Multiple Choice Questions

Real estate economics - with depreciation

1.   A problem with the specific identification method is that

a.   inventories can be reported at actual costs.

b.   management can manipulate income.

c.   matching is not achieved.

d.   the lower of cost or market basis cannot be applied.

2.     In a period of increasing prices, which inventory flow assumption will result in the lowest amount of income tax expense?

a.   FIFO

b.   LIFO

c.   Average Cost Method

d.    Income tax expense for the period will be the same under all assumptions.

3.     When applying the lower of cost or market rule to inventory valuation, market generally means

a.   current replacement cost.

b.   original cost.

c.   resale value.

d.   original cost, less physical deterioration.

Comparison of Oracle and Microsoft (Ratio Analysis)

Oracle logo at the Oracle headquarters.

For Parts 1 and 2:

Create an Excel spreadsheet to show your computations for the six ratios listed under each part.

For Part 3:

Create an Excel spreadsheet to show your computations for the six ratios listed under this part and also to include (copy and paste) the ratio calculations from the first two parts. In this part, you will calculate the last six ratios as well as comment on all of the ratios calculated so far, including the first twelve ratios calculated under the first two parts. Your comments for each ratio should include more than just a definition of the ratio. You should focus on interpreting each ratio number for each company and support your comments with the numbers found in the ratios.

The summary and conclusion should discuss the liquidity, solvency and profitability of each company.

Part 1

Prepare a four-column worksheet in Excel, with the left-most column (column 1) to write the ratio names, the second column from the left (column 2) to show the calculation of each ratio for Oracle Corporation, the second column from the right (column 3) to show the calculation of each ratio for Microsoft Corporation, and the right-most column (column 4) to include your DETAILED comments about each ratio and what the ratio tells you about each company under study. Calculate each of the following six ratios. Earnings per Share Current Ratio, Gross Profit Rate, Profit Margin Ratio, Inventory Turnover Ratio, and Days in Inventory (Average Age of Inventory).

Part 2

Prepare a four-column worksheet in Excel, column 1 to write the ratio names, column 2 to show the calculation of each ratio for Oracle Corporation, column 3 to show the calculation of each ratio for Microsoft Corporation, and column 4 to include your DETAILED comments about each ratio and what the ratio tells you about each company under study. Calculate each of the following six ratios. Receivable Turnover Ratio, Average Collection Period, Assets Turnover Ratio, Return on Assets, Ratio Debt to Total Assets Ratio, and Times Interest Earned Ratio

Part 3

Prepare a four-column worksheet in Excel, column 1 to write the ratio names, column 2 to show the calculation of each ratio for Oracle Corporation, column 3 to show the calculation of each ratio for Microsoft Corporation, and column 4 to include your DETAILED comments about each ratio and what the ratio tells you about each company under study. Remember to copy and paste the ratio calculations and interpretations from the first two parts of the project in this worksheet, in addition to calculating the following six ratios. Payout ratio, Return on Common Stockholders’ Equity Ratio, Free Cash Flow Current, Cash Debt Coverage ratio, Cash Debt Coverage ratio, and Price/Earnings Ratio [For the purpose of this ratio, use the market price per share on June 1, 2007 for each company].

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Objective Type Costing Questions

Objective Type Costing Questions 

1. Which one of the following does not appear on the  balance sheet of a manufacturing company?

  • Raw materials inventory
  • Finished goods inventory
  • Work in process inventory
  • Cost of goods manufacture

2. Cost of goods manufactured is calculated as follows:

  • Beginning WIP + direct materials used + direct labor + manufacturing overhead + ending WIP.
  • Direct materials used + direct labor + manufacturing overhead – beginning WIP + ending WIP.
  • Beginning WIP + direct materials used + direct labor + manufacturing overhead – ending WIP.
  • Direct materials used + direct labor + manufacturing overhead – ending WIP – beginning WIP.

3. Which one of the following is an example of a period cost?

  • A change in benefits for the union workers who work in the New York plant of a Fortune 1000 manufacturer
  • Workers’ compensation insurance on factory workers’ wages allocated to the factory
  • A box cost associated with computers
  • A manager’s salary for work that is done in the corporate head office

Summary of MediSys Corp.: The IntensCare Product Development Team Summary

Write a one page summary of  HBR Brief case study ‘MediSys Corp.: The IntensCare Product Development Team’.

Please, also include the key points of this case study.

