|
Paul Sabin organized Sabin Electronics 10 years ago to produce and sell several electronic devices on which he had secured patents. Although the company has been fairly profitable, it is now experiencing a severe cash shortage. For this reason, it is requesting a $590,000 long-term loan from Gulfport State Bank, $145,000 of which will be used to bolster the Cash account and $445,000 of which will be used to modernize equipment. The company’s financial statements for the two most recent years follow: |
| Sabin Electronics | ||||
| Comparative Balance Sheet | ||||
| This Year | Last Year | |||
| Assets | ||||
| Current assets: | ||||
| Cash | $ | 104,000 | $ | 240,000 |
| Marketable securities | 0 | 27,000 | ||
| Accounts receivable, net | 594,000 | 390,000 | ||
| Inventory | 1,035,000 | 685,000 | ||
| Prepaid expenses | 26,000 | 31,000 | ||
| Total current assets | 1,759,000 | 1,373,000 | ||
| Plant and equipment, net | 1,751,000 | 1,420,000 | ||
| Total assets | $ | 3,510,000 | $ | 2,793,000 |
| Liabilities and Stockholders Equity | ||||
| Liabilities: | ||||
| Current liabilities | $ | 845,000 | $ | 520,000 |
| Bonds payable, 12% | 700,000 | 700,000 | ||
| Total liabilities | 1,545,000 | 1,220,000 | ||
| Stockholders' equity: | ||||
| Common stock, $15 par | 780,000 | 780,000 | ||
| Retained earnings | 1,185,000 | 793,000 | ||
| Total stockholders’ equity | 1,965,000 | 1,573,000 | ||
| Total liabilities and equity | $ | 3,510,000 | $ | 2,793,000 |
| Sabin Electronics | ||||
| Comparative Income Statement and Reconciliation | ||||
| This Year | Last Year | |||
| Sales | $ | 5,450,000 | $ | 4,620,000 |
| Cost of goods sold | 3,965,000 | 3,540,000 | ||
| Gross margin | 1,485,000 | 1,080,000 | ||
| Selling and administrative expenses | 671,000 | 566,000 | ||
| Net operating income | 814,000 | 514,000 | ||
| Interest expense | 84,000 | 84,000 | ||
| Net income before taxes | 730,000 | 430,000 | ||
| Income taxes (30%) | 219,000 | 129,000 | ||
| Net income | 511,000 | 301,000 | ||
| Common dividends | 119,000 | 98,000 | ||
| Net income retained | 392,000 | 203,000 | ||
| Beginning retained earnings | 793,000 | 590,000 | ||
| Ending retained earnings | $ | 1,185,000 | $ | 793,000 |
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During the past year, the company introduced several new product lines and raised the selling prices on a number of old product lines in order to improve its profit margin. The company also hired a new sales manager, who has expanded sales into several new territories. Sales terms are 3/10, n/30. All sales are on account. |
|
Assume that Paul Sabin has asked you to assess his company’s profitability and stock market performance. |
| Required: | |
| 1. |
You decide first to assess the company’s stock market performance. For both this year and last year, compute: |
| a. |
The earnings per share. There has been no change in common stock over the last two years.(Round your answers to 2 decimal places.) |
| b. |
The dividend yield ratio. The company’s stock is currently selling for $60 per share; last year it sold for $55 per share. (Do not round intermediate calculations. Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) |
| c. |
The dividend payout ratio. (Round intermediate calculations to 2 decimal places. Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) |
| d. |
The price-earnings ratio. (Round intermediate calculations to 2 decimal places. Round your answers to 2 decimal places.) |
| e. |
The book value per share of common stock. (Round your answers to 2 decimal places.) |
| 2. |
You decide next to assess the company’s profitability. Compute the following for both this year and last year: |
| a. |
The gross margin percentage. (Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) |
| b. |
The net profit margin percentage. (Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) |
| c. |
The return on total assets. (Total assets at the beginning of last year were $2,570,000.) (Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) |
| d. |
The return on equity. (Stockholders’ equity at the beginning of last year was $1,563,000.) (Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) |
| e. | Is the company’s financial leverage positive or negative? | ||||
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In: Accounting
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Paul Sabin organized Sabin Electronics 10 years ago to produce and sell several electronic devices on which he had secured patents. Although the company has been fairly profitable, it is now experiencing a severe cash shortage. For this reason, it is requesting a $620,000 long-term loan from Gulfport State Bank, $160,000 of which will be used to bolster the Cash account and $460,000 of which will be used to modernize equipment. The company’s financial statements for the two most recent years follow: |
| Sabin Electronics | ||||
| Comparative Balance Sheet | ||||
| This Year | Last Year | |||
