and we know from past experience that σ = 12.5. The mean glucose level for horses should be μ = 85 mg/100 ml.† Do these data indicate that Gentle Ben has an overall average glucose level higher than 85? Use α = 0.05.

(a) What is the level of significance?


State the null and alternate hypotheses. Will you use a left-tailed, right-tailed, or two-tailed test?

H0: μ > 85; H1:  μ = 85; right-tailed

H0: μ = 85; H1:  μ > 85; right-tailed    

H0: μ = 85; H1:  μ ≠ 85; two-tailed

H0: μ = 85; H1:  μ < 85; left-tailed


(b) What sampling distribution will you use? Explain the rationale for your choice of sampling distribution.

The standard normal, since we assume that x has a normal distribution with unknown σ.

The Student's t, since we assume that x has a normal distribution with known σ.    

The standard normal, since we assume that x has a normal distribution with known σ.

The Student's t, since n is large with unknown σ.


What is the value of the sample test statistic? (Round your answer to two decimal places.)


(c) Find (or estimate) the P-value. (Round your answer to four decimal places.)


Sketch the sampling distribution and show the area corresponding to the P-value.


(d) Based on your answers in parts (a) to (c), will you reject or fail to reject the null hypothesis? Are the data statistically significant at level α?

At the α = 0.05 level, we reject the null hypothesis and conclude the data are statistically significant.

At the α = 0.05 level, we reject the null hypothesis and conclude the data are not statistically significant.  

   At the α = 0.05 level, we fail to reject the null hypothesis and conclude the data are statistically significant.

At the α = 0.05 level, we fail to reject the null hypothesis and conclude the data are not statistically significant.


(e) State your conclusion in the context of the application.

There is sufficient evidence at the 0.05 level to conclude that Gentle Ben's glucose is higher than 85 mg/100 ml.

There is insufficient evidence at the 0.05 level to conclude that Gentle Ben's glucose is higher than 85 mg/100 ml.     

In: Statistics and Probability

Dan, age 45, is an independent contractor working in pharmaceutical sales, Cheryl, age 42, is a...

  • Dan, age 45, is an independent contractor working in pharmaceutical sales, Cheryl, age 42, is a nurse at a local hospital. Dan’s ssn is 400-20-100 and Cheryl’s SSN is 200-40-8000 an they reside at 2033 Palmetto Drive, Atlanta, GA 30304.
  • Dan is paid according to commissions from sales, and he has no income tax or payroll tax withholdings. Dan operates his business from his home office.
  • During 2018 Dan earned total commission in his business of $125,000.
  • Cheryl earned a salary during 2018 of $45,400,1 with the following withholdings: 6,000 federal taxes, 1,800 state taxes, 2,815 OASDI, and $658 Medicare taxes.
  • During 2018, Dan and Cheryl had interest income from corporate bonds and bank accounts of $1450 and qualified dividends from stock of %5950. Dan also actively trades stocks and had the following results from 2018:
  • LTCG              4,900
  • LTCL              (3,200)
  • STCG              0
  • STCL              (7,800)
  • He had no capital loss carryovers from previous years.
  • Dan does a considerable amount of travel in connection with his business and uses his own car. During 2018, Dan drove his car a total of 38,000 miles, of whih 32,000 were business related. He also had business-related parking fees and tolls during the year of $280. Dan uses the mileage method for deducting auto expenses. Dan also had the following travel expenses while away from home during the year
  • Hotel                                                                         4200
  • Meals                                                                         820
  • Entertainment of Customers                                     1080
  • Tips                                                                             100
  • Laundry and cleaning                                                 150
  • Total                                                                            6350
  • Dan uses the simplified method to deduct expenses for him office-in-home. His office measures 15feet by 12 feet is size (180 sqft)
  • Cheryl incurred several expenses in connection with her nursing job. She paid 450 in professional dues, 200 in professional journals, and 350 for uniforms.

Dan and Cheryl's last name is Taxpayer.

If the Taxpayers have a refund, have the entire amount refunded.

Helpful Hints and Checks

For Schedule D:

  • Assume the STCL was from Intel stock originally purchased on 1/4/19 for $10,000 and sold on 3/1/19 for $2,200.
  • Assume the LTCG was from the sale of Google, Inc. stock originally purchased on 5/19/14 for $7,100 and sold on 5/1/19 for $12,000.
  • Assume the LTCL was from the sale of Yahoo, Inc. stock originally purchased on 8/30/16 for $38,200 and sold on 11/7/19 for $35,000.

Assume the charitable donation of GE stock was to the United Way. It was donated on 3/5/19 and was originally purchased on 4/10/12.

Schedule C:

  • Dan uses the cash method.
  • Assume one-third of the tax preparation fees are allocable to Dan's business.
  • The Taxpayers' house is 3,000 square feet.
  • The vehicle was placed in service on 12/31/17.
  • Answer "yes" to items 45-47b on page 2.

Use the 2019 tax forms (locate tax forms on www.irs.gov).

General Requirements

For this assignment you will need to submit the following tax forms as a single document:

  • Form 1040
  • Schedule 1, Form 1040
  • Schedule 2, Form 1040
  • Schedule 3, Form 1040
  • Schedule A, Form 1040
  • Schedule B, Form 1040
  • Schedule C, Form 1040
  • Schedule D, Form 1040
  • Form 8949, Form 1040
  • Schedule SE, Form 1040
  • Form 8283, Form 1040

Refer to the resource, "Tax Rate Schedules 2019 and Other Items," located in the course materials.

Tax Return Check Figures for 2019 Tax Forms - Data Set A

Problem I:7-64

Check Figures for the Various Forms (check figures are not provided for every form):

Form 1040 –

  • Line 8b, AGI                                       $138,875
  • Line 16, Total tax                               $24,446

Schedule 1 –

  • Line 22, Adjustments to income        $11,075

Schedule A –

  • Total itemized deductions             $34,400                                    

Schedule C –

  • Line 28, Total expenses                $23,950

Schedule D –

  • Line 16                                          $(6,100)

Form 8829 (not required) –

  • Use simplified method as directed in the problem. Note: You have to determine the amount of square footage for the home office based on the information provided.

Remember to use the tax forms for the year indicated by your instructor. Points will be deducted for incorrect forms and incorrect sequence. In addition, be sure to submit the tax forms in order as required by the IRS. You will notice a Sequence No. on the top right of each tax return form except for the Form 1040. Form 1040 is the first form in the sequence.

In: Accounting

The U.S. Court of Appeals for the Seventh Circuit has upheld a district court ruling requiring...

The U.S. Court of Appeals for the Seventh Circuit has upheld a district court ruling requiring marketers of the “Q-Ray Ionized Bracelet” to give up almost $16 million in net profits as part of a maximum $87 million they must pay in refunds to consumers. In a decision issued on January 3 and written by Chief Judge Frank Easterbrook, the court concluded, “The magistrate judge did not commit a clear error, or abuse his discretion, in concluding that the defendants set out to bilk unsophisticated persons who found themselves in pain from arthritis and other chronic conditions.” The court found that the defendants’ claims about how their product worked, for example, through “ionization” or “enhancing the flow of bio-energy” were “blather.” Judge Easterbrook wrote, “Defendants might as well have said: Beneficent creatures from the 17th Dimension use this bracelet as a beacon to locate people who need pain relief, and whisk them off to their homeworld every night to provide help in ways unknown to our science.” The FTC filed its case in May 2003, alleging that QT Inc., Q-Ray Company, and Bio-Metal, Inc., located in Illinois, and their owner, Que Te Park, also known as Andrew Q. Park, made false and misleading advertising claims that the Q-Ray bracelet provided immediate and significant pain relief and deceptively advertised their refund policy, in violation of Sections 5 and 12 of the FTC Act. In September 2006, the federal district court in Chicago found in favor of the FTC. In November 2006, the court required the defendants to turn over a minimum of $22.5 million in net profits and up to $87 million in refunds to consumers who bought the bracelets between January 1, 2000 and June 30, 2003, when the bracelet was advertised on infomercials and Internet Web sites, and at trade shows. The district court later reduced the minimum disgorgement amount to $15.9 million, which the appellate court has upheld. The appellate court rejected the defendants’ argument that the magistrate judge had held the defendants to too high a standard of proof for their purported therapeutic claims about the bracelet and found that the claims must be based on science. The court found that “proof is what separates an effect new to science from a swindle” and that the defendants “have no proof,” stating that the “tests” the defendants relied on were “bunk.” The court also rejected the defendants’ contention that testimonials could support their claims -- the defendants could not show that the testimonials would not have enjoyed the same pain relief even if they had not worn the bracelet. “That’s why the ‘testimonial’ of someone who keeps elephants off the streets of a large city by snapping his fingers is the basis of a joke rather than proof of cause and effect,” stated the court. The appellate court also rejected the defendants’ argument that because their bracelet conferred a benefit to consumers through its placebo effect, they were vindicated in making their false therapeutic claims. The court held that the Federal Trade Commission Act “lacks an exception for ‘beneficial deceit’.” The court noted, “Deceit such as the tall tales that defendants told about the Q-Ray Ionized Bracelet will lead some consumers to avoid treatments that cost less and do more . . .”. The court also found that the defendants deceived consumers who purchased online and received only a 10-day return period when the infomercials promised a 30-day refund and suggested that consumers purchase online. “The disclosure of this shorter period was buried several clicks away on the website” and did not ameliorate the infomercial time frame upon which “reasonable consumers” could rely, the court stated. The Q-Ray defendants are currently in Chapter 11 bankruptcy in the United States Bankruptcy Court for the Northern District of Illinois.

1. Are not such claims as those at the center of this case so transparent that there is no need for a government agency or court to intervene?

2. Does not the marketplace effectively wee out such frauds?

3. Assume that the defendant had actually conducted scientific studies, which had proved inconclusive. How might the judge have ruled in that situation?

In: Operations Management