1. A potential investor in your airline wants to know how his investment would compare with the share market as a whole. To do this, what ratio would he use? a) Dividend cover b) Dividend per share on historical basis c) Price earnings ratio d) Asset test e) None of the above
2.Return on equity should be above whic of these? a) Variable mortgage rates b) Fixed Mortgage rates c) Bank interest on long term deposits d) Bank interest on short term deposits e) None of the above
3.What is operating revenue in terms of aviation business? a) All except interline sales b) Revenue from frequent flyer sales c) Sub-leasing terminal space d) Interline sales e) Duty free sales f) All of the above g) Revenue from passenger services
4.In financial terms a Discounted cash flow valuation is mainly concerned with: a) Both selling cheaply and capital budgeting b) Capital budgeting c) Revenue from fare discounting d) Selling cheaply
5.Shares in a company entitle the owners of the shares to a proportional share of the profits, which is paid as a dividend. The level of the dividend is determined by the directors, who may elect to pay some or all of the profits. In general, what should they pay as dividends? a) They should defer dividends until realising two consecutive profit announcements b) The percentage depends on the number of directors c) At least some of the profits- but they can retain profits against future risk d) All of the profits. Thats what shareholders demand e) None of the profits. They are perfectly entitled to retain all profits for the future
In: Accounting
On an examination in Biochemistry 12 students in one class had a mean grade of 78 with a standard deviation of 6, while 15 students in another class had a mean grade of 74 with a standard deviation of 8. Using a significance level of 0.05, determine whether the first group is superior to the second group.
In: Statistics and Probability
The
Situation:
In the summer of 2015, Photonics, a leader in the production of biometric sensors, started to experience a decline in sales growth for one of their most popular products, OxyAlert. OxyAlert was launched in 2011 and quickly became the industry standard in analyzing the oxygen levels of surgically repaired tissue after emergency care procedures. In the first year of sales this product captured 25% of the market in post operation biometric devices. By the second year it had rapidly overtaken the industry leader with a 55% share of the market. The success of this product was primarily due to innovative features that were not found on any other product. Features such as wireless disposable sensor probes and advance analytic software allowed doctors to shorten the recovery time of their patients in ICU units, which decreased per patient ICU expense by 10%. Based on these innovative features Photonics was able to charge a premium for this product and establish themselves as one of the most profitable companies in the industry.
Several competitors have now closed the gap in product design and functionality. In the fall of 2014, SeaBridge, one of Photonics biggest rivals, launched the product TotalDiagnostic. This product contains similar disposable sensory technology as OxyAlert, however, it allows doctors to analyze a broader range of a patient’s biometrics. While this product was priced around 10% higher than OxyAlert, doctors had the added advantage of not only maintaining the same recovery rates but also decrease the rate of post surgical infection by 15%. By February of 2015, TotalDiagnostic had captured 30% of the market.
Photonics response was swift. They immediately reduced the price of OxyAlert by 20% in order to regain market share. From March through May, sales of OxyAlertrebounded. While profit margins of the company did take a hit, it appeared that the price reduction stabilized the company’s market share. Unfortunately, recent sales reports from June show that pre-orders for OxyAlert are significantly down. As the CFO of Photonics you are worried that OxyAlert has become an obsolete product and further price reduction will have very little impact on sales growth.
Background and History:
Photonics was founded in 2008 by Rachel Walker, a professor of Bioengineering. From 2001 through 2006, Dr. Walker authored several papers on photonic measuring systems and it’s applications in biometrics. By 2007 she developed a prototype sensor that that was extremely non-invasive to the patient. She realized that this type of sensor combined with advanced computer algorithms could quickly analyze oxygen levels in surgically repaired tissues giving doctors “real time” information on the likelihood that a patient’s body would accept or reject the repaired tissue.
Dr. Walker believed that she had an important technology that could be highly profitable if she could find a way to commercialize it. Given the uniqueness of this technology she was able to obtain a patent in 2008. She felt fairly confident that her technology would be a major improvement in post-surgical care. However, several obstacles existed. The cost to turn this technology into a commercialized product was fairly substantial. However, more importantly, this was a highly disrupted technology that would require hospitals to change ICU and post operation processes. She wasn’t even sure if hospitals had a desire to change their current practices.