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Analysis of Financial Statements of Southwest Airlines Co.

Analysis of Financial Statements of Southwest Airlines Co. in $19 Only (Instant Download)

1) What 3 items of important information does the Southwest income statement reveal about the financial performance of the company over the last three years?
2) What 3 items of important information does the Southwest balance sheet reveal about the financial position of the company over the last two years?
3) Can you identify the major sources of funding for operating costs and capital expenditures used by Southwest Airlines from the information presented in the company’s annual report? If not, how could you get this information?
4) Who is responsible for: a) the issuance, and b) the content of the Southwest financial statements?
5) What assurance, if any, is there that the Southwest financial statements are in compliance with GAAP, and are free of material misstatements?
6) Of what use, if any, are the notes to the financial statements? Quantitative analysis tied to the financial statement concepts will add value to your work.
Sample Answer:
Question 2. What 3 items of important information does the Southwest balance sheet reveal about the financial position of the company over the last two years?

Answer:

Balance is another important statement of final account. It is also known as a report card of the corporation. It shows the position of the company at any particular date. The most three important information from the Southwest income statement are given below:

Improvement in current assets to current liabilities ratio

The company is able to improve its current ratio in last three years. In the year 2006 the current ratio was hovering around below one, however, it increased and touched 1.03 at the end of 2008.

Rising Debt

Debt to equity ratio increased from 0.26 in 2006 to 0.79 at the end of 2008. Debt to assets ratio also increased from 0.13 in 2006 to 0.27 at the end of 2008. In reflecting that in assets financing debt part in increasing faster than equity part.

Decrease in Total Equity

Total equity of the firm was decreased substantially in the year 2008 when it compares to 2007. In 2007 total equity was $6941 million, which fell to $4953 million by the end of 2008.

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Net Present Value (NPV) Calculations Using Each Model

 Net Present Value (NPV) Calculations Using Each Model

Need the Net Present Value (NPV) calculations each model using the following techniques and ignoring income Net Present Value (NPV) Calculations Using Each Modeltaxes: Dr. David Dunn, head of the radiology department at Grant Clinic Inc., is adding a new piece of diagnostic equipment to the department. Two similar models are offered by two different vendors, and both models would serve the needs of the clinic. Both also have an estimated useful life of five years, with no salvage value at the end of five years. The only difference between the two models is the cost and estimated annual labor savings, as shown below: Model A Model B Cost, including installation $120,000 $110,000 Estimated annual labor savings $40,000 $32,000 The straight-line method of depreciation is used on the books. Senior management of the clinic has established a target rate of return of 15% for all equipment with a useful life of over two years and a desired payback period of three years.

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Objective Type Questions

a) A company sells a product which has a unit sales price of $5, unit variable cost of $3 and total fixed costs of $120,000. The number of units the company must sell to break even is

  1. 60,000 units.
  2. 24,000 units.
  3. 240,000 units.
  4. 40,000 units.

b) A company has total fixed costs of $120,000 and a contribution margin ratio of 20%. The total sales necessary to break even are

  1. $480,000.
  2. $600,000.
  3. $150,000.
  4. $144,000.

c) At the break-even point of 2,500 units, variable costs are $55,000, and fixed costs are $32,000. How much is the selling price per unit?

  1. $34.80
  2. $9.20
  3. $12.80
  4. $22.00

Management Accounting Questions (AC 330 Unit 2)

Economist salaries by educational attainment.

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1. Classify the items into the following categories: (a)direct materials (b)direct labor (c)manufacturing overhead: 1.salaries for assembly line inspectors 2.insurance on factory machines 3.property taxes on the factory building 4.factory repairs 5. upholstery used in manufacturing furniture 6.wages paid to assembly line workers 7.factory machinery depreciation 8.glue,nails,paint,and other small parts used in production 9.factory supervisors’ salaries 10.wood used in manufacturing furniture

2. Determine the total amt. of (a)delivery service (product) costs and (b) period costs: indirect materials $5400, depreciation on delivery equipment $11200, dispatchers salary $5000, property tax on building $870, CEO salary $12000, gas and oil $2200, drivers’ salaries $11000, advertising $1600, delivery repairs $300, supplies $650, utilities $990, equip repairs $180.

Mini Case: Will Leasing Fly at Continental?