| Assets | ||||
| Current assets: | ||||
| Cash | $ | 118,000 | $ | 270,000 |
| Marketable securities | 0 | 30,000 | ||
| Accounts receivable, net | 633,000 | 420,000 | ||
| Inventory | 1,065,000 | 715,000 | ||
| Prepaid expenses | 30,000 | 34,000 | ||
| Total current assets | 1,846,000 | 1,469,000 | ||
| Plant and equipment, net | 1,969,200 | 1,490,000 | ||
| Total assets | $ | 3,815,200 | $ | 2,959,000 |
| Liabilities and Stockholders Equity | ||||
| Liabilities: | ||||
| Current liabilities | $ | 820,000 | $ | 420,000 |
| Bonds payable, 12% | 850,000 | 850,000 | ||
| Total liabilities | 1,670,000 | 1,270,000 | ||
| Stockholders' equity: | ||||
| Common stock, $15 par | 810,000 | 810,000 | ||
| Retained earnings | 1,335,200 | 879,000 | ||
| Total stockholders’ equity | 2,145,200 | 1,689,000 | ||
| Total liabilities and equity | $ | 3,815,200 | $ | 2,959,000 |
| Sabin Electronics | ||||
| Comparative Income Statement and Reconciliation | ||||
| This Year | Last Year | |||
| Sales | $ | 5,600,000 | $ | 4,710,000 |
| Cost of goods sold | 3,995,000 | 3,570,000 | ||
| Gross margin | 1,605,000 | 1,140,000 | ||
| Selling and administrative expenses | 677,000 | 572,000 | ||
| Net operating income | 928,000 | 568,000 | ||
| Interest expense | 102,000 | 102,000 | ||
| Net income before taxes | 826,000 | 466,000 | ||
| Income taxes (30%) | 247,800 | 139,800 | ||
| Net income | 578,200 | 326,200 | ||
| Common dividends | 122,000 | 101,000 | ||
| Net income retained | 456,200 | 225,200 | ||
| Beginning retained earnings | 879,000 | 653,800 | ||
| Ending retained earnings | $ | 1,335,200 | $ | 879,000 |
|
During the past year, the company introduced several new product lines and raised the selling prices on a number of old product lines in order to improve its profit margin. The company also hired a new sales manager, who has expanded sales into several new territories. Sales terms are 2/10, n/30. All sales are on account. |
|
Assume that Paul Sabin has asked you to assess his company’s profitability and stock market performance. |
| Required: | |
| 1. |
You decide first to assess the company’s stock market performance. For both this year and last year, compute: |
| a. |
The earnings per share. There has been no change in common stock over the last two years.(Round your answers to 2 decimal places.) |
| b. |
The dividend yield ratio. The company’s stock is currently selling for $50 per share; last year it sold for $45 per share. (Do not round intermediate calculations. Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) |
| c. |
The dividend payout ratio. (Round intermediate calculations to 2 decimal places. Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) |
| d. |
The price-earnings ratio. (Round intermediate calculations to 2 decimal places. Round your answers to 2 decimal places.) |
| e. |
The book value per share of common stock. (Round your answers to 2 decimal places.) |
| 2. |
You decide next to assess the company’s profitability. Compute the following for both this year and last year: |
| a. |
The gross margin percentage. (Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) |
| b. |
The net profit margin percentage. (Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) |
| c. |
The return on total assets. (Total assets at the beginning of last year were $2,919,000.) (Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) |
| d. |
The return on equity. (Stockholders’ equity at the beginning of last year was $1,679,000.) (Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) |
| e. | Is the company’s financial leverage positive or negative? | ||||
|
In: Accounting
|
Paul Sabin organized Sabin Electronics 10 years ago to produce and sell several electronic devices on which he had secured patents. Although the company has been fairly profitable, it is now experiencing a severe cash shortage. For this reason, it is requesting a $590,000 long-term loan from Gulfport State Bank, $145,000 of which will be used to bolster the Cash account and $445,000 of which will be used to modernize equipment. The company’s financial statements for the two most recent years follow: |
| Sabin Electronics | ||||
| Comparative Balance Sheet | ||||
| This Year | Last Year | |||
| Assets | ||||
| Current assets: | ||||
| Cash | $ | 104,000 | $ | 240,000 |
| Marketable securities | 0 | 27,000 | ||
| Accounts receivable, net | 594,000 | 390,000 | ||
| Inventory | 1,035,000 | 685,000 | ||
| Prepaid expenses | 26,000 | 31,000 | ||
| Total current assets | 1,759,000 | 1,373,000 | ||
| Plant and equipment, net | 1,751,000 | 1,420,000 | ||
| Total assets | $ | 3,510,000 | $ | 2,793,000 |
| Liabilities and Stockholders Equity | ||||
| Liabilities: | ||||
| Current liabilities | $ | 845,000 | $ | 520,000 |
| Bonds payable, 12% | 700,000 | 700,000 | ||
| Total liabilities | 1,545,000 | 1,220,000 | ||
| Stockholders' equity: | ||||
| Common stock, $15 par | 780,000 | 780,000 | ||
| Retained earnings | 1,185,000 | 793,000 | ||