After interviewing several prominent hospital administrators, she concluded that that demand would be high if she could find a way to mass-produce her prototype at a cost that was on par with biometric sensors currently being sold to hospitals and other surgical centers. After several investor presentations, she was able to attract significant funding from a venture capital firm that specialized in funding small biomedical start-ups. With a $15 million dollar investment, Photonics was able to launch its first product, The BMD 1000, in January 2010.
In the first three months of 2010, sales of the BMD 1000 were tepid at best. While the product design was innovative, it did not integrate well with the current technology employed by most hospitals. Based on the criticisms of this product, Dr. Walker and her engineering team went back to the drawing board. The redesigned product was named OxyAlert and was introduced to the industry with much fanfare in January of 2011. By July of 2011, Photonics had secured orders with several large health care facilities on the East Coast. One year later, OxyAlert become the standard in the biometrics device industry.
Solutions
All along, you and Dr. Walker have known that five years was the typical product life cycle in this industry. Fortunately, you employ some of the brightest engineers in the field who have been developing three new interesting products that could restore your company’s sales growth. The first product is an improved version of OxyAlert, codenamed “OxyAlertII”. The second product is completely new to the industry and will allow doctors in emergency rooms to diagnose pre-existing conditions of incapacitated patients through breathalyzer tests. This product is codenamed “AutoAnalytics”. The third product is a complimentary product to OxyAlert that will enhance OxyAlert’s diagnostic capabilities. This product is codenamed “Diagnostic Solutions”.
The following are brief descriptions of each product’s financial costs and revenue projections:
OxyAlertII
Your marketing department believes that this product will not completely replace OxyAlert, as there will still be some companies who will want the older and cheaper version. However, they do believe that there will be significant cannibalization of your old product. By introducing this new product, sales of OxyAlert is forecasted to steadily decrease by 20% each year over the next 5 years. First year sales of OxyAlertII are projected to be $15 million with a 10% increase in revenue each year over the next 5 years. In the prior two years your company has spent $1 million on the development of this project. To finish the development of OxyAlertII and create the manufacturing infrastructure to produce it, your engineers estimate that they will need another $20 million in equipment purchases. This equipment has a 5-year life. The manufacturing process for this product will be fairly automated. As a result, cost of goods sold will be only 45% of revenue, much lower than current company averages. Incremental SG&A will be 15% of revenue. Working capital requirements will be 8% of revenue. In order to successfully launch this product, your marketing department is requesting a one-time advertising budget of $2.5 million, which will be spent in the first year of sales.
“AutoAnalytics”
This product is neither a complimentary product nor a replacement product for OxyAlert. The launch of this product is intended to create a new product line by extending Photonics core competencies into the emergency response market. Prior years’ development cost for this product has totaled $1.5 million dollars. Your engineering team estimates that it will cost $10 million dollars in new equipment purchases to manufacture this product. The economic life of this equipment is also 5 years. Your marketing department forecasts first year revenue at $9.5 million with initial one time marketing expense of $1.25 million. Based on projected demand, revenue is expected to increase by 7% year over year for the next 5 years. Because of the lack of experience in manufacturing this type of product, your operations management team expects that costs of goods sold will be somewhat high at 55% of revenue. Incremental SG&A will be 13% of revenue with an additional working capital requirement of 10% of revenue.
“DiagnosticSolutions”
DiagnosticSolutions is a series of networked probes that will allow customers to use OxyAlert in more efficient ways. Marketing believes that this complimentary product will actually help the sales of OxyAlert and prevent the full adoption of your competitor’s product, TotalDiagnostic, in the marketplace. Market share for OxyAlert is projected to slightly increase by 1.5 percent over the next 5 years. Your finance team believes that this will provide an additional $50,000 of cash flow per year in this five-year time period. While this product will help the sales of OxyAlert, it will be sold separately. Revenue projections for DiagnosticSolutions will be $4 million in the first year of sales. Since this is already a fairly saturated market, the sales of DiagnosticSolutions are projected to increase by only 2% per year over the next five years. As this is a complimentary product, the development cost is nominal. You will, however, need to expand your assembly line with more specialized equipment. This will require an additional $6 million of capital. Since this equipment is custom made it tends to have a longer life than the equipment used for the other products under consideration. Typically the economic useful life of this equipment is 7 years. Your incremental cost of goods sold and SG&A expense will be in line with current company margins of 50% and 10% respectively. Projected working capital is 12% of revenue. Given that this is a complimentary product, you will not incur any additional one time marketing expenses for launching this product.