Continental Airlines

CFM 3 Ch 21 Minicase Will Leasing Fly at Continental? in $28 only

  1. Calculate the net advantage to leasing, using the expected residual value and assuming Continental can use all the tax benefits of ownership with a tax rate of 40% and straight line depreciation to the expected residual value. Assume that Continental issues 80% secured debt and 20% unsecured debt to finance a purchase.

a) Calculate rt–the project cost of capital.

b) Calculate the expected lease residual value per aircraft.

c) Calculate the quarterly CFAT per aircraft under the leasing option.

      • Hint: It should be the same each quarter hroughout the term of the lease.
      • The lease payment is tax deductible.
      • Under the leasing option Continental forgoes the depreciation tax deduction.

      d) Calculate the NAL.

          • Assume quarterly compounding to match the lease payments.
          • Continental’s required return on the asset—r, is given.
          • Assume no incremental difference in operating expenses between the purchasing and leasing options.
          • Assume that the lessor claims the ITC.

          2.  Calculate the net advantage to leasing, assuming Continental cannot use any of the tax benefits of ownership and the residual value is (i) the expected residual value, (ii) $50 million, and (iii) $10 million

          Mini Case: The Power to Cool Off in Florida (Indiantown Cogeneration Project)

          Tabebuia caraiba. Jensen Beach, Martin County,...

          CFM3 Ch 10 Minicase The Power to Cool Off in Florida             in $19 only

          Objective:
          This case demonstrates the use of NPV, IRR, and financial ratios for evaluating a capital budgeting project.
          Case Discussion:
          The Indiantown Cogeneration Project involved the construction and operation of a coal-fired plant in Martin County, Florida, that produces electricity and steam. The capital cost (including interest during construction) was approximately $770 million. Since completion, it has an electric generating capacity of 330 megawatts (net) and a steam capacity of 175,000 pounds per hour. The project sells the electric power to Florida Power & Light Company (FPL) under a 30-year contract and the steam to Caulkins Indiantown Citrus Company under a 15-year contract.

          FPL’s electricity payments have two parts: one for electric capacity and the other for the electric energy that it receives.

          The project’s financing consisted of $630 million of 30-year 9% APR interest rate debt and $140 million of equity. The debt requires equal annual sinking fund payments of $31.5 million beginning in year 11. Depreciation is straight line to zero over 20 years. The tax rate is 40%. Other information about the project includes:

          STRATEGIC INVESTMENT DECISIONS: Schweser Satellites Inc.

          Cost-Volume-Profit diagram, decomposing Total ...

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          STRATEGIC INVESTMENT DECISIONS: Schweser Satellites Inc.

          Schweser Satellites Inc. Produces satellite earth stations that sell for $100,000 each. The firm’s fixed cost, F, are $2 million; 50 earth stations are produced and sold each year; profits total $500,000; and the firms assets (all equity financed) are $5million. The firm estimates that it can change its production process, adding $4million to investment and $500,000 to fixed operating costs. This change will (1) reduce variable costs per unit by $10,000 and (2) increase output by 20 units, but (3) sales price on all units will have to be lowered to $95,000 to permit sales of the additional output. The firm has tax loss carry forwards that cause its tax rate to be zero, its cost equity is 15 percent, and it uses no debt.

          1. Should the firm make the change?
          2. Would the firms operating leverage increase or decrease if it made the change? What about its breakeven point?
          3. Would the new situation expose the firm to more or less business risk than the old one?

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          [email protected] or [email protected] 

          Your work is over now, just sit back at your place in your comfort. Very soon you will receive our mail. So, why wait and pay more just mail us at [email protected] or [email protected] or [email protected].

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          Mini Case: Getting Off the Ground at Boeing

          CFM3 Ch 09 Mini Case:  Getting Off the Ground at Boeing in $9 only

          Objective:

          This case asks the student to calculate the incremental cash flows and use the NPV and IRR methods to evaluate Boeing’s investment project to build a new plane. This project, because of its size and importance to Boeing, was potentially a “make-or-break” investment for the firm. It was therefore critical to Boeing to “get it right” when it performed the capital budgeting analysis.

          Case Discussion:
          By the time Boeing announced the newest addition to its fleet, much of the preliminary work was already computed. The new plane was an enormous undertaking. Research and development, begun two and a half years earlier, would cost between $4 billion and $5 billion. Production facilities and personnel training would require an additional investment of $2.0 billion, and $1.7 billion in working capital would be required. The exhibit included in the case furnishes profit, depreciation, and capital expenditure projections for the project.