| Total stockholders’ equity | 1,965,000 | 1,573,000 | ||
| Total liabilities and equity | $ | 3,510,000 | $ | 2,793,000 |
| Sabin Electronics | ||||
| Comparative Income Statement and Reconciliation | ||||
| This Year | Last Year | |||
| Sales | $ | 5,450,000 | $ | 4,620,000 |
| Cost of goods sold | 3,965,000 | 3,540,000 | ||
| Gross margin | 1,485,000 | 1,080,000 | ||
| Selling and administrative expenses | 671,000 | 566,000 | ||
| Net operating income | 814,000 | 514,000 | ||
| Interest expense | 84,000 | 84,000 | ||
| Net income before taxes | 730,000 | 430,000 | ||
| Income taxes (30%) | 219,000 | 129,000 | ||
| Net income | 511,000 | 301,000 | ||
| Common dividends | 119,000 | 98,000 | ||
| Net income retained | 392,000 | 203,000 | ||
| Beginning retained earnings | 793,000 | 590,000 | ||
| Ending retained earnings | $ | 1,185,000 | $ | 793,000 |
|
During the past year, the company introduced several new product lines and raised the selling prices on a number of old product lines in order to improve its profit margin. The company also hired a new sales manager, who has expanded sales into several new territories. Sales terms are 3/10, n/30. All sales are on account. |
|
Assume that Paul Sabin has asked you to assess his company’s profitability and stock market performance. |
| Required: | |
| 1. |
You decide first to assess the company’s stock market performance. For both this year and last year, compute: |
| a. |
The earnings per share. There has been no change in common stock over the last two years.(Round your answers to 2 decimal places.) |
| b. |
The dividend yield ratio. The company’s stock is currently selling for $60 per share; last year it sold for $55 per share. (Do not round intermediate calculations. Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) |
| c. |
The dividend payout ratio. (Round intermediate calculations to 2 decimal places. Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) |
| d. |
The price-earnings ratio. (Round intermediate calculations to 2 decimal places. Round your answers to 2 decimal places.) |
| e. |
The book value per share of common stock. (Round your answers to 2 decimal places.) |
| 2. |
You decide next to assess the company’s profitability. Compute the following for both this year and last year: |
| a. |
The gross margin percentage. (Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) |
| b. |
The net profit margin percentage. (Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) |
| c. |
The return on total assets. (Total assets at the beginning of last year were $2,570,000.) (Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) |
| d. |
The return on equity. (Stockholders’ equity at the beginning of last year was $1,563,000.) (Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) |
| e. | Is the company’s financial leverage positive or negative? | ||||
|
In: Accounting
A 1.25 lbs. measuring tape became dislodged from the belt of a worker on the 48th floor of a building under construction and fell approximately 460 feet hitting another worker who was delivering materials to the project. The worker who was struck and killed was not wearing a hard hat but had one available in his truck. If we assume a deceleration distance of 4”, what was the force in pounds generated by the measuring tape at impact and what is the velocity of the measuring tape at impact?
In: Physics
The U.S. Census Bureau announced that the median sales price of new house sold in December of 2018 $322,800, and the mean sales price was $376,000 (https://www.census.gov/construction /nrs/pdf/uspricemon.pdf). Assume that the standard deviation of the prices is $90,000.
a. If you select a random sample of n = 100, what is the probability that the sample mean will be less than $300,000?
b. If you select a random sample of n = 100, what is the probability that the sample mean will be between $275,000 and $290,000
In: Statistics and Probability
Coquitlam Builders is a medium size home construction company. It wants to test the hypothesis that the average size of a new home unit exceeds 2,400 square feet. A random sample of 36 newly constructed homes had a mean of 2,510 square feet. Assume that the standard deviation of the size for all newly constructed homes is 480 square feet. Toll Brothers would like to set α = 0.02. Using the confidence interval approach, what is the decision in this case?
In: Statistics and Probability
In: Physics
In: Civil Engineering
In: Physics
On January 1, Snipes Construction paid for earth moving equipment by issuing a 350,000, 2 year note that specified 4% interest to be paid on December 31 of each year. The equipments retail cash price was unknown, but it was determined that a reasonable interest rate was 7%
At what amount should Snipes record the equipment and the note?
what journal entry should it record for the transaction?
| n= | ||
| i= | ||
| Loan repayments | Amount | Present Value |
| Interest | ||
| Principal | ||
| Price of equipment |
In: Accounting