Decisions
As the year progresses, investors and creditors are getting nervous that your company cannot maintain its leadership position within the industry. They still believe in your management team and your company’s ability to produce innovative products. As a result you have the ability to access up to $30 million dollars from your financiers. Your creditors are willing to loan you money at a 6% interest rate, while your investors expect a return of 12% on their equity. Based on the required returns on equity and debt, the company’s weighted average cost of capital is 9.45%. On all projects, assume a 30% tax rate on income. With good financial backing you have some important decisions to make in regards to these product launches. Again, your assignment is to make a recommendation on what new products to launch and provide an analysis on each product’s projected cash flow over a 5-year period. In order to support your recommendation, you will need to integrate the principles of capital budgeting decision-making in your analysis.
In: Finance
a Janice Toy Inc. is a toy manufacturer in Hong Kong. Recently, the company introduced a new electronic bear to the market. Although there are no other companies that sell this type of toy, the sales figure is not ideal and customers are not aware of the toy. Suppose you are the marketing manager of this company. Identify and explain the stage of product life cycle that this toy falls into, and suggest the corresponding marketing actions to be taken.
b GFE Limited is a company that sells audio products, such as
earphones, speakers, mixer and other related accessories to
retailers in Hong Kong. John is the owner of this company and he
wishes to repackage his products to promote his company and
increase sales.
What factors should he consider when designing the packaging of
his
products? Explain.
In: Operations Management
Question 2
The following trial balance was extracted from the books of R Giggs
at the close of business on 28 February 2007.
Dr Cr
RM RM
Purchases 92,800
Sales 157,165
Cash at bank 4,100
Cash in hand 324
Capital 11,400
Drawings 17,100
Office furniture 2,900
Rent 3,400
Wages and salaries 31,400
Discount received 160
Discount allowed 820
Accounts receivable 12,316
Accounts payable 5,245
Inventory 1/3/2006 4,120
Provision for doubtful debts 405
Motor vehicles 3,750
Motor expenses 615
Bad debts 730
174,375 174,375
Additional information:
1. Inventory as at 28/2/2007 was RM2,400.
2. Wages and salaries accrued at 28/2/2007 RM340.
3. Rent prepaid at 28/2/2007 RM230.
4. Motor expenses owing at 28/7/2007 RM72.
5. Increase in provision for doubtful debts by RM91.
6. Provide for depreciation as follows: office furniture RM380,
motor vehicles RM1,250.
Required:
Draw up the Income Statement (Profit and Loss) for the year ended
28/2/2007 together with a Financial Positions (Balance Sheet) as at
28/2/2007.
Question 2
The following trial balance was extracted from the books of R Giggs
at the close of business on 28 February 2007.
Dr Cr
RM RM
Purchases 92,800
Sales 157,165
Cash at bank 4,100
Cash in hand 324
Capital 11,400
Drawings 17,100
Office furniture 2,900
Rent 3,400
Wages and salaries 31,400
Discount received 160
Discount allowed 820
Accounts receivable 12,316
Accounts payable 5,245
Inventory 1/3/2006 4,120
Provision for doubtful debts 405
Motor vehicles 3,750
Motor expenses 615
Bad debts 730
174,375 174,375
Additional information:
1. Inventory as at 28/2/2007 was RM2,400.
2. Wages and salaries accrued at 28/2/2007 RM340.
3. Rent prepaid at 28/2/2007 RM230.
4. Motor expenses owing at 28/7/2007 RM72.
5. Increase in provision for doubtful debts by RM91.
6. Provide for depreciation as follows: office furniture RM380,
motor vehicles RM1,250.
Required:
Draw up the Income Statement (Profit and Loss) for the year ended
28/2/2007 together with a Financial Positions (Balance Sheet) as at
28/2/2007.