          Regression, Beta, Standard Dev, Correlation and other Calculation for S&P500

          Dow Jones Industrial Average (DJIA) vs. TEPIX ...

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          The assignment will be collected at the beginning of final exam. You should turn in the Excel
          workbook for this assignment with your report.
          1. Use http://finance.yahoo.com to obtain daily closing prices for your company. Use Excel to
          calculate daily returns for the period January 1, 2010 – December 31, 2010. Calculate,
          • Average daily return,
          • Standard deviation of returns.
          Repeat the analysis for the Dow Jones Industrial Average (DJIA). Ticker is ^DJI.
          Your report should contain,
          • Average daily return for your stock, yourstock R
          • Standard deviation of daily returns, yourstock σ
          • Average daily return for DJIA, DJIA R
          • Standard deviation of daily returns on the DJIA, DJIA σ .

          Alpha, Beta and Fitted Line for Colgate-Palmolive (CL)

          History of S&P 500 from Jan 5, 1950 - Mar 30, ...

          Latest Work (2014 and 2016) in $11 only (Instant Download)

          Case Study on page 447-448 within the Ross textbook

          1.   Go to finance.yahoo.com and download the ending monthly stock prices for Colgate-Palmolive for the last 60 months. Use the adjusted closing price, which adjusts for dividend payments and stock splits. Next, download the ending value of the S&P 500 index over the same period. For the historical risk-free rate, go to the St. Louis Federal Reserve Web site  (www.stlouisfed.org) and find the three-month Treasury bill secondary market rate. Download this file. What are the monthly returns, average monthly returns, and standard deviations for

          Colgate-Palmolive stock, the three-month Treasury bill. and the S&P 500 tbr this period?

          2.   Beta is often estimated by linear regression. A model often used is called the market model, which is:

          Ratio Analysis and Comparison for Exxon Mobil Corporation and Royal Dutch Shell plc

          Ratio Analysis and Comparison for Exxon Mobil Corporation and Royal Dutch Shell plc in $15 Only
          1) Need to choose two firms within the same industryRatio Analysis and Comparison

           

          2) Go to each firm’s Web site, and then access and download their annual reports (financial statements).

          3) Using the accounting data from the firms’ financial statements, calculate all ratios for each firm (liquidity ratios, activity ratios, profitability ratios, leverage ratios, and coverage ratio)

          Liquidity Ratios

          Current Ratio = Current Assets/Current Liabilities

          Quick Ratio = Current Assets – Inventory/Current Liabilities

          Journal Entries

          Prepare the General Journals for these source documents. Record the journal entries in date order. Narrations are required.

          Todd Wills has the following source documents relating to transactions for April 2010.

          • Todd started business on 1 April with $25,000 in cash.

          • On 2 April, the business purchased office equipment on credit from Small Equipment Supplies for $1,650, including GST.

          • On 3 April, the business purchased, for cash, inventory with a value of $5,000, plus GST.

          • On 7 April, the business received $2,750 cash for the sale of goods, including GST. The cost of these goods was $1,500.

          • On 8 April, the business sold on credit inventory costing $1,000 to Low Ltd. These goods were sold for $1,700, plus GST.

          • On 9 April, rent of $990 was paid, including GST.

          • On 14 April, the business made a cash sale for $2,200, including GST. The original cost of these goods was $1,400.

          • On 15 April, the business purchased additional inventory on credit from Big Supplies for $3,500 plus GST.

          • On 17 April, the business borrowed $20,000 from the bank to be used by the business in its operations.

          • On 21 April, Todd withdrew $2,000 in cash from the business for personal use.

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          Objective Type Business Questions

          Loan payment schedule of a 1-year, fixed-size ...

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          Objective Type Business Questions

          1. The amount of money borrowed or invested is called the maturity value.
          True
          False

          2. When solving a simple interest problem, the rate should be written as a decimal number.
          True
          False

          3. The interest paid on a $10,000.00 loan for 2 years at 13.5% interest is $1,250.00.
          True
          False

          4. The formula to find the rate is interest divided by (principal times time).
          True
          False

          5. 8% for 45 days is equal to 0.01.
          True
          False

          Financial Management Questions

          You have been giving the financial statements asked to analyze the financial performance of your division. Other managers have suggested you use financial ratios in your analysis.

          1. what are financial ratios?

          2. which ratios might you use in your analysis?

          3. List them and explain what information they provide.

          4. How would you use them to make managerial decisions?

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