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

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:

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

Statement of Cash Flow with Indirect method

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

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.

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.)

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).

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.     

• 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.

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?

Demand: Qd=90-4P, where Qd is quantity demanded and P is price

Supply: Qs=-100+15P, where Qs is quantity supplied and P is price

Recall that equilibrium price was 19, while quantity was 50. At that price, the price elasticity of demand was -0.80.

1. Now I want you to rearrange each equation, putting P on the left-hand side, and solve again for equilibrium P and Q (you ought to get the same answer).
   1. Now we want to figure the monopoly price. Take the supply equation that you just developed (with P on the left-hand side), and make it your marginal cost equation. That is, just replace P with MC.

2. Total revenue is (P*Qd) and marginal revenue is the first derivative of total revenue with respect to Qd. Calculate total revenue and marginal revenue equations, derived from the demand equation developed above.

3. Now calculate price and quantity at the monopoly equilibrium (set MR=MC, solve for Q, the solve for P from the demand equation). How does monopoly P and Q compare to that calculated under competition?

4. What’s the price elasticity of demand at the monopoly price and quantity? Is it more or less elastic than the price elasticity at the competitive equilibrium?

1. A price elasticity of demand, estimated at the profit-maximizing monopoly price, will always be in the elastic range (that is, less than -1.0). Can you explain why?

Bank Balance Sheet (Note: Use this information for all three problems)

Item                             Amount            Duration       Interest Rate       

Cash-type Securities       $50m                1.2 year             2.25%

Commercial Loans          $100m             2.4 years           4.50%

Mortgages                     $350m             8.0 years           6.50%

Core Deposits                $270m             1.0 year             2.00%

Notes Payable                $180m             2.0 years           4.50%

1. Deposit Outflow Analysis (6 points)

a. Calculate the bank’s assets (A), liabilities (L) and its current value, or equity (E).

b. Calculate the bank’s Net Income (Interest Income – Interest Expense) for the current year (ignore taxes here and below, and ignore any maturity values), and the bank’s ROA% and ROE%. (Return on Assets = Net Income / Assets).

Assume an unexpected $70m outflow of core deposits. The bank considers 2 options:

Option A: Issue $70m of new subordinated debt for 5.50%.

Option B: Sell $70m of its mortgage portfolio at full book value.

c. Under Option A, calculate the bank’s Net Interest Income, ROA (express as a percent), and ROE (express as a percent).

d. Under Option B, calculate the bank’s Net Interest Income, ROA and ROE (express ROA and ROE as a percent).

e. If maximizing ROA is the bank’s goal, which option should it use (report and compare the ROAs)? What if ROE is the goal (report and compare the two ROEs)?

Suppose you have a call option on a stock with a strike price of $2 2. A) Fill in the stock price and strike price in the table and calculate the exercise value ( B) Plot the Stock price on the x-axis and the Exercise value on the y-axis. Be sure to label both axes with titles and include a chart title. Now assume you have the following data for a call option: Current stock price Strike price Time to expiration Risk - free rate Stock return standard deviation $65.00 $70.00 1.0 4 . 0 % 35 .00% C) Fill in the components of the Black -Scholes model and calculate d 1 and d 2 D) Calculate the value of N(d 1 ) and N(d 2 ) using the Excel function and find the value of V C Now use the binomial option pricing model in conjunction with the following data to value a call option: Current stock price, P = $27.00 Risk - free rate, r RF = 5 % Strike price, X = $25.00 Up factor for stock price, u = 1.41 Down factor for stock price, d = 0.71 Years to expiration, t = 0.50 E) Calculate the stock price using the binomial model and find the option payoff in each case, in addition to the value of N S F) Calculate the portfolio payoff in each case and find the present value of the payoff, in addition to the value of the call option

Please answer All

Which of the following would not shift the demand curve of golf balls?

A.    an increase in the price of golf clubs.

B.     a decrease in the popularity of golf.

C.     an increase in the number of golfers.

D.    an expected increase in the price of golf balls.

E.     a decrease in the price of golf balls.

Given that the price of a shirt decreased (in 2008) from $35.00 per shirt with 40 thousand shirts demanded and (in 2009) to $25.00 per shirt with 80 thousand shirts demanded. Using the midpoint formula, calculate the price elasticity of demand for shirts.

A.    |0.10|

B.     |-0.20|

C.     |1.0|

D.    |-2.0|

E.     |-0.05|

Factors that affect a product’s price elasticity of demand are

A.    availability of close substitutes.

B.     passage of time.

C.     necessity versus luxury.

D.    definition of the market.

E.     All of the above are correct.

For most consumers, a snack food such as potato chips has a price elasticity of demand that is

A.    unitary elastic.

B.     perfectly inelastic.

C.     extremely elastic, almost perfectly elastic.

D.    All of the above are correct.

E.     None of the above are correct.

When the price of a taco falls by 10%, the quantity of pizza demanded decreases by 5%. The cross elasticity of demand for pizza with respect to the price of a taco demonstrates that tacos and pizza are

A.    substitute goods.

B.     complementary goods.

C.     factors of production.

D.    intermediate goods.

E.     cannot be determined with the given information.

Two home-improvement stores (Lopes and HomeMax) in a growing urban area are interested in expanding their market share. Both are interested in expanding the size of their store and parking lot to accommodate potential growth in their customer base. The following game depicts the strategic outcomes that result from the game. Increases in annual profits of the two home-improvement stores are shown in the table below.

      
Lopes

      
Increase the size of store
and parking lot

Do not increase the size of
store and parking lot

HomeMax

Increase the size
of store and
parking lot

Lopes = $1.0 million
HomeMax = $1.5 million

Lopes = $0.4 million
HomeMax = $3.4 million

Do not increase
the size of store
and parking lot

Lopes = $3.2 million
HomeMax = $0.6 million

Lopes = $2.0 million
HomeMax = $2.5 million

Refer to Table 17-13. Pursuing its own best interest, HomeMax will
    a.   increase the size of its store and parking lot only if Lopes also increases the size of its store and parking lot.
   b.   increase the size of its store and parking lot only if Lopes does not increase the size of its store and parking lot.
   c.   increase the size of its store and parking lot regardless of the decision made by Lopes.
   d.   not increase the size of its store and parking lot regardless of the decision made by Lopes.