In: Accounting
Refer to the accompanying data set and construct a 90% confidence interval estimate of the mean pulse rate of adult females; then do the same for adult males. Compare the results.
Pulse Rates (beats per minute)
Males Females
82 83
72 94
48 59
57 64
54 56
62 80
53 78
74 86
53 86
63 58
73 35
61 65
65 85
76 76
83 75
65 64
64 68
93 79
41 59
84 63
74 82
64 82
72 68
70 75
57 88
66 91
58 87
82 93
73 89
64 97
66 69
96 92
57 84
65 80
58 73
58 53
68 99
bpm < μ < bpm
(Round to one decimal place as needed.)
In: Statistics and Probability
A college physics professor thinks that two of her sections scored differently on the final exam.
She collects the scores for the two classes and stores them in a file.
We do not know anything about the test score distributions.
Answer the following. Use alpha = 0.05.
a). What is the value of the test statistic?
b). What is the p-value?
c). Is she correct in stating that the final exam scores from the two sections are not equal to each other?
Here are the score sets
Set 1: 74, 79, 65, 58, 67, 61, 63, 64, 62, 72, 66, 58, 66, 63, 61, 73, 77, 68, 62, 67, 81, 80, 58
Set 2: 75, 77, 76, 82, 88, 91, 92, 70, 89, 85, 71, 82, 91, 77, 67, 87, 92, 88, 94, 85, 97, 93, 74
In: Statistics and Probability
Seacrest Company has 10,000 shares of cumulative preferred 2% stock, $50 par and 50,000 shares of $10 par common stock. The following amounts were distributed as dividends:
| Year 1 | $20,000 |
| Year 2 | 5,000 |
| Year 3 | 30,000 |
Determine the dividends per share for preferred and common stock for each year. Round all answers to two decimal places. If an answer is zero, enter '0'.
| Preferred Stock (dividend per share) |
Common Stock (dividend per share) |
|
| Year 1 | $ | $ |
| Year 2 | $ | $ |
| Year 3 |
$ |
Journalize the entries to record the following transactions for Mountain Realty Inc. Refer to the Chart of Accounts for exact wording of account titles.
| Aug. | 26 | Issued for cash 108,000 shares of no-par common stock (with a stated value of $5) at $9. |
| Oct. | 1 | Issued at par value 43,000 shares of preferred 1% stock, $10 par for cash. |
| Nov. | 30 |
Issued for cash 15,000 shares of preferred 1% stock, $10 par at $12 . The declaration, record, and payment dates in connection with a cash dividend of $659,000 on a corporation’s common stock are June 15, August 10, and September 15. Journalize the entries required on each date. If no entry is required, simply skip to the next transaction. Refer to the Chart of Accounts for exact wording of account titles. Olde Wine Corporation has 265,500 shares of $30 par common stock outstanding. On February 15, Olde Wine Corporation declared a 1% stock dividend to be issued May 2 to stockholders of record on March 27. The market price of the stock was $50 per share on February 15. Journalize the entries required on February 15, March 27, and May 2. If no entry is required, simply skip to the next transaction. Refer to the Chart of Accounts for exact wording of account titles. |
In: Accounting
Job order cost accounting for a service company
The law firm of Furlan and Benson accumulates costs associated with individual cases, using a job order cost system. The following transactions occurred during July:
| July 3. | Charged 500 hours of professional (lawyer) time at a rate of $220 per hour to the Obsidian Co. breech of contract suit to prepare for the trial. |
| 10. | Reimbursed travel costs to employees for depositions related to the Obsidian case, $25,200. |
| 14. | Charged 140 hours of professional time for the Obsidian trial at a rate of $250 per hour. |
| 18. | Received invoice from consultants Wadsley and Harden for $65,900 for expert testimony related to the Obsidian trial. |
| 27. | Applied office overhead at a rate of $80 per professional hour charged to the Obsidian case. |
| 31. | Paid administrative and support salaries of $36,400 for the month. |
| 31. | Used office supplies for the month, $12,300. |
| 31. | Paid professional salaries of $160,100 for the month. |
| 31. | Billed Obsidian $327,500 for successful defense of the case. |
a. Provide the journal entries for each of these transactions.
| July 3 | Work in Process | ||
| Salaries Payable | |||
| July 10 | Work in Process | ||
| Cash | |||
| July 14 | Work in Process | ||
| Salaries Payable | |||
| July 18 | Work in Process | ||
| Consultant Fees Payable | |||
| July 27 | Work in Process | ||
| Office Overhead | |||
| July 31 Admin. sal. | Office Overhead | ||
| Cash | |||
| July 31 Supplies | Office Overhead | ||
| Supplies | |||
| July 31 Prof. sal. | Salaries Payable | ||
| Cash | |||
| July 31 Billed | Accounts Receivable | ||
| Fees Earned | |||
| July 31 Cost | Cost of Services | ||
| Work in Process |
Feedback
b. How much office overhead is over- or
underapplied? Enter your answer as a positive number.
$ Overapplied
c. Determine the gross profit on the Obsidian
case, assuming that over- or underapplied office overhead is closed
monthly to cost of services.
$
In: Accounting
1- What might be the underlying motivations of Geely's
acquisition of foreign auto brand?
2- How does cooperation in international business offer
competitiveness?
3- What role can the government play in promoting
internationalisation?
China Globalises London's Black Cabs lobalisation
refers to international transactions, co- company for last 70
years. Coventry city is the birth place of operation, and
competition among firms. China has British motor industry and has
long tradition of manufacturing become one of the most active
trading nations in an iconic automobile brands like Jaguar, Rover,
Triumph, and increasingly globalised world. China's pursuit in
transforming Armstrong Siddeley. The FX4 model taxis rolled out in
1959 itself into an industrial economy gave birth to a thriving
auto from Coventry plant set the quintessential shape for the black
mobile industry and Geely Automobile Holdings Limited was cabs.
They formed partnership with Geely in 2006 which fi- founded in
1986. Geely is a subsidiary of Li Shufu's Zhejiang nally acquired
the taxi maker in 2012 for £11.4 million after it Geely Group. They
began with motorcycle production and went into administration.
London Taxi Company's current annual eventually started
manufacturing cars in 1997. Geely's moto production is
approximately 2000 taxis. Geely has been con- of 'Happy Life, Geely
Drive' encompasses its customers, sup- stantly investing to
increase capacity and competitiveness since pliers and human
resource to manufacture safe, environmental acquisition. The
company has recently announced a £250 friendly and god value
automobiles. Relentless pursuit of bet million investment to build
a new factory with a production ter technology, foreign brands and
oversees market resulted capacity of approximately 36000 cars
annually. This new in- in Geely's European acquisition of Volvo
cars in 2010 and vestment is celebrated locally and nationally due
to 1000 new London Taxi Company (LTC) in 2012. jobs creation and
boost to the local economy. Geely's ambition London Taxi Company is
the manufacturer of the iconic to put iconic London taxis in all
major cities in the world require London Black Cabs. Coventry has
been the home of the lots of innovation in emission technology and
globalising the London taxi experience. The current technology is
not suitable The Chinese state extended its support to fund Geely's
for bigger cities due to high emission, less fuel efficiency and
oversees ambitions. China EXIM bank is offering a 20 billion bulky
weight. The company has pledged to invest a further £80 yuan credit
line to Geely. This is exciting news for privately million in
research and development of TX5 model with hybrid owned enterprises
in China as favourable credit lines were engines. Hybrid and
electric taxis are expected to roll out from mostly available for
the state owned enterprises (SOEs) until the new factory in 2018.
recently. This is an expected move from new Chinese leader- Western
manufacturers are also developing strong manu- ship team under
chronic overcapacity and mounting losses of facturing bases in
China to tap the opportunities presented the State Owned
Enterprises. by the increasing purchasing powers of Chinese people.
Geely's ownership of London Taxi Company is an ex- Competition from
foreign manufacturer, cost pressures due ample of multinational
corporations (MNCs) from emerging to stringent regulatory
requirements at home and volatility in economies acquisition in the
industrial hearts of developed some export markets are some of the
current challenges for countries. This is a fairly new phenomenon
in international Geely. The management is searching for new
opportunities to business which becoming more and more common with
grow- overcome these challenges. ing powers of emerging
economies.
In: Operations